Accounting Expert Answers & Study Resources : Page 164

4.2   Learning Objective 4-2 1) The primary way that fraud and errors are prevented is by external auditors. 2) External auditors are responsible for maintaining a company's system of internal controls. 3) All employees should have a background check before being hired, and should be properly trained and supervised. 4) Small companies cannot have.

42) Sharon is the receptionist and office manager for The Best Construction Company. Sharon handles all of the office duties including billing, cash receipts, payroll, depositing checks and preparing the monthly bank reconciliation. She also prepares all of the checks for disbursements and is an authorized signer on all checks.

31) ________ will be increased when a company receives cash before performing the services. A) Prepaid Rent B) Accumulated Depreciation C) Unearned Sales Revenue D) Accrued Sales 32) The book value of a plant asset is the: A) accumulated depreciation less the cost of the asset. B) cost of the asset. C) balance in the accumulated depreciation account. D).

21) A payment packet of documents: A) reports the arrival of items purchased. B) is sent by the purchasing department to the vendor selling the item. C) identifies the need for merchandise and begins the purchasing process. D) includes the invoice, receiving report and purchase order. 22) When approving an invoice for payment: A) the receiving.

20) XYZ Company is preparing its cash budget for the upcoming year. It anticipates the following cash receipts and cash disbursements for the year: Collections from customers$ 921,400 Cash paid for operating expenses360,000 Interest and dividends received on investments12,000 Sale of machinery for cash45,000 Purchase of inventory for cash407,000 Payment of interest expense14,000 Payment for land175,000 Payment of.

89) Anya's Boutique has a note receivable. During the current year, Anya's Boutique has earned accrued interest revenue of $850 that it will collect next year. Prepare the journal entry to (A) record the accrued revenue and (B) to record the payment that Anya's Boutique will receive next year. 90) Complete.

43) Prepare the bank reconciliation for June 30 and make the journal entries that Apples Galore, Inc. should record on June 30 to update its cash account. •The bank statement indicated a monthly service charge of $110. •Janus made a deposit on June 30, but this deposit did not appear on the.

31) The rule that all major groups of transactions should be supported by hard copy documents or electronic records is part of the control procedure of: A) limited access. B) segregation of duties. C) adequate records. D) proper approvals. 32) A company has a policy that all checks over $5,000 need to have the signature.

3.3   Learning Objective 3-3 1) In an unadjusted trial balance, the accounts are not yet ready for the preparation of the company's financial statements. 2) Accounts Receivable and Common Stock are accounts that need to be adjusted at the end of the period. 3) Certain accounts do not need to be adjusted at.

  5.1   Learning Objective 5-1 1) Another term for short-term investments is held-to-maturity securities. 2) Short-term investments may be divided into held-to-maturity securities, trading securities and available-for-sale securities. 3) Short-term investments are the most liquid asset. 4) The purpose of a trading security is to hold it for a short term and then sell it.

45) Use the information below for Jamie Horiwitz Co. for March 31, to prepare a bank reconciliation to determine the balance in the Cash account as of March 31, before any reconciling items. •Adjusted bank balance as of March 31 was $6,365. •Outstanding checks totaled $850. •Bud Harper's check for $260 was returned.

11) The cost of office supplies used up during the period is an expense. 12) If deferred revenue has been earned by the end of the current period and no adjustment is recorded, net income for the current period will be understated. 13) Companies are required to record accrued expenses on a.

11) When a company receives cash by mail: A) all incoming mail containing cash receipts should be opened by the accounting department. B) the mailroom sends all customer checks to the internal audit department. C) the remittance advice goes to the accounting department for preparation of the journal entries. D) the bank deposit is.

86) Prepare the December 31 year-end adjusting entries for Missy's Tea Shoppe, Inc., using the following information: A)On December 1, Missy's Tea Shoppe received an advance payment of $3,930 to supply tea to a customer for the next three months. The amount of tea supplied each month will not vary. B)The unadjusted.

52) Debit Company just finished its first month of operations. The cash account contains the following information: Balance, January 1$0 Deposits: 1/2$1,000 1/10900 1/201,250 1/312,100 Total Deposits5,250 Checks: 101$300 102225 103 150 104  75 105450 106 250 107500 108 100 Total Checks2,050 Balance, January 31$3,200 Debit Company's January bank statement is shown below: Balance, January 1$0 Deposits and other credits: 1/2$1,000 1/11900 1/211,250 Interest103,160 Checks and other debits: 102300 103225 104150 105450 106250 EFT 100 Service charge  15(1,490) Balance, January 31 $1,670 Based on the.

81) The Book Company had the following adjustments at December 31, the end of the accounting period: A.The Book Company uses straight-line depreciation for its equipment. The amount of depreciation to be recorded for the equipment is $10,500. B.Accrued interest of $2,000 on a note receivable will be received in January. C.On November.

61) On August 1 of the current year, Jamie Simmons received $5,400 for legal services to be performed evenly throughout the next six months. The adjusting entry on December 31 of the current year would include a: A) credit to Unearned Service Revenue of $4,500. B) debit to Unearned Service Revenue of.

50) When preparing a bank reconciliation, several terms are used, which are listed below. Following the list is a series of definitions. a.bank collections b.bank reconciliation c.bank statement d.check e.deposits in transit f.electronic fund transfer g.nonsufficient funds check h.outstanding checks _____1.Document showing the beginning and ending balances of a particular bank account listing the                                           month's transactions.

71) On November 1, Phillips Tool and Die Company paid six months' insurance in advance totaling $9,000. An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of: A) $0. B) $3,000. C) $6,000. D) $9,000. 1,500 ∗ 2 months = 3,000 insurance expense 72) The balance in the.

32)  The ABC Jewelry Store sells mostly costume jewelry, but it also sells an expensive watch brand. The owner of the store is concerned about monitoring sales and inventory of the watches. He decided to perform a quick inventory count of the watches on a daily basis as a control.

28) The adjusted trial balance of Debit Company is shown below. Prepare the necessary closing entries. There were no dividends paid during the year. Debit Company Adjusted Trial Balance December 31, 2012 Cash$6,500 Accounts receivable8,000 Supplies1,000 Prepaid Rent (3 months)2,500 Equipment, net46,000 Accounts payable$4,000 Salary payable2,000 Unearned revenue (2 month advance)2,000 Note payable — long term14,000 Common stock10,000 Retained earnings14,700 Service revenue75,000 Salary expense40,000 Rent expense10,000 Supplies expense1,500 Depreciation.

4.4   Learning Objective 4-4 1) All cash receipts should be deposited in the bank on a weekly or monthly basis. 2) Internal controls for cash receipts over the counter and for cash receipts by mail are identical. 3) In a lock-box system, customers send payments into a special post office box. 4) The duties.

22) Mary's Dairy has the following information available for the preparation of the cash budget for the second quarter: Reconciled Cash balance March 31$  15,000 Sales for April220,000 Sales for May330,000 Sales for June440,000 Cost of Goods Sold is 80% of Sales Operating expenses is 8% of Sales Interest expense is paid in June80,000 Income tax rate is.

4.5   Learning Objective 4-5 1) A budget is a financial plan that helps coordinate business activities. 2) When preparing a cash budget, a company must determine how much cash it will need. 3) The cash-budget can span any length of time. 4) Cash equivalents include accounts receivable expected to be collected within 90 days.

48) The owner of ABC Inc. has reason to believe that an employee has been stealing cash from the company. The employee receives cash from clients, makes the bank deposit, and also prepares the monthly bank reconciliation. To check up on the employee, the owner               prepares his own bank.

11) There are three parties to a check. The person or company to whom the check is paid is the: A) maker. B) payee. C) draftee. D) promissee. 12) When preparing a bank reconciliation, which of the following items should be added to the book balance? A) EFT receipts B) Deposits in transit C) Collection items D) Both EFT.

11) After the closing entries are prepared: A) all asset accounts will have a zero balance. B) the Retained Earnings account will have the correct ending balance. C) the temporary accounts will have debit balances. D) all liability accounts will have a zero balance. 12) Accounts that relate to a limited period are called: A) asset.

3.4   Learning Objective 3-4 1) The balance sheet is the last financial statement to be prepared. 2) Net income for the period appears on the income statement and the balance sheet for the period. 3) The beginning balance of retained earnings appears on the Balance Sheet and the statement of retained earnings. 4) The.

11) ________ is the most common fraud, but ________ is the most expensive fraud. A) Fraudulent financial reporting, misappropriation of assets B) Misappropriation of assets, fraudulent financial reporting C) Misappropriation of assets, cooking the books D) Cooking the books, misappropriation of assets 12) ________ is the element in the fraud triangle results from either critical.

3.5   Learning Objective 3-5 1) The books need to be closed in order to prepare the accounts for the next period's transactions. 2) Temporary accounts are closed at the end of the accounting period. 3) During the closing process, each revenue account is credited for the amount of its balance. 4) The income statement.

25) After all the adjustments have been made, the following selected balances were taken from the adjusted trial balance of Evan's Ski Shop: Accounts Payable $10,000 Accounts Receivable3,000 Accumulated Depreciation 1,400 Depreciation Expense1,500 Dividends2,400 Insurance Expense1,750 Interest Revenue1,240 Prepaid Supplies2,320 Retained Earnings10,500 Salary Expense4,100 Service Revenue37,800 Journalize the entries to close the appropriate accounts. 26) The ABC Company has the following adjusted trial.

20) The Car Company uses the accrual basis of accounting. The company is having a poor year financially. In September, 2012, the company paid $3 million for advertisements that will run during the World Series in September and October of 2012. The bonus of the CEO is based on net.

40) There are five components of internal control. Match the following examples to the correct internal control component. Component:Examples: A) Control environment_____1. separating duties B) Risk assessment_____2. accounting software package C) Control procedures_____3. starts with the owner and top managers D) Monitoring of controls_____4. a food company's products may harm people E) Information system_____5. external auditor _____6..

11) The debt ratio measures a firm's ability to: A) pay current debt. B) pay long-term debt. C) purchase additional assets. D) pay both current and long-term debt. 12) Which of the following is correct regarding transactions and their effect on ratios? A) Lending agreements often require a company's current ratio to stay above 2.5. B) Lending.

31) There are two records of a business's cash: A) the cash account in the general ledger and the petty cash box. B) the cash account in the general ledger and the journal entries from the bank reconciliation. C) the bank statement and the cash account in the general ledger. D) the bank statement.

41) An accrual refers to an event where the: A) expense or revenue is not recorded until the cash settlement. B) liability is recorded after the cash settlement. C) expense or revenue is recorded before the cash settlement. D) asset is recorded only after the cash settlement. 42) At the end of the accounting period,.

4.3   Learning Objective 4-3 1) The person to whom a check is paid is referred to as the drawee. 2) The person performing the bank reconciliation should not have any other cash duties. 3) Outstanding checks are checks that have been recorded by the bank, but are not yet recorded on the books. 4).

  4.1   Learning Objective 4-1 1) One of the main elements of the fraud triangle is rationalization. 2) Perpetrators of fraud usually commit fraud for their own short-term economic gain. 3) Fraud is a major problem. 4) One of the most common types of fraud that impacts the financial statements is the misappropriation of assets. 5).

11) Which is NOT an objective of an internal control system? A) Safeguarding of assets B) Compliance with company policies C) Compliance with legal requirements D) Risk minimization 12) The objective of internal control that minimizes waste, which lowers costs and increases profits is: A) operational efficiency. B) asset safeguards. C) cost minimization. D) reliable accounting records. 13) The Sarbanes-Oxley.

22) Adjusting entries are: A) not needed under the accrual basis of accounting. B) prepared at the option of the accountant. C) prepared at the beginning of the accounting period to update all accounts. D) prepared at the end of the accounting period to update certain accounts. 23) The following accounts are up-to-date and need.

21) In a bank reconciliation, an EFT cash payment is: A) added to the bank balance. B) added to the book balance. C) deducted from the book balance. D) deducted from the bank balance. 22) Interest paid on a company's checking account should appear on the bank reconciliation as: A) added to the bank balance. B) added.

11) The budget period: A) must be for one year. B) can be for any length of time. C) must be for one month. D) is none of the above. 12) When reporting cash on the balance sheet, companies: A) show each bank account separately. B) combine cash with accounts receivable. C) include any restricted amounts. D) combine cash.

51) Which of the following is NOT a correct statement about adjusting entries? A) Every adjusting entry affects cash. B) Every adjusting entry affects the balance sheet. C) Every adjusting entry affects net income. D) Every adjusting entry must balance. 52) The adjustment for an accrued expense: A) increases expenses and decreases assets. B) increases expenses and.

3.6   Learning Objective 3-6 1) To analyze a company's financial position, decision makers use data and ratios computed from various items in the financial statements. 2) A current ratio below 1.0 is a sign of financial strength for a company. 3) A low debt ratio is safer than a high debt ratio. 4) The.

21) A fidelity bond is a(n): A) employment contract for a specified period of time. B) insurance policy that reimburses a company for employee theft. C) contract prohibiting former employees from working for a competitor. D) promise by a company to safeguard customers' personal information. 22) When a company is determining its risk assessment: A) the.

24) The ABC Company is preparing its cash budget for the upcoming year. ABC ended the previous year with cash of $20,000. Collections from customers are expected to total $105,000 for the year and payments for inventory are expected to be $87,000. Operating expense payments are budgeted at $26,000. During.

13) ABC Company has a balance of $20,340 in Retained Earnings as of January 1, 2012. For the year ended December 31, 2012, ABC had a net loss of $6,400. $4,000 was paid in dividends for the year. Prepare the Statement of Retained Earnings for the year ended 2012. 14) A.

23) Sam's Fancy Foods has the following Trial Balance as of March 31, 2012. Determine the current ratio. Account Debit Credit Cash 10,500 Accounts Receivable 3,800 Inventory 3,000 Store Supplies 1,900 Prepaid Rent 1,500 Land 28,000 Building 50,000 Accumulated Depreciation—Building 10,000 Store Equipment 27,000 Accumulated Depreciation—Store Equipment 15,625 Accounts Payable 9,000 Notes Payable due in one year 4,500 Salaries Payable 1,000 Unearned Revenue 12,000 Common Stock 31,655 Retained Earnings 4,920 Revenue 63,000 Rent Expense 7,000 Salaries Expense 14,000 Depreciation Expense—Building 3,500 Depreciation Expense—Store Equipment 1,500 TOTALS $151,700 $151,700 24) Sam's Fancy Foods has the following Trial Balance as of.

27) Indicate if the account is current asset (CA), long-term asset (LTA), current liability (CL), or long-term liability (LTL): 1.Accounts Payable________ 2.Accounts Receivable________ 3.Furniture________ 4.Income Tax Payable________ 5.Inventory________ 6.Land________ 7.Notes Payable due in 3 years________ 8.Short-Term Investments________ 9.Store Supplies________ 10.Unearned Rent________ 11.Intangible Assets________ 12.Interest Payable________ .

83) Eckle Ltd. has the following unadjusted trial balance as of March 31, 2012: Account Debit Credit Cash         600 Accounts Receivable       1,800 Inventory       3,000 Store Supplies       1,900 Prepaid Rent       1,500 Land     23,000 Building     50,000 Accumulated Depreciation–Building   7,500 Store Equipment      27,000 Accumulated Depreciation–Store Equipment 15,625 Accounts Payable 6,000 Notes Payable   2,500 Salaries Payable Unearned Revenue 8,000 Common Stock 31,655 Retained Earnings 2,520 Revenue 35,000 Rent Expense Store Supplies Expense Salaries Expense Depreciation Expense–Building Depreciation Expense–Store Equipment Totals   $108,800   .