ACC Exam III – Flashcards

What does the term "bonding" mean when it refers to employees?

Identify the example of poor internal control

Which of the following is BEST at providing evidence that helps companies enforce the principle of establishing responsibility?

________ controls enhance the accuracy and reliability of the accounting records

A small business owner has two employees but each employee has a separate cash register drawer. This situation can be viewed as

When a company allows only designated personnel to handle cash receipts, it is applying the internal control principle of

A voucher system is a series of prescribed control procedures that are designed to

When a company uses prenumbered checks and requires an approved invoice for each check, it is using which internal control?

Printing check amounts by machine in indelible ink is an example of

Which of the following items would most likely be paid from a petty cash fund?

Why should a bank reconciliation be prepared?

Which of the following affects the cash balance per bank?

A(n)________ requires a journal entry by the depositor

Which of the following is an example of an electronic funds transfer?

If a check written and paid by the bank for $638 is incorrectly recorded on the company's books at $683, the appropriate treatment on the bank reconciliation would be to

Which of the following is considered a cash equivalent?

Cash equivalents are highly liquid investments that are both

Which of the following would be reported on the balance sheet as a cash equivalent? Select all that apply

What does a check marked NSF mean?

Which of the following statements correctly describes the reporting of cash?

Sheridan Company had checks outstanding totaling $27200 on its June bank reconciliation. In July, Sheridan Company issued checks totaling $196100. The July bank statement shows that $132600 in checks cleared the bank in July. A check from one of Sheridan Company's customers in the amount of $1500 was also returned marked "NSF." The amount of outstanding checks on Sheridan Company's July bank reconciliation should be

Swifty Corporation gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30: $13400 Deposits in transit 1800 Notes receivable and interest collected by bank 4500 Bank charge for check printing 150 Outstanding checks 9100 NSF check 850 The adjusted cash balance per books on April 30 is:

Vaughn Manufacturing gathered the following reconciling information in preparing its June bank reconciliation: Cash balance per books, 6/30 $12900 Deposits in transit 900 Notes receivable and interest collected by bank 2260 Bank charge for check printing 75 Outstanding checks 4600 NSF check 430 The adjusted cash balance per books on June 30 is:

At April 30, Pina Colada Corp. has the following bank information: Cash balance per bank $7600 Outstanding checks $460 Deposits in transit $900 Credit memo for interest $15 Bank service charge $30 What is Pina adjusted cash balance on April 30?

Bramble Corp. wrote checks totaling $37660 during October and $41125 during November. $35810 of these checks cleared the bank in October, and $40175 cleared the bank in November. What was the amount of outstanding checks on November 30?

Nash's Trading Post, LLC assembled the following information in completing its March bank reconciliation: Balance per bank $14100 Outstanding checks $2875 Deposits in transit $4650 NSF check $300 Bank service charge $95 Cash balance per books $16280 As a result of this reconciliation, Nash's will:

The following information was taken from Vaughn Manufacturing cash budget for the month of July: Beginning cash balance $128000 Cash receipts 122000 Cash disbursements 173000 If the company has a policy of maintaining an end of the month cash balance of $128000, the amount the company would have to borrow is:

The following information was taken from Windsor, Inc. cash budget for the month June Beginning cash balance $59000 Cash receipts 80000 Cash disbursements 101000 If the company has a policy of maintaining an end of the month cash balance of $52000, the amount the company would have to borrow is:

Skysong, Inc. is preparing a cash budget for September. The company's cash balance on September 1 is $28540. The company anticipates cash receipts of $137510 and cash disbursements of $144300. If Skysong, Inc. desires a cash balance of $29520, it must

On January 15, Skysong, Inc. sells merchandise on account to Martinez Associates for $7800 with terms 3/10, n/30. On January 20, Martinez returns merchandise worth $800 to Skysong. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

An aging of a company's accounts receivable indicates that $10200 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2300 credit balance, the adjustment to record bad debts for the period will require a

Using the allowance method, the uncollectible accounts for the year are estimated to be $45500. If the balance for the Allowance for Doubtful Accounts is a $7600 credit before adjustment, what is the balance after adjustment?

Using the allowance method, the uncollectible accounts for the year is estimated to be $54700. If the balance for the Allowance for Doubtful Accounts is a $8100 credit before adjustment, what is the amount of bad debt expense for the period?

Using the allowance method, the uncollectible accounts for the year is estimated to be $58600. If the balance for the Allowance for Doubtful Accounts is a $8400 debit before adjustment, what is the amount of bad debt expense for the period?

In reviewing the accounts receivable, the cash receivable value is $26800 before the write-off of a $2500 account. What is the cash receivable value after the write-off?

The interest on a $13000, 5%, 1-year note receivable is

The interest on a $12000, 10%, 30-day note receivable is

The interest on a $17000, 6%, 30-day note receivable is

Vaughn Manufacturing receives a $10400, 6-month, 6% promissory note from Wildhorse Co. in settlement of an open accounts receivable. What entry will Vaughn Manufacturing make upon receiving the note?

Wildhorse Co. lends Dobson industries $55200 on August 1, 2017, accepting a 9-month, 15% interest note. If Wildhorse Co. prepares its financial statements as of December 31, 2017, what adjusting entry must it make?

Tamarisk, Inc. lends Dobson industries $52800 on August 1, 2017, accepting a 9-month, 9% interest note. If Tamarisk, Inc. accrued interest at its December 31, 2017 year-end, what entry must it make to record the collection of the note and interest at its maturity date?

Metlock, Inc. lends Dobson industries $45600 on January 1, 2017, accepting a 9-month, 12% interest note. If Dobson dishonors the note and does not pay it in full at maturity but Metlock expects that it will eventually be able to collect the debt, which of the following entries should most likely be made by Metlock, Inc.?

The maturity value of a $64800, 9%, 40-day note receivable dated July 3 is

Blue Spruce Corp. accepted a national credit card for a $11000 purchase. The cost of the goods sold is $7000. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?

On April 5 Donna's Boutique accepted a Visa card for a $1250 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a

Schofield Retailers accepted $46500 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $46500 and a debit(s) to

A company purchased land for $87400 cash. Real estate brokers' commission was $4200 and $9800 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1300. Under the historical cost principle, the cost of land would be recorded at

Cullumber Company acquires land for $83000 cash. Additional costs are as follows. Removal of shed $200 Filling and grading 1700 Salvage value of lumber of shed 140 Broker commission 1270 Paving of parking lot 12000 Closing costs 420 Cullumber will record the acquisition cost of the land as:

Cullumber Company purchases a new delivery truck for $71000. The sales taxes are $2300. The logo of the company is painted on the side of the truck for $2000. The truck's annual license is $150. The truck undergoes safety testing for $290. What does Cullumber record as the cost of the new truck?

Grouper Corp. purchased a delivery van with a $57000 list price. The company was given a $4800 cash discount by the dealer, and paid $3300 sales tax. Annual insurance on the van is $1100. As a result of the purchase, by how much will Grouper Corp. increase its van account?

Equipment with a cost of $477400 has an estimated salvage value of $55000 and an estimated life of 4 years or 8800 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2200 hours?

A company purchased factory equipment on June 1, 2017, for $138900. It is estimated that the equipment will have a $16500 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2017, is

On October 1, 2017, Crane Company places a new asset into service. The cost of the asset is $103500 with an estimated 5-year life and $22500 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Crane Company uses the straight-line method of depreciation?

Flint Corporation bought equipment on January 1, 2017. The equipment cost $450000 and had an expected salvage value of $70000. The life of the equipment was estimated to be 4 years. The depreciable cost of the equipment is

Concord Corporation bought equipment on January 1, 2017. The equipment cost $390000 and had an expected salvage value of $70000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be

A company sells a plant asset that originally cost $250000 for $35000 on December 31, 2017. The accumulated depreciation account had a balance of $100000 after the current year's depreciation of $25000 had been recorded. The company should recognize a

Equipment that cost $154000 and on which $123000 of accumulated depreciation has been recorded was disposed of for $38000 cash. The entry to record this event would include a

On May 1, 2017, Carla Vista Co. purchased the copyright to Martinez Corp. for $132000. It is estimated that the copyright will have a useful life of 5 years. The amount of amortization expense recognized for the year 2017 would be

The following information is provided for Sandhill Co. and Monty Corp.. (in $ millions) Sandhill Co. Monty Corp. Net income 2017 $170 $445 Net sales 2017 1290 4580 Total assets 12/31/15 1080 2090 Total assets 12/31/16 1145 3000 Total assets 12/31/17 1160 4060 What is Monty's asset turnover ratio (rounded) for 2017?

A company purchased factory equipment for $590000. It is estimated that the equipment will have a $59000 salvage value at the end of its estimated 10-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

A factory machine was purchased for $188000 on January 1, 2017. It was estimated that it would have a $28000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40000 hours in the 5 years. If the actual number of machine hours ran in 2017 was 4000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2017 would be

Which of the following statements regarding reporting receivables on the balance sheet is true?

The financial statements of the Larson Company report net sales of $1,000,000 and accounts receivable of $80,000 and $60,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

The financial statements of the Harrison Company report net sales of $200,000 and accounts receivable of $10,000 and $5,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days?

The financial statements of the Tyler Company report net sales of $300,000 and accounts receivable of $50,000 and $10,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for the Tyler Company?

The financial statements of the Imagine Company report net sales of $1,000,000 and accounts receivable of $700,000 and $300,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for the Imagine Company?

How is the average collection period computed?

Foti Co. accepts a $1,000, 3-month, 12% promissory note in settlement of an account with Bartelt Co. The entry to record this transaction is as follows

Maynard Mills received a 60-day, 5% note for $10,000 on April 5th. Which of the following statements is true?

Valente Company received a $10,000, 12%, 1-year note from Andrea Foley on June 1st, as full payment on her account. Which of the following is the correct journal entry?

When a note receivable is honored, Cash is debited for the note's ________ value

Which of the following statements about a note receivable is true?

What are the two key parties to a promissory note?

If the allowance method is used to account for uncollectible accounts, when is bad debt expense debited?

What happens if the amount of uncollectible account expense is overstated at year end?

The entry to recognize the bad debt expense ________ when the allowance method is used

What is bad debt expense considered?

Hunter's Paradise sells merchandize on account to Outdoor Haven for $3,280, terms 2/10, n/30. What should the journal entry be to record this transaction for Hunter's Paradise?

________ are also called trade receivables

What are notes or accounts receivable that result from sales transactions often called?

Which of the following should be disclosed in the balance sheet or the notes to the financial statements?

To find the asset turnover ratio, divide net ________ total assets

Martha Beyerlein Company incurred $150,000 of research and development costs in its laboratory to develop a patent granted on January 2nd, 2017. On July 31st, 2017, Beyerlein paid $35,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31st, 2017, should be

Wilmington Sports has the following account balances at year end. What are the total intangible assets on the balance sheet? Land: $2,500,000 Trademarks: $1,500,000 Copyrights: $800,000 Research & Development: $800,000

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,400,000. What is the amount of net income or loss after these R & D costs are accounted for?

A patent that has a legal life of 20 years and a useful life of less than 20 years should

Companies can amortize a patent for a period that cannot exceed ________ years

Wells Company's delivery truck, with a cost of $56,000 was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $38,000. The company received $32,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

How is depreciation accounted for if disposal of a plant asset occurs during the year?

Where is the loss on disposal of a plant asset reported in the financial statements?

Where is the loss on disposal of a plant asset reported in the financial statements?

To find the book value of a plant asset, you find the difference between the

If the estimated useful life of equipment changes, then this change requires

In selecting a depreciation method, a company should choose the method that

A company purchased land for $70,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at

Pat's Garage installed a new parking lot. The paving cost $10,000 and the lights to illuminate the new parking area cost $5,000. These additions require that

________ are the costs incurred to increase the operating efficiency or useful life of a plant asset

When can interest be included in the acquisition cost of a plant asset?

For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?

Ayayai Corp. had checks outstanding totaling $30500 on its June bank reconciliation. In July, Ayayai Corp. issued checks totaling $219400. The July bank statement shows that $148300 in checks cleared the bank in July. A check from one of Ayayai Corp.'s customers in the amount of $1700 was also returned marked "NSF." The amount of outstanding checks on Ayayai Corp.'s July bank reconciliation should be

At April 30, Blossom Company has the following bank information: Cash balance per bank $8100 Outstanding checks $500 Deposits in transit $975 Credit memo for interest $20 Bank service charge $40 What is Blossom adjusted cash balance on April 30?

The following information was taken from Whispering Winds Corp. cash budget for the month of July: Beginning cash balance $115000 Cash receipts 110000 Cash disbursements 156000 If the company has a policy of maintaining an end of the month cash balance of $115000, the amount the company would have to borrow is:

The following information was taken from Splish Brothers Inc. cash budget for the month June Beginning cash balance $83000 Cash receipts 112000 Cash disbursements 140000 If the company has a policy of maintaining an end of the month cash balance of $72000, the amount the company would have to borrow is

On January 15, Vaughn Manufacturing sells merchandise on account to Martinez Associates for $5300 with terms 1/10, n/30. On January 20, Martinez returns merchandise worth $1200 to Vaughn. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

An aging of a company's accounts receivable indicates that $9700 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3900 credit balance, the adjustment to record bad debts for the period will require a

Using the allowance method, the uncollectible accounts for the year is estimated to be $55500. If the balance for the Allowance for Doubtful Accounts is a $7700 credit before adjustment, what is the amount of bad debt expense for the period?

The interest on a $10000, 6%, 30-day note receivable is

The maturity value of a $30600, 6%, 60-day note receivable dated February 10th is

The interest on a $21000, 5%, 1-year note receivable is

Novak Corp. accepted a national credit card for a $11300 purchase. The cost of the goods sold is $7300. The credit card company charges a 4% fee. What is the impact of this transaction on net operating income?

Sheridan Company acquires land for $81000 cash. Additional costs are as follows. Removal of shed $500 Filling and grading 1900 Salvage value of lumber of shed 110 Broker commission 1250 Paving of parking lot 10000 Closing costs 460 Sheridan will record the acquisition cost of the land as

Crane Company purchases a new delivery truck for $73000. The sales taxes are $2000. The logo of the company is painted on the side of the truck for $1500. The truck's annual license is $150. The truck undergoes safety testing for $220. What does Crane record as the cost of the new truck?

Equipment with a cost of $562600 has an estimated salvage value of $25000 and an estimated life of 4 years or 12800 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3200 hours?

Pronghorn Corp. purchased a delivery van with a $68000 list price. The company was given a $6200 cash discount by the dealer, and paid $3300 sales tax. Annual insurance on the van is $1900. As a result of the purchase, by how much will Pronghorn Corp. increase its van account?

Sunland Company bought a machine on January 1, 2017. The machine cost $168000 and had an expected salvage value of $29000. The life of the machine was estimated to be 4 years. The company uses the straight-line method of depreciation. The book value of the machine at the beginning of the third year would be

A company sells a plant asset that originally cost $400000 for $165000 on December 31, 2017. The accumulated depreciation account had a balance of $160000 after the current year's depreciation of $40000 had been recorded. The company should recognize a

A company purchased factory equipment for $500000. It is estimated that the equipment will have a $50000 salvage value at the end of its estimated 8-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be

A factory machine was purchased for $162000 on January 1, 2017. It was estimated that it would have a $24000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 30000 hours in the 5 years. If the actual number of machine hours ran in 2017 was 3000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2017 would be

an internal control system is important to a business because it?

which one of the following is NOT an objective of a system of internal controls

from an internal control standpoint, the asset most susceptible to improper diversion and use is:

when an NSF check is returned by the bank, it should be shown on the company's books as:

a good device for control over cash received in a store would be a:

A company received its monthly bank statement, which showed an ending balance of $15,000. Adjustments on the company's monthly bank reconciliation included a deposit in transit, $2,000; outstanding checks, $3,000; an "NSF" check for $500; a bank service charge of 30; proceeds of a customer's note collected by the bank of $4,000. What was the corrected cash balance shown on the balance sheet at the end of the month?

Which of the following not an internal control procedure for cash?

james river had checks outstanding totaling $162 on its July bank reconciliation. in august, james river issued checks totaling $1167. the august bank statement shows that 789 in checks cleared the bank in august. the amount of outstanding checks on james river's august bank reconciliation should be:

which of the following statements is false?

if a seller offered terms of 2/10, n30 on a $20,000 sales and the purchaser pays on the ninth day, how much does the seller receive?

a company uses the allowance method to account for losses from sales on credit. sales on credit for the year were $200,000, cash sales were &50,000, and the company estimates its uncollectible accounts as $6,000 at year end using the aging method. if there is already $2,000 credit balance in the account allowance for doubtful accounts. how much should be recorded as the expense due to uncollectible accounts for the year?

after analyzing the customers' accounts receivable accounts, it is determined that $4,000 of the accounts are probably uncollectible. the balance in the account allowance for doubtful accounts is $300 debit balance. what would be the debit entry for the necessary adjusting entry?

assuming a $500 credit balance in the Allowance for Doubtful accounts, the act of writing off an uncollectible account receivable of $200 will cause the following effect on total current assets and net income for the period:

a company received and accepted a $2,000, 60 day, 12 percent not on September 15 in payment of an account receivable. The company should expect a check in payment of the note and interest on November 14, in the amount of:

a company received a six month $10,000 note from a customer. when the note matured, the company collected 10,500 in cash. the effective annual interest rate on this transaction was:

a $1,000, 12% 90 day not received by a company on December 1, 200A. the company will record accrued interest receivable on December 31, 200A (year-end) of:

Short-term receivables are reported on the balance sheet as:

summer rain lends lightening industries $30,000 on August 1, year 1, accepting a 9 month, 12% interest note. if summer rain prepares financial statements as of December 31 Year 1, what adjusting entry must summer make?

summer rain lends lightening industries $30,000 on August 1, year 1, accepting a 9 month, 12% interest note. if summer rain prepares financial statements as of December 31 Year 1, year-end, what entry must it make to record the collection of the note and interest at its maturity date?

a company makes $2,000 of credit card sales. the credit card company makes 5% of gross sales. which of the following statement is true?

on june 15, cloud company sells merchandise on account to green grass for $2,000 with terms 3/10, n/30. on june 20, green returns merchandise worth $400 to cloud. on june 24, payment is received from green for the balance due. what is the amount of cash received?

under the allowance method of accounting for uncollectible accounts,