Question 1
The balance of a control account in the general ledger
must equal the amount of total assets.
must equal the composite balance of individual accounts in arelated subsidiary ledger.
is always greater than the composite balance of individual accountsin a related subsidiary ledger.
must always be zero.
Question 2
The Foreign Corrupt Practices Act requires that all U.S.corporations under the juris-diction of the Securities and ExchangeCommission
have at least one foreign subsidiary.
must file reports with the National Commission on FraudulentFinancial Reporting.
maintain accounting records of foreign branches and subsidiaries inthe local foreign currency.
maintain an adequate system of internal control.
Question 3
Holliday Company's inventory records show the following data:
Units Unit Cost
Inventory, January 1 5,000 $9.00
Purchases: June 18 4,500 8.00
November 8 3,000 7.00
A physical inventory on December 31 shows 2,000 units on hand.Holliday sells the units for $12 each. The company has an effectivetax rate of 20%. Holliday uses the periodic inventory method.
Under the FIFO method, the December 31 inventory is valued at
$14,000.
$15,000.
$18,000.
$14,500.
Question 4
#4 A $100 petty cash fund has cash of $15 and receipts of $80. Thejournal entry to replenish the account would include a creditto
Cash for $85.
Cash for $80.
Petty Cash for $85.
Cash Over and Short for $5.
Question 5
Lee Industries had the following inventory transactions occurduring 2010:
Units Cost/unit
2/1/10 Purchase 18 $45
3/14/10 Purchase 31 $47
5/1/10 Purchase 22 $49
The company sold 51 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used, what is thecompany's gross profit using FIFO? (rounded to whole dollars)
$772
$848
$2,441
$2,365
# 6 Wright sells softball equipment. On November 14, they shipped$1,000 worth of softball uniforms to Paola Middle School, terms2/10, n/30. On November 21, they received an order from DouglasHigh School for $600 worth of custom printed bats to be produced inDecember. On November 30, Paola Middle School returned $100 ofdefective merchandise. Wright has received no payments from eitherschool as of month end. What amount will be recognized as netaccounts receivable on the balance sheet as of November 30?
$1,500
$1,000
$1,600
$900
Question 7
Two individuals at a retail store work the same cash register. Youevaluate this situation as
a violation of establishment of responsibility.
supporting internal independent verification.
a violation of segregation of duties.
supporting the establishment of responsibility.
Question 8
Kershaw Bookstore had 500 units on hand at January 1, costing $18each. Purchases and sales during the month of January were asfollows:
Date Purchases Sales
Jan. 14 375 @ $28
17 250 @ $20
25 250 @ $22
29 250 @ $32
Kershaw does not maintain perpetual inventory records. According toa physical count, 375 units were on hand at January 31.
The cost of the inventory at January 31, under the LIFO methodis:
$8,000.
$6,750.
$7,750.
$1,000.
Question 9
A company has an average inventory on hand of $40,000 and the daysin inventory is 73 days. What is the cost of goods sold?
$2,920,000
$1,460,000
$200,000
$400,000
Question 10
An aging of a company's accounts receivable indicates that $9,000are estimated to be uncollectible. If Allowance for DoubtfulAccounts has a $1,100 credit balance, the adjustment to record baddebts for the period will require a
debit to Allowance for Doubtful Accounts for $7,900.
debit to Bad Debts Expense for $7,900.
debit to Bad Debts Expense for $9,000.
credit to Allowance for Doubtful Accounts for $9,000.
# 11 The accountant at Reber Company has determined that incomebefore income taxes amounted to $6,750 using the FIFO costingassumption. If the income tax rate is 30% and the amount of incometaxes paid would be $225 greater if the LIFO assumption were used,what would be the amount of income before taxes under the LIFOassumption?
$6,525
$6,975
$7,500
$6,090
Question 12
Tyler, Inc. had the following bank reconciliation at March 31.2010:
Balance per bank statement, 3/31/10 $37,200
Add: Deposit in transit 10,300
47,500
Less: Outstanding checks 12,600
Balance per books, 3/31/10 $34,900
Data per bank for the month of April 2010 follow:
Deposits $46,700
Disbursements 49,700
All reconciling items at March 31, 2010 cleared the bank in April.Outstanding checks at April 30, 2010 totaled $6,000. There were nodeposits in transit at April 30, 2010. What is the cash balance perbooks at April 30, 2010?
$28,200
$31,900
$34,200
$38,500
Question 13
Which of the following is not an advantage of a subsidiaryledger?
Helps locate errors in individual accounts.
Puts greater detail in the general ledger.
Makes possible a division of labor.
Shows transactions affecting one customer or one creditor in asingle account.
Question 14
The use of special journals to record transactions
can save time in the posting process.
eliminates the need for a general ledger.
should only be used if the volume of transactions is small.
eliminates the need for a general journal.
Question 15
On March 1, 2010, Joe Miles purchased a suit at Calvin's FineApparel Store. The suit cost $250 and Joe used his Calvin creditcard. Calvin charges 2% per month interest if payment on creditcharges is not made within 30 days. On April 30, 2010, Joe had notyet made his payment. What entry should Calvin make on April30th?
Bad Debts Expense 245
Interest Expense 5
Accounts Receivable 250
Accounts Receivable 5
Interest Revenue 5
Accounts Receivable 255
Interest Revenue 5
Sales 250
Uncollectible Account 250
Accounts Receivable 250
Question 16
A company just starting business made the following four inventorypurchases in June:
June 1 150 units $390
June 10 200 units 585
June 15 200 units 630
June 28 150 units 495
$2,100
A physical count of merchandise inventory on June 30 reveals thatthere are 200 units on hand. Using the average-cost method, theamount allocated to the ending inventory on June 30 is
$1,500.
$575.
$600.
$2,100.
Question 17
A sales journal is used to record
only cash sales of merchandise.
credit sales of merchandise, sales returns and allowances, andsales discounts.
sales of all assets on credit and for cash.
only credit sales of merchandise.
Question 18
Assume the following sales data for a company:
2011 $945,000
2010 845,000
2009 650,000
If 2009 is the base year, what is the percentage increase in salesfrom 2009 to 2010?
130%
23%
30%
77%
Question 19
Rodgers Company lends Lanier Company $30,000 on April 1, acceptinga four-month, 9% interest note. Rodgers Company prepares financialstatements on April 30. What adjusting entry should be made beforethe financial statements can be prepared?
Notes Receivable 30,000
Cash 30,000
Interest Receivable 225
Interest Revenue 225
Cash 225
Interest Revenue 225
Interest Receivable 900
Interest Revenue 900
Question 20
Walker Clothing Store had a balance in the Accounts Receivableaccount of $390,000 at the beginning of the year and a balance of$410,000 at the end of the year. Net credit sales during the yearamounted to $2,000,000. The average collection period of thereceivables in terms of days was
30 days.
146 days.
73 days.
365 days.
Question 21
If a check correctly written and paid by the bank for $428 isincorrectly recorded on the company's books for $482, theappropriate treatment on the bank reconciliation would be to
deduct $54 from the bank's balance.
deduct $428 from the book's balance.
add $54 to the bank's balance.
add $54 to the book's balance
Question 22
The current assets of Kile Company are $150,000. The currentliabilities are $100,000. The current ratio expressed as aproportion is
$150,000 ÷ $100,000.
150%.
.67 : 1
1.5 : 1
Question 23
Accounts Receivable and Accounts Payable are examples of
subsidiary ledger accounts.
both nominal accounts and controlling accounts.
nominal accounts.
controlling accounts
Question 24
Hahn Company uses the percentage of sales method for recording baddebts expense. For the year, cash sales are $500,000 and creditsales are $2,000,000. Management estimates that 1% is the salespercentage to use. What adjusting entry will Hahn Company make torecord the bad debts expense?
Bad Debts Expense 20,000
Allowance for Doubtful Accounts 20,000
Bad Debts Expense 20,000
Accounts Receivable 20,000
Bad Debts Expense 25,000
Accounts Receivable 25,000
Bad Debts Expense 25,000
Allowance for Doubtful Accounts 25,000
Question 25
A successful grocery store would probably have
a high inventory turnover.
low volume.
zero profit margin.
a low inventory turnover.
Question 26
Richmond's Wholesale uses a sales journal. An entry in this journalrepresents a
debit to Cash; credit to Sales.
debit to Accounts Payable; credit to Sales Returns andAllowances.
debit to Accounts Receivable; credit to Sales.
debit to Sales Discounts; credit to Cash.
Question 27
In the month of November, Coler Company Inc. wrote checks in theamount of $9,250. In December, checks in the amount of $12,658 werewritten. In November, $8,468 of these checks were presented to thebank for payment, and $10,883 were presented in December. What isthe amount of outstanding checks at the end of November?
$1,775
$782
$3,550
$2,557
Question 28
On February 1, Platt Company received a $9,000, 10%, four-monthnote receivable. The cash to be received by Platt Company when thenote becomes due is
$9,000.
$9,300.
$9,900.
$300.
Question 29
Gold Clothing Store had a balance in the Accounts Receivableaccount of $820,000 at the beginning of the year and a balance of$880,000 at the end of the year. Net credit sales during the yearamounted to $7,650,000. The receivables turnover ratio was
4.5 times.
8.7 times.
9.3 times.
9.0 times.
Question 30
Widner Company understated its inventory by $10,000 at December 31,2010. It did not correct the error in 2010 or 2011. As a result,Widner's owner's equity was:
overstated at December 31, 2010, and overstated at December 31,2011.
understated at December 31, 2010, and overstated at December 31,2011.
understated at December 31, 2010, and properly stated at December31, 2011.
understated at December 31, 2010, and understated at December 31,2011.
