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Question 14 pts

The five components to a system of internal controls include all of the following except:

control procedure
risk assessment
safeguarding assets
monitoring controls

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Question 24 pts

An automobile company testing brakes on new vehicles is part of:

control procedure
risk assessment
information systems
monitoring controls

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Question 34 pts

Which account would we debit to open a new petty cash fund?

cash
petty cash
miscellaneous expense
petty cash expense

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Question 44 pts

Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?

a credit to petty cash for $127
a debit to travel expenses for $125
a credit to cash over and short for $2
a credit to cash for $125

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Question 54 pts

On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?

deposit
NSF check (non-sufficient funds)
service charge
Payments made by EFT (electronic fund transfer)

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Question 64 pts

Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?

$7,000
$9,000
$11,000
$13,000

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Question 74 pts

Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?

bad debt expense
accounts receivable
allowance for doubtful accounts
cash

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Question 84 pts

Where does allowance for doubtful accounts appear on our financial statements?

on balance sheet as a current liability
on income statement as part of cost of goods sold
on balance sheet as a contra asset related to accounts receivable
on the statement of retained earnings as a deduction from net income

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Question 94 pts

At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?

bad debt expense, $30,000
allowance for doubtful accounts, $30,000
bad debt expense, $20,000
accounts receivable, $20,000

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Question 104 pts

On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?

interest revenue, $300
interest revenue, $350
interest receivable, $300
interest receivable, $350

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Nelly StrackeLv2
28 Sep 2019

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A) Winningham Company maintains a petty cash fund for smallexpenditures. The following transactions occurred over a 2-monthperiod.

July 1 Established petty cash fund by writing a check on Cubs Bankfor $200.
15 Replenished the petty cash fund by writing a check for $196.00.On this date the fund consisted of $4.00 in cash and the followingpetty cash receipts: freight-out $94.00, postage expense $42.40,entertainment expense $46.60, and miscellaneous expense$11.20.
31 Replenished the petty cash fund by writing a check for $192.00.At this date, the fund consisted of $8.00 in cash and the followingpetty cash receipts: freight-out $82.10, charitable contributionsexpense $45.00, postage expense $25.50, and miscellaneous expense$39.40.

Aug. 15 Replenished the petty cash fund by writing a check for$187.00. On this date, the fund consisted of $13.00 in cash and thefollowing petty cash receipts: freight-out $75.60, entertainmentexpense $43.00, postage expense $33.00, and miscellaneous expense$37.00.
16 Increased the amount of the petty cash fund to $300 by writing acheck for $100.
31 Replenished petty cash fund by writing a check for $284.00. Onthis date, the fund consisted of $16 in cash and the followingpetty cash receipts: postage expense $140.00, travel expense$95.60, and freight-out $47.10.







B) Post to the Petty Cash account. (If answer is zero, please enter0. Do not leave any fields blank.)
Cash

No. 101

Date Explanation Ref. Debit Credit Balance
July 1 CP
Aug. 16 CP

Suppose that on September 1, Lavene Motors opens a new showroomin Napanee, Ontario, and creates a petty cash fund with an imprestbalance of $500. During, September, Lisa Manfield, the fundcustodian, signs the petty cash tickets shown below.

TicketNo. Item Amount

1 Courier for packagereceived $49.67

2 Refreshments for showroomopening $101.00

3 Computerdisks $88.07

4 Officesupplies $7.50

5 Dinner money for sales managerentertainment $87.50

On September 30, prior to replenishment, the fund contains thesetickets plus $161.34. The accounts affected by petty cash paymentsare Office Supplies Expenses, Entertainment expenses, and DeliveryExpenses.

1. Explain the characteristics and the internal control features of animprest fund.

2. On September 30, how much cash should this petty cash fund holdbefore it is replenished?

3. Make the general journal entries to (A) create the fund and (B)replenish it. Include explanation.

4. Due to the risk of robbery, make the entry on October 1 to decreasethe fund balance to $400. Include explanation.

Req.1


Req. 2

Req. 3. (a) (creation ofthe petty cash fund)

General Journal

DATE

ACCOUNT TITLES AND EXPLANATIONS

POST. REF.

DEBIT

CREDIT

Ù­

Ù­

Ù­

Ù­ (b) (replenishment of the petty cash fund)

General Journal

DATE

ACCOUNT TITLES AND EXPLANATIONS

POST. REF.

DEBIT

CREDIT

(continued)P8-8B

Req. 4 (decreasing the amount of the petty cashfund)

General Journal

DATE

ACCOUNT TITLES AND EXPLANATIONS

POST. REF.

DEBIT

CREDIT

1 of 50

Investments in debt securities, such as bonds, may be classifiedas either current or long-term assets.

True
False

Question

2 of 50

Marketable securities that are held until the due date of thesecurities are

trading and held-to-maturitysecurities.
available-for sale securities.
held-to-maturity securities.
trading securities.

Question

3 of 50

Which of the following business types is most common as measuredby the amount of business transacted?

Government entities
Proprietorships
Partnerships
Corporations

Question

4 of 50

Depreciation is based upon cost, useful life, and salvagevalue.

True
False

Question

5 of 50

Because depreciation is not cash-based, it is NOT reported inthe direct method of the statement of cash flows.

True
False

Question

6 of 50

A company has a petty cash fund of $200. At the end of themonth, $6.41 remains in the fund along with $190.96 in variousreceipts. The journal entry to replenish the fund would show adebit(s) to

various expenses for $190.96 andCash Short of $2.63.
Cash for $190.96.
Cash for $193.59.
various expenses for $190.96 andCash Over of $2.63.

Question

7 of 50

A 12-month, 8% note dated August 1, 2013 for $5,000 would haveaccrued interest payable on December 31, 2013 of $166.67.

True
False

Question

8 of 50

Warranty expense must be estimated and matched to revenues.

True
False

Question

9 of 50

Upgrading the RAM on a computer would be an example of a(n)

capital expense.
betterment.
ordinary repair.
extraordinary repair.

Question

10 of 50

The formula for the quick ratio is quick assets divided bynoncurrent assets.

True
False

Question

11 of 50

Which of the following are considered to be legal entities thatexist separate and distinct from their owners?

Sole proprietorships
Organizations with more than 100partners
Partnerships
Corporations

Question

12 of 50

Patents and copyrights can be seen, held, or touched.

True
False

Question

13 of 50

Which of the following would be considered part of the cost ofmachinery and equipment?

Repairs after start-up
Insurance after purchase
Maintenance
Sales taxes

Question

14 of 50

The business or person that signs the note and promises to paythe required amount is called the payee.

True
False

Question

15 of 50

Conley Company has a petty cash fund of $300. At the end of themonth, $42.38 remains in the fund along with $260.75 in variousreceipts. The journal entry to replenish the fund would bedebit

Petty Cash for $257.62 and creditCash for $257.62.
various expenses, $260.75 andcredit Cash for $260.75.
various expenses, $260.75, creditCash Over for $3.13, and credit Cash for $257.62.
various expenses, $254.49, debitCash Short for $3.13, and credit Cash for $257.62.

Question

16 of 50

Neither land nor land improvements are depreciated.

True
False

Question

17 of 50

Using a 365-day year, the maturity value of a 180-day note for$2,700 at 9% annual interest is (rounded to the nearest cent)

$2,819.84.
$2,821.50.
$2,943.00.
$ 119.84.

Question

18 of 50

On January 1, Bestway, Inc. signed a $175,000, 8%, 30-yearmortgage that requires semiannual payments of $7,735 on June 30 andDecember 31 of each year. The journal entry to record the secondsemiannual payment would be (round interest calculation to thenearest dollar) to

debit Interest expense, $764; debitMortgage payable, $6,971; credit Cash, $7,735.
debit Mortgage payable, $7,735;credit Cash, $7,735.
debit Interest expense, $6,971;debit Mortgage expense, $764; credit Cash, $7,735.
debit Interest expense, $6,971;debit Mortgage payable, $764; credit Cash, $7,735.

Question

19 of 50

Allied Industries purchased a piece of equipment for $65,000with an estimated salvage value of $15,000 on January 1. Itsestimated life is five years. To the nearest dollar, what is theequipment's depreciation using double-declining-balance for yeartwo?

$ 26,000
$ 12,000
$ 20,000
$ 15,600

Question

20 of 50

Payroll is also called employee compensation and can consist ofmany parts.

True
False

Question

21 of 50

The number of shares of stock that a corporation is given theright to sell is called

authorized stock.
issued stock.
outstanding stock.
capital stock.

Question

22 of 50

Which of the following would NOT be considered part of the costof machinery and equipment?

In-transit insurance costs
Delivery charges
Installation costs
Repairs and maintenance afterstart-up

Question

23 of 50

Equipment costing $118,000 has accumulated depreciation of$92,000. The equipment is a trade-in for new equipment costing$187,000. If the trade-in value received for the old equipment is$30,000, the journal entry to record this transaction is to

debit Equipment (New) for $187,000,debit Accumulated Depreciation – Equipment for $92,000, creditEquipment (Old) for $118,000, and credit Cash for $161,000.
debit Equipment (New) for $187,000and credit Cash for $187,000.
debit Accumulated Depreciation –Truck for $50,000, debit Loss on Disposal $6,000, and credit Truckfor $56,000.
debit Equipment (New) for $187,000,debit Accumulated Depreciation – Equipment for $92,000, debit Losson Exchange of Assets for $26,000, credit Equipment (Old) for$118,000 and credit Cash for $187,000.

Question

24 of 50

Liberty Company has declared a $40,000 cash dividend toshareholders. The company has 5,000 shares of $20-par, 6% preferredstock and 10,000 shares of $15-par common stock. The preferredstock is cumulative. How much will be distributed to the preferredand common stockholders on the date of payment if the preferredstock is $12,000 in arrears?

$18,000 preferred, $22,000common
$20,000 preferred, $20,000common
$6,000 preferred, $34,000common
$40,000 preferred, $0 common

Question

25 of 50

In accounting, what is the meaning of capitalized?

Capitalized means that a given cityhas been selected as a government center.
Capitalized means that the cost ofan asset is recorded as a debit (increase) to expense.
Capitalized means that a liabilityaccount is credited (increase
Capitalized means that an assetaccount is debited (increased) for the cost of an asset.

Question

26 of 50

Interest is an expense to the debtor and income to thecreditor.

True
False

Question

27 of 50

Cash consists of anything that a bank will take as adeposit.

True
False

Question

28 of 50

The cost of long-term assets must be allocated to an expense asthe asset is used up.

True
False

Question

29 of 50

The process of acquiring merchandise from a supplier begins withthe

purchase order.
check for payment.
receiving report.
invoice.

Question

30 of 50

Appleway Corporation purchases a machine for $125,000. It has anestimated salvage value of $10,000 and is expected to produce50,000 units in its lifetime. During the first year of operation,it produced 14,500 units. To the nearest dollar, the depreciationfor the first year under the units of production method will be

$35,500.
$31,250.
$36,250.
$33,350.

Question

31 of 50

Book value is depreciable cost minus accumulateddepreciation.

True
False

Question

32 of 50

The records of Inland Equipment showed a net loss of $30,000,depreciation expense of $25,000, and an increase in supplies onhand of $5,000. The amount of net cash flow from operatingactivities using the indirect method is

($10,000).
$15,000.
$20,000.
($15,000).

Question

33 of 50

Retained earnings represent internally generated capital.

True
False

Question

34 of 50

A company issues 15,000 shares of its $25 par common stock for$29 per share. The amount to be debited to Cash is

$435,000.
$375,000.
$405,000.
$ 60,000.

Question

35 of 50

On September 1, 2012, Juno Corp. lent $2,400 to Bill Askins on asix-month 8% promissory note. The journal entry to record the notefor Juno Corp. would be to:

debit Note Receivable/Tim, $2,400;credit Cash, $2,400.
debit Note Receivable/Tim, $96;credit Interest Income, $96.
debit Note Receivable/Tim, $2,496;credit Cash, $2,496.
debit Cash, $2,400; credit NotePayable/Tim, $2,400.

Question

36 of 50

Separation of duties is essential for internal control over cashreceipts and cash payments.

True
False

Question

37 of 50

Which of the following would indicate poor internal control overaccounts receivable?

The same person handling cashreceipts also records the accounts receivable transactions.
The person handling cash receiptspasses the receipts to someone who enters them into accountsreceivable.
The mailroom employees open themail and give the cash receipts to another employee.
The person who handles accountsreceivable would not write off accounts as uncollectible.

Question

38 of 50

Limited liability means that the stockholders of a corporationshare a personal liability for all debts of the corporation.

True
False

Question

39 of 50

Accumulated depletion is a(n)

contra-asset account.
cash account.
contra-liability account.
expense account.

Question

40 of 50

Allied Industries reported net income of $52,000, depreciationexpenses of $13,000, a gain on a land sale of $3,000, and adecrease in accounts receivable of $1,500. Under the indirectmethod, net cash flows from operations is

$63,500.
$66,500.
$69,500.
$60,555.

Question

41 of 50

The portion of stockholders' equity that can be used fordividends is referred to as legal capital.

True
False

Question

42 of 50

Franklin Industries had total assets of $560,000; totalliabilities of $250,000; and total stockholders' equity of$310,000. Franklin Industries debt ratio is

55.4%.
28.7%.
44.6%.
80.6%.

Question

43 of 50

Financial analysis is used to predict the future of abusiness.

True
False

Question

44 of 50

Online banking should NOT be used to reconcile the bankaccount.

True
False

Question

45 of 50

Costs of testing machinery or equipment before they are usedwould be included in the price of the machinery or theequipment.

True
False

Question

46 of 50

There are two methods for accounting for uncollectiblereceivables.

True
False

Question

47 of 50

Assets that are NOT expected to provide benefits for a number ofaccounting periods are called

current assets.
property, plant, andequipment.
long-term assets.
natural resources.

Question

48 of 50

The allowance method of accounting for bad debts is required byGAAP because of the materiality principle.

True
False

Question

49 of 50

A stock dividend affects total stockholders' equity.

True
False

Question

50 of 50

Realized gains and losses only occur when the security is soldfor more or less than the original cost.

True
False

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