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1. The Sales Returns and Allowances A) account is presented on the balance sheet as a deduction from Accounts Receivable.

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1. The Sales Returns and Allowances;A) account is presented on the balance sheet as a deduction from Accounts Receivable.;B) on the income statement as a deduction from Sales.;C) on the income statement as an addition to Sales.;D) on the balance sheet as a deduction from Capital.;2. If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were;A) $54,000.;B) $50,000.;C) $46,000.;D) $4,000.;3. The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes;A) a debit to Return Expense and a credit to Accounts Receivable.;B) a debit to Sales and a credit to Sales Returns and Allowances.;C) a debit to Sales Returns and Allowances and a credit to Accounts Receivable.;D) a debit to Accounts Receivable and a credit to Sales Returns and Allowances.;4. With the accrual basis of accounting, it is appropriate to recognize revenue from a credit sale;A) on the date of the sale.;B) on the date the account is collected in full.;C) each time a payment on an account balance is received.;D) either on the date of the sale or when the amount of the sale is collected.;5. On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for;A) $800.;B) $1,000.;C) $1,200;D) $200;6. When the allowance method of recognizing losses from uncollectible accounts is used, the entry to record the write-off of a specific account consists of;A) a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.;B) a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.;C) a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.;D) a debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.;7. A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for;A) $1,200;B) $1,500;C) $1,800;D) $3,000;8. When a firm uses the allowance method to provide for losses, the collecting of an account previously written off as uncollectible requires an entry;A) to reinstate the account receivable.;B) to increase the balance of the Sales account.;C) to reduce the balance of Uncollectible Accounts Expense.;D) to decrease the balance of the Allowance for Doubtful Accounts.;9. On December 31, prior to adjustments, the balance of Accounts Receivable is $16,000 and Allowance for Doubtful Accounts has a credit balance of $95. The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for;A) $705.;B) $800.;C) $895.;D) $95.;10. The adjusting entry to record accrued interest on a note receivable requires;A) a debit to Interest Income and a credit to Notes Receivable.;B) a debit to Interest Receivable and a credit to Interest Revenue.;C) a debit to Interest Revenue and a credit to Cash.;D) a debit to Interest Revenue and a credit to Interest Receivable.;11. When a company issues a promissory note, the accountant records an entry that includes a credit to Note Receivable for;A) the face value of the note.;B) the face value of the note plus the interest that will accrue.;C) the face value less the interest that will accrue.;D) the maturity value of the note.;12. How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year (based on a 360 day year)?;A) $300;B) $1,800;C) $450.;D) $900.;13. Notes payable which are to be satisfied with current assets and are due within one year are usually shown;A) in the Current Assets section of the balance sheet.;B) in the Current Liabilities section of the balance sheet;C) in the Other Expenses section of the income statement.;D) in the Long-Term Liabilities section of the balance sheet.;14. Upon collection of the amount due on a $6,000 face value, 90-day note with interest at 10 percent a year, the Note Receivable account is;A) debited for $6,600.;B) credited for $6,000.;C) credited for $6,150.;D) debited for $6,000.;15. The balance sheet shows;A) the results of business operations.;B) all revenues and expenses.;C) the amount of net income or loss.;D) the financial position of a business at a given time.;16. Amounts that a business must pay in the future are known as;A) accounts receivable.;B) accounts payable.;C) stock.;D) expenses.;17. Examples of assets are;A) cash and accounts receivable.;B) cash and revenue.;C) cash and rent expense.;D) investments by the owner and revenue.;18. A net loss results;A) when expenses are greater than revenue.;B) when assets are greater than liabilities.;C) when revenue is greater than expenses;D) when expenses are greater than assets.;19. The income statement shows;A) the financial position of a business on a specific date.;B) revenue and stockholders? equity.;C) the results of operations for a period of time.;D) the total value of the business.;20. If liabilities are $4,000 and stockholders? equity is $15,000, assets are;A) $9,000.;B) $15,000.;C) $19,000.;D) $4,000.;21. Assets and liabilities are reported on;A) the balance sheet.;B) the income statement.;C) the statement of stockholders? equity.;D) both the balance sheet and the income statement.;22. The rent paid for future months is a (n);A) asset.;B) liability.;C) expense.;D) revenue.;23. Credits are used to record;A) decreases in assets and stockholders? equity and increases in liabilities.;B) decreases in assets, liabilities, and stockholders? equity.;C) decreases in liabilities and increases in assets and stockholders? equity.;D) increases in liabilities and stockholders? equity.;24. Debits are used to record increases in;A) assets and revenue.;B) revenue and stockholders? equity.;C) assets and expenses.;D) assets and liabilities.;25. A firm paid cash to apply against a debt. To record this transaction, the accountant would;A) debit Accounts Receivable and credit Cash.;B) debit Accounts Payable and credit Cash.;C) debit Cash and credit Accounts Payable.;D) Debit Cash and credit Accounts Receivable.;26. When charge customers pay cash to apply against their accounts, the amount is recorded;A) on the debit side of the Cash account and the credit side of the Fees Income account.;B) on the debit side of the Accounts Payable account and the credit side of the Cash account.;C) on the debit side of the Cash account and the credit side of the Accounts Receivable account.;D) on the debit side of the Accounts Receivable account and the credit side of the Cash account.;27. The account used to record increases in stockholders? equity from the sale of goods or services is;A) the revenue account.;B) the Cash account.;C) the stock account.;D) the dividends account.;28. Which of the following types of accounts normally have debit balances?;A) assets and revenue.;B) assets, liabilities, and stockholders? equity.;C) expenses and assets.;D) liabilities and Stockholders? equity.;29. Which of the following groups contain only accounts that normally have credit balances?;A) accounts receivable and fees income.;B) salaries expense and accounts payable.;C) fees income and stock.;D) accounts payable and equipment.;30. The journal entry to record the sale of services on credit should include;A) debit to Accounts Receivable and a credit to Stock.;B) a debit to Cash and a credit to Accounts Receivable.;C) a debit to Fees Income and a credit to Accounts Receivable.;D) a debit to Accounts Receivable and a credit to Fees Income.;31. The journal entry to record the purchase of equipment for a $100 cash down payment and a balance of $400 due in 30 days would include;A) a debit to Equipment for $100 and a credit to Cash for $100.;B) a debit to Equipment for $500, a credit to Cash for $100, and a credit to Accounts Payable for $400.;C) a debit to Equipment for $100 and a credit to Accounts Payable for $400.;D) debit to Equipment for $500 and a credit to Cash for $500.;32. The journal entry to record the payment of the current month utility bill would include;A) a debit to Utilities Expense and a credit to Stock.;B) a debit to stockholders? equity and a credit to Cash.;C) a debit to Utilities Expense and a credit to Cash.;D) a debit to Utilities Expense and a credit to Accounts Payable.;33. The journal entry to record the payment of dividends for the month is;A) a debit to Common Stock and a credit to Cash.;B) a debit to cash and a credit to dividends.;C) a debit to dividends and a credit to Cash.;D) a debit to dividends and a credit to common stock.;34. The journal entry to record the payment of salaries should include;A) debit to Salaries Expense and a credit to Cash.;B) a debit to Stock and a credit to Cash.;C) a debit to Cash and a credit to Salaries Expense.;D) a debit to Salaries Expense and a credit to Accounts Payable.;35. On a balance sheet, Accumulated Depreciation?Equipment is reported;A) as a deduction from the cost of the equipment.;B) as a liability.;C) as an expense.;D) as a deduction from the total of the assets.;36. If the prepaid expenses are not adjusted, assets on the balance sheet;A) will be overstated.;B) will be understated.;C) will not be affected.;D) may be either overstated or understated.;37. If long-term assets are not adjusted, expenses on the income statement;A) will be overstated.;B) will be understated.;C) will not be affected.;D) may be either overstated or understated.;38. The entry to replenish a petty cash fund includes;A) a debit to Cash and a credit to Petty Cash.;B) a debit to Petty Cash Fund and a credit to Cash.;C) debits to various expense accounts and a credit to Petty Cash Fund.;D) debits to various expense accounts and a credit to Cash.;39. On May 1, 20--, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20?is;A) $600.;B) $1,200.;C) $1,800.;D) $1,050.;40. To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be;A) added to the bank statement balance.;B) added to the book balance.;C) deducted from the bank statement balance.;D) deducted from the book balance.;41. A firm appropriately wrote a check for $78 but entered the amount as payment of $87. On a bank reconciliation statement this error would be shown as;A) deduction of $9 from the book balance.;B) an addition of $9 to the book balance.;C) a deduction of $9 from the bank statement balance.;D) an addition of $9 to the bank statement balance.;42. The entry to record a purchase of merchandise on credit using a perpetual inventory system includes;A) a debit to Merchandise Inventory and a credit to Accounts Payable.;B) a credit to Merchandise Inventory and a debit to Accounts Payable.;C) a debit to Accounts Payable and a credit to Purchases.;D) a debit to Purchases (COGS) and a credit to Accounts Payable.;43. A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?;A) $27,000;B) $24,000;C) $21,000;D) $36,000;44. A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $16,000 Early in the year, 8,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 2,000 units?;A) $12,000;B) $10,000;C) $8,000;D) $24,000;45. Which of the following is allowed under generally accepted accounting principles?;A) A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.;B) An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company's balance sheet.;C) A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.;D) The Equipment ledger account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.;46. An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is;A) following the accrual principle.;B) following the conservatism convention.;C) violating generally accepted accounting principles.;D) following the consistency principle.;47. The FASB has concluded that financial reporting rules should;A) help companies minimize the taxes they must pay.;B) be in compliance with income tax law.;C) concentrate on providing helpful information to management.;D) concentrate on providing helpful information to present and potential investors and creditors.;48. Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of;A) following the going concern assumption.;B) applying the realization principle.;C) following the separate entity assumption.;D) applying the conservatism convention.;49. Internal control is;A) The act of stealing a business' assets.;B) The preparation of fraudulent financial statements.;C) The process that helps a business achieve its objectives such as operating efficiently and effectively.;D) The reconciliation of the bank?s cash balance to the book?s cash balance.;50. Separation of duties refers to separating all of these functions except which of the following?;A) Authorizing transactions;B) Keeping accounting records;C) Hiring personnel;D) Maintaining custody of assets;51. Which of the following is not a control activity?;A) Mandatory vacations;B) Risk assessment;C) Security measures;D) Proper authorization

 

Paper#76549 | Written in 18-Jul-2015

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