Accounting Expert Answers & Study Resources : Page 140

11) In order to exercise effective internal control over receivables the credit department must have access cash. 12) Businesses must maintain a single account receivable account for all customers. 13) Individual customer accounts of accounts receivable are known as subsidiary accounts. 14) Sales through credit cards and debit cards are journalized in the.

Learning Objective 8-4 1) Cash in the bank is more liquid than a petty cash fund. 2) Petty cash is a fund containing a small amount of cash that is used to pay for minor expenditures. 3) The journal entry to replenish a petty cash fund includes a debit to the Petty Cash.

11) When an asset is fully depreciated, no further depreciation expense is recorded. 12) Companies are required to use Modified Accelerated Cost Recovery System (MACRS) for tax purposes. 13) Which of the following categories of assets should be depreciated? A) tangible property, plant and equipment, other than land B) intangible property C) land D) natural resources 14).

Learning Objective 9-3 1) The allowance method violates the matching principle. 2) A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see which customers the company will not collect from is known as the allowance method. 3) Under both the allowance method and.

41) In the following situation, which internal control procedure needs strengthening? At Syria Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes.

56) Refer to the following bank reconciliation: Bank          Book Balance, June 30, 2014$11,240.00Balance, June 30, 2014$10,200.00 Add:Add: Deposit in transit3,110.00Note collected by bank2,100.00 Interest revenue55.00 Less:Less: Outstanding checks #5061,200.00NSF check85.00 Outstanding checks #510900.00Bank service charge20.00 _________________ Adjusted balance, June 30, 2014$12,250.00Adjusted balance, June 30, 2014$12,250.00 Journalize the adjusting entry for the second reconciling item: interest revenue. 57) Refer to the following bank reconciliation: Bank         Book Balance,.

Learning Objective 10-4 1) Natural resource is an asset that comes from the earth and is consumed. 2) The process by which businesses spread the allocation of a natural resource's cost over its usage is known as depreciation. 3) The units-of-production method is used to compute the depletion expense. 4) Businesses should not deplete.

  Learning Objective 11-1 1) Amounts owed for products or services, due within one year, are current liabilities. 2) Amounts owed for products or services purchased on account are accounts receivable. 3) Unearned revenues relating to a one-year service contract are current liabilities until they are earned. 4) Notes payable are considered long-term debts, usually.

21) The following information is from the 2015 records of Armand Camera Shop: Accounts Receivable, December 31, 2015 $40,000 (debit) Allowance for Bad Debts, December 31, 2015 prior to adjustment 1,500 (debit) Net credit sales for 2015 175,000 Accounts written off as uncollectible during 2015 15,000 Cash sales during 2015 27,000 Bad debts expense is estimated by the percent-of-sales method. The management.

Learning Objective 10-5 1) An intangible asset is an asset with no physical form that is valuable because of the special rights it carries. 2) Impairment of an intangible asset occurs when the book value of an asset is less than the fair value. 3) The process by which businesses spread the allocation.

Learning Objective 10-2 1) Depreciation is the allocation of a plant asset's cost to expense over the useful life of the asset. 2) Residual value is also known as depreciable cost. 3) An asset is said to be obsolete when a newer asset can perform the job more efficiently. 4) When a company uses.

Learning Objective 9-5 1) The acid-test ratio is also known as the quick ratio. 2) The higher the quick ratio, the lower the business's ability to pay its current liabilities. 3) The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet. 4) The acid-test ratio is a more.

31) On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $350,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry for this transaction, using a perpetual inventory system. 32) On July 1, 2013, Ferrero Inc. purchased.

21) The type of intangible asset related to the rights of original music and media is known as: A) goodwill. B) a trademark. C) a copyright. D) a patent. 22) On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected.

Learning Objective 10-7 1) An exchange transaction is said to have commercial substance if the future cash flows change as a result of the transaction. 2) Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized. 3) In exchanges of plant assets with commercial.

  Learning Objective 9-1 1) The receivables of an organization can be categorized into accounts receivable, notes receivable, and other receivables. 2) A company will have receivables whenever it sells goods or services on credit. 3) The two major types of receivables are interest receivable and taxes receivable. 4) A receivable can be described as.

31) A check for which a maker's bank account has inadequate money to pay the check is known as: A) a nonsufficient funds check. B) an outstanding check. C) a restrictive check. D) a canceled check. 32) The following information is available for Jack's Unlimited Company for the current month. Book balance end of the month $6,875 Outstanding.

11) The accounts receivable turnover ratio of a merchandiser is 9.8 times. Calculate the days' sales in receivables for the merchandiser. (Round to the nearest day.) A) 33 days B) 37 days C) 28 days D) 40 days 12) Which of the following is true of the proper balance sheet treatment of the Allowance for.

8) Black n White Company purchased equipment for $45,000. The company recorded total depreciation of $36,000 on the equipment. On January 1, 2015, Black n White traded in the equipment for new equipment, paying $54,000 cash. The fair market value of the new equipment is $65,000. Journalize the company's exchange.

21) Which of the following accounts will be credited by the borrower when a promissory note is issued? A) Note Payable B) Note Receivable C) Interest Payable D) Cash 22) The journal entry for accrued interest on a note payable by the borrower includes: A) a debit to Interest Expense and credit to Cash. B) a debit.

36) Cost of an asset is $10,000,000 and its residual value is $100,000. Estimated useful life of the asset is four years. Prepare the schedule of depreciation using the double-declining-balance method of accounting 37) On January 1, 2015, Zade Manufacturing Company purchased a machine for $40,000,000. The company expects to use.

11) Corel Sales sold its old office furniture for $5,000. Its original cost was $10,000 and at the time of sale, it had accumulated depreciation of $7,000. What was the effect of the transaction? A) gain of $5,000 B) gain of $2,000 C) loss of $2,000 D) loss of $5,000 12) A photocopy machine costs.

11) A company issues a 60-day, 12% note for $15,000. What is the principal amount of the note? A) $16,800 B) $15,000 C) $14,700 D) $15,300 12) Calculate the interest on a 90-day, 9% note for $36,000. (Use a 360-day year to compute interest.) A) $720 B) $810 C) $880 D) $460 13) The maturity value of a note is.

21) On January 1, 2015, Zade Manufacturing Company purchased a machine for $40,000,000. The company expects to use the machine for 24,000 hours over the next 6 years. The estimated sale value of the machine at the end of the sixth year is $40,000. The company used the machine for.

21) A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the company? A) Net income will be overstated. B) Revenues will be understated. C) Assets will be understated. D) Liabilities will be understated. 22) Nobells Corp. has acquired land and paid.

Learning Objective 8-2 1) A point-of-sale terminal provides control over cash receipts over the counter. 2) As a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department. 3) Regarding controls over cash receipts by mail, the bank.

  Learning Objective 10-1 1) Plant assets are long-lived, tangible assets used in the operation of a business. 2) The process of allocating the cost of a plant asset over its useful life is known as cost reduction. 3) The cost principle requires a business to record the assets acquired or services received at.

Learning Objective 10-3 1) Discarding of plant assets involves disposing of the asset for no cash. 2) When a business sells a plant asset for book value, a gain or loss should be recorded. 3) When a plant asset is discarded that is fully depreciated and has no residual value, the business will.

Learning Objective 9-4 1) The interest period extends from the original date of the note to the maturity date. 2) The maturity value of a note is the sum of the principal minus interest due at maturity. 3) If the maker of the note fails to repay the borrowed amount on the maturity.

21) On October 1, 2015, Android Inc. made a loan to one of its customers. The customer signed a 4-month note for $100,000 at 15%. Calculate the maturity value of the note. A) $105,000 B) $75,000 C) $25,000 D) $95,000 22) On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The.

31) At the beginning of 2015, Peter Dots has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the percent-of-sales method.

Learning Objective 10-6 1) The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested. 2) The asset turnover ratio is calculated by dividing cost of goods sold by average total assets. 3) Maple Company had net sales of $200,550 for the year ended December.

11) If a company uses the contra account, Accumulated Amortization, this account will typically be shown on the balance sheet. 12) Which of the following is an intangible asset? A) copyright B) building C) land D) equipment 13) Businesses are allowed to record goodwill: A) when they enjoy an outstanding reputation and loyalty with customers. B) if they.

Learning Objective 11-2 1) Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period, after taxes or any other deductions. 2) The old age, survivors, and disability insurance portion of FICA taxes is imposed on all of an individual employee's earnings. 3) The.

21) Which of the following is an example of exercise of internal control over receivables? A) separate cash collection and credit allowance duties B) extend credit only to customers who are most likely to pay C) pursue collection from customers to maximize cash flow D) ensure quick recovery of accounts receivable 22) Which of the.

11) A petty cash fund was established with a $350 balance. It currently has cash of $41 and petty cash tickets totaling $309. Which of the following would be included in the entry to replenish the fund? A) a credit to Petty Cash for $309 B) a debit to Petty Cash for.

11) Ordinary repairs to plant assets are referred to as revenue expenditures. 12) The cost of a building depends on whether the company is constructing the building by itself or is acquiring an existing one. 13) Which of the following is included in the cost of land? A) cost of fencing B) cost of.

11) Charles and Charms, a merchandiser, has an account receivable for $125 which they now decided to be uncollectible. The merchandiser uses the direct write-off method. Which of the following entries is required to record the write-off? A) Bad Debts Expense 125 Accounts Receivable 125 B) Cash 125 Accounts Receivable 125 C) Allowance for Bad Debts 125 Accounts Receivable 125 D) Accounts Receivable 125 Bad Debts Expense 125 12) On January.

11) Sales revenue for a sporting goods store amounted to $525,000 for the current period. All sales are on account and are subject to a sales tax of 9%. Which of the following would be included in the journal entry to record the sales? A) a debit to Sales Revenue for.

41) The bank statement reveals an EFT received from a customer that has not yet been recorded in the ledger. How would this information be included on the bank reconciliation? A) an addition on the bank side B) a deduction on the bank side C) a deduction on the book side D) an addition.

31) Iverycoast Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was 5 years, and its estimated residual value was $90,000. Iverycoast uses the straight-line method of depreciation. Give journal entry to record the purchase of van for cash. Van 800,000 Cash 800,000 32) Iverycoast Inc. purchased a van.

Learning Objective 8-3 1) Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received. 2) A receiving report should be matched with the.

Learning Objective 9-2 1) The direct write-off method of accounting for uncollectible receivables is primarily used by small, non-public companies. 2) The expense associated with the cost of uncollectible accounts receivable is known as bad debts expense. 3) Companies that follow GAAP are required to use the direct write-off method for uncollectible accounts.

11) If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue. 12) In a bank reconciliation, a book error will be shown on the bank side of the reconciliation. 13) In a bank reconciliation, outstanding checks will be shown on the bank side.

11) Which of the following are two methods of estimating uncollectible receivables? A) allowance method and amortization method B) aging-of-accounts-receivable method and percent-of-sales method C) gross-up method and direct write-off method D) direct write-off method and percent-of-completion method 12) The entry to write off an account receivable under the allowance method will: A) reduce net income. B).

11) A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as: A) Real Time Gross Settlement. B) Electronic Data Interchange. C) Electronic Fund Transfer. D) Evaluated Receipts Settlement. 12) Which of the following statements describes a.

21) When a check is issued, the party who is paying the cash is referred to as the: A) payee. B) maker. C) bank signatory. D) depositor. 22) Which of the following is a benefit of online banking to a business? A) The business can reconcile to the bank's balance at any time. B) The bank reconciliation.

51) Which of the following items are reconciling items on the bank side of the reconciliation? A) outstanding checks and correction of book error B) deposit in transit and NSF check C) deposit in transit and outstanding checks D) bank service charge and correction of book error 52) Which of the following items are reconciling.

Learning Objective 8-5 1) A demand deposit at a bank is the most liquid of all company assets. 2) The cash balance in a company's general ledger and the bank's balance on the bank statement will always be the same. 3) All items on the book side of the bank reconciliation require journal.

Learning Objective 8-6 1) When calculating the cash ratio, the numerator includes cash equivalents. 2) A cash equivalent is a highly liquid investment that can be converted into cash in three years or less. 3) Having a cash ratio below 1 is a good thing. 4) Cash is a highly liquid asset, but cash.