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40 Accounting Multiple Choice Questions

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Question;1. At the end of the day, the cash register's record shows $1,250, but the count of cash inthe cash register is $1,245. The correct entry to record the cash sales is2. The entry necessary to establish a petty cash fund should include:A. A debit to Cash and a credit to Petty Cash.B. A debit to Cash and a credit to Cash Over and Short.C. A debit to Petty Cash and a credit to Cash.D. A debit to Petty Cash and a credit to Accounts Receivable.E. A debit to Cash and a credit to Petty Cash Over and Short.23. When a petty cash fund is in use:A. Expenses paid with petty cash are recorded when the fund is replenished.B. Petty Cash is debited when funds are replenished.C. Petty Cash is credited when funds are replenished.D. Expenses are not recorded.E. Cash is debited when funds are replenished.4. On a bank reconciliation, an unrecorded debit memorandum for a $15 fee for printing checksis:A. Noted as a memorandum only.B. Added to the book balance of cash.C. Deducted from the book balance of cash.D. Added to the bank balance of cash.E. Deducted from the bank balance of cash.5. A company made a bank deposit on September 30 that did not appear on the bank statementdated as of September 30. In preparing the September 30 bank reconciliation, the companyshould:A. Deduct the deposit from the bank statement balance.B. Send the bank a debit memorandum.C. Deduct the deposit from the September 30 book balance and add it to the October 1 bookbalance.D. Add the deposit to the book balance of cash.E. Add the deposit to the bank statement balance.6. In comparing the canceled checks on the bank statement with the entries in the accountingrecords, it is found that check number 4239 for November's rent was correctly written and drawnfor $3,790 but was erroneously entered in the accounting records as $7,390. When preparing theNovember bank statement, the company should:A. Deduct $3,600 from the book balance of cash.B. Add $3,700 to the bank statement balance.C. Add $7,390 to the book balance of cash.D. Deduct $3,600 from the bank statement balance.E. Add 3,600 to the book balance of cash.7. When the account Cash Short and Over has a debit balance, ita) Is an expense and is reported on the income statementb) Is a revenue and is reported on the income statementc) Is an asset and is reported on the balance sheetd) Is a liability and is reported on the balance sheet38. The "allowance for doubtful accounts" is an example of aa.b.c.d.Expense AccountContra AccountAdjunct AccountControl Account9. The maturity value for a 2 month, 12% note for $15,000 isa.b.c.d.e.$14,700$15,000$15,300$16,200none of the above10. If the direct write off method of accounting for uncollectible receivables is used,what ledger account is debited to write off a customer's account?a.b.c.d.e.Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseUncollectible Accounts PayableNone of the above11 If the allowance method of accounting for uncollectible receivables is used, whatledger account is debited to write off a customer's account?(choose from answers to #10 above)12. Allowance for Doubtful Accounts has a credit balance of $900 at the end of the year(before adjustments), and an analysis or aging of accounts indicates doubtfulaccounts of $15,000. Which of the following entries would be the proper adjustmentto make?a.b.c.d.e.debit Bad Debt Expense $900, credit Allowance for Doubtful Accts. $900debit Bad Debt Expense $14,100, credit Allowance for Doubtful Accts. $14,100debit Allowance for Doubtful Accts. $900, credit Bad Debt Exp. $900debit Allowance for Doubtful Accts. $15,900, credit Bad Debt Exp. $15,900none of the above13. When a company using the allowance method writes off a specific accountreceivable:a) there is a decrease in net incomeb) there is a decrease in net realizable value of accounts receivablec) there is no effect on net incomed) there is a increase in net realizable value of accounts receivablee) none of the above414. The Green Acres Company uses the allowance method. In January, it wrote off$650 balance of one of its customers, J. Garcia. Garcia later paid the balance in fullin August. Green Acres should make what entry/entries in August?a) Cash650Accounts Receivable J. Garcia650b) Cash650Bad Debt Expense650c) Accounts Receivable J. Garcia650Allowance for Doubtful Accounts650Cash650Accounts Receivable J. Garcia650d) Accounts Receivable _ J. Garcia650Bad Debt Expense650Cash650Accounts Receivable J. Garcia65015. Accounts receivable has a balance of $430,000, Bad Debt expense has a balanceof $20,000, Allowance for Doubtful Accounts has a credit balance of $25,000.Net Accounts Receivable is:a) $410,000b) $405,000c) $430,000d) $455,000e) none of the above16. The Allowance for Doubtful Accounts has a debit balance of $800 at the end of theyear before adjustment. Uncollectible accounts are estimated to be 1% of net sales.If net sales are $500,000, the amount of the adjusting entry is:a) $800b) $4200c) $5000d) $5800e) none of the above17. A 90 day note dated April 20th is due:a)b)c)d)July 18July 19July 20July 21518. The control account in the general ledger that is the sum of all the customersaccounts in the subsidiary ledger isa)b)c)d)e)Allowance for Doubtful AccountsAccounts payableNotes payableAccounts receivablenone of the above19. A depositors cash account is carried on the books of the bank asa) a revenueb) an owners equity accountc) a liabilityd) an assete) none of the above20. What effect will it have on the financial statements if a business fails to make theyear-end adjusting entry to record the estimated bad debts (assuming that thecompany uses the allowance method)?a)b)c)d)Net income is understated, assets are understatedNet income is overstated, assets are overstatedNet income is understated, assets are overstatedNet income is overstated, assets are understated#21 - 24 are based on the following information:6On September 1, 2007 a $4800, 6 month, 10% note is accepted on account.21. The journal entry for the acceptance of the note on the accceptors (payee) books is:a.b.c.d.Debit Accounts Payable 4800, Credit Notes Payable 4800Debit Notes Receivable 4800, Credit Accounts Payable 4800Debit Accounts Receivable 5040, Credit Notes Receivable 5040Debit Notes Receivable 4800, Credit Accounts Receivable 480022. The adjusting entry needed on December 31 for the accrued interest on the makers(payor) books is:a.b.c.d.e.Debit Interest Exp. 240, Credit Interest Payable 240Debit Interest Receivable 120, Credit Interest Revenue 120Debit Interest Exp. 160, Credit Interest Payable 160Debit Interest Revenue 160, Credit Interest Receivable 160none of the above23. The adjusting entry needed on December 31 for the accrued interest on theacceptors books is:(select from answers in #22 above)24. The maturity value of the note is:a.b.c.d.e.$5040$4800$5280$4880None of the above25. If the actual cash receipts at the end of the day are larger than what the cash registerhas recorded as actual days sales revenue, then:a)b)c)d)Sales Revenue is debited for the differenceSales Revenue is credited for the differenceCash Short and Over is debited for the differenceCash Short and Over is credited for the difference726. When comparing the two methods of accounting for bad debts, which of thefollowing statements are true:a) the direct write-off method is exact and also better illustrates the matching conceptb) the allowance method is less exact, but it better illustrates the use of the matchingconceptc) the direct write-off method is theoretically superior for GAAPd) the direct write method requires two separate entries to write off an uncollectibleaccount27. When the direct write off method is used to write off a specific customer account,there will be:a) an increase in net incomeb) have no effect on net incomec) increase in net accounts receivable and increase in net incomed) decrease in net accounts receivable and decrease in net income28. When the allowance method is used to write off a specific customer account, theeffect will be:(choose from # 27 above)29.Depreciation:A) Measures the decline in market value of an asset.B) Measures physical deterioration of an asset.C) Is the process of allocating to expense the cost of a plant asset.D) Is an outflow of cash from the use of a plant asset.E) Is applied to land.30.The modified accelerated cost recovery system (MACRS):A) Is included in the U.S. federal income tax rules for depreciating assets.B) Is required for tax reporting.C) Is required for financial reporting.D) Is identical to units of production depreciation.E) All of the above.831.A company purchased a rope braiding machine for $190,000. The machine has auseful life of 8 years and a residual value of $10,000. It is estimated that themachine could produce 750,000 units of climbing rope over its useful life. In thefirst year, 105,000 units were produced. In the second year, production increased to109,000 units. Using the units-of-production method, what is the amount ofdepreciation that should be recorded for the second year?A) $25,200.B) $26,160.C) $26,660.D) $27,613.E) $53,160.32. A company discarded a display case it had originally purchased for $8,000. The casehad $7,200 worth of accumulated depreciation. The company should recognize a (an):A) $0 gain or loss.B) $800 loss.C) $800 gain.D) $8,000 loss.E) $7,200 loss.33. Natural resources:A) Include standing timber, mineral deposits, and oil and gas fields.B) Are also called wasting assets.C) Are long-term assets.D) Are depleted.E) All of the above.34. A company purchased a mineral deposit for $800,000. It expects this property toproduce 1,200,000 tons of ore and to have a salvage value of $50,000. In the currentyear, the company mined and sold 90,000 tons of ore. Its depletion expense for thecurrent period equals:A) $ 15,000.B) $ 60,000.C) $150,000.D) $ 56,250.E) $139,500.35. Intangible assets include:A) Patents.B) Copyrights.C) Trademarks.D) Goodwill.E) All of the above.36.9Amortization:A) Is the systematic allocation of the cost of an intangible asset to expense over itsestimated useful life.B) Is the process of allocating to expense the cost of a plant asset to the accountingperiods benefiting from its use.C) Is the process of allocating the cost of natural resources to periods when they areconsumed.D) Is an accelerated form of expensing an asset's cost.E) Is also called depletion.37.In order to calculate periodic depreciation expense, which of the following is nota necessary requirement to be known:a) its acquisition costb) its salvage valuec) the amount of the cash down paymentd) the estimated useful lifee) all of the above is used to figure out the amount of depreciation expense38.Patents are:a) amortizedb) depletedc) depreciatedd) expensed in the year the cost of the patent in incurrede) treated the same as Land39. A company bought a piece of equipment for $200,000. In addition, it cost$40,000 for delivery, installation, and calibration in order to use it. Theestimatedlife of the equipment is 4 years with a salvage value of $8,000. Assuming thestraight line depreciation method is used, what will be the book value after thesecond year of operations?a) $116,000b) $124,000c) $104,000d) $48,000e) $58,00040.A plant asset with a cost of $30,000 and accumulated depreciation of $27500,is sold for $3500. What is the amount of gain or loss on the sale?a) 2500 gainb) 2500 lossc) 1000 gaind) 1000 losse) none of the above

 

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