quick questions
32. Under the allowance method of accounting for credit losses,the entry to write off a specific account:
Select one:
A. Is the same as the entry to write off a specific accountunder the direct write-off method
B. Does not affect net income or total assets
C. Debits Bad Debts Expense and credits Allowance forUncollectible Accounts
D. Will increase total assets
34. Fifth Ohio Bank collected a note for Charlie Company. Thiscollection, not yet recorded in Charlie’s books, appears on thebank reconciliation as a(n):
Select one:
A. Addition to balance per bank statement
B. Addition to balance per general ledger
C. Deduction from balance per general ledger
D. Deduction from balance per bank statement
35. During its year-end bank reconciliation, Baybridge Companyfinds that Check No. 951 was written for $28.70 on the books, butthe check was written and cleared the bank for the correct amount,$82.70.
The correct treatment on the bank reconciliation would be:
Select one:
A. On the bank side, add $54 to receipts and add $54 to endingbalance
B. On the bank side, deduct $54 from payments and add $54 toending balance
C. On the book side, deduct $54 from payments and add $54 toending balance
D. On the book side, add $54 to payments and deduct $54 fromending balance
36. Goodwill can be recorded as an asset when:
Select one:
A. A business is purchased and payment is made in excess if thefair value of the identifiable net assets
B. A business has above normal profitability compared to otherbusinesses in its industry
C. A business can determine that it has created customergoodwill and name recognition
D. An offer is received to purchase the business at a price inexcess of the value of the assets
37. On November 16, 2016, Soccer Company borrowed $20,000 fromBall Company and gave a 90-day, 12% note. On December 31, 2016 theend of the accounting period, Ball makes the following entry:
Select one:
A.
Interest receivable
600
Interest income
600
B.
Notes receivable
300
Interest income
300
C.
Interest receivable
300
Interest income
300
D.
Cash
300
Interest income
300
38. On January 1, 2016, Ceramic, Inc. purchased a new machinefor $160,000. Its estimated useful life is eight years with anexpected salvage value of $12,000.
Assuming double-declining balance depreciation, 2016depreciation expense is:
Select one:
A. $20,000
B. $40,000
C. $13,500
D. $37,000
39. On January 1, 2016, Clementine Company purchased a new truckfor $29,400. Its estimated useful life is seven years or 200,000miles. The truck’s expected salvage value is $1,400. During 2016,the truck was driven 20,000 miles.
Assuming units-of-production depreciation, 2016 depreciationexpense is:
Select one:
A. $4,200
B. $2,800
C. $2,940
D. $4,000
40. Which of the following is not an internal control componentidentified in the COSO framework:
Select one:
A. Technology
B. Monitoring activities
C. Risk assessment
D. Control environment
41. In reconciling the January bank statement, the vicepresident discovered that the bookkeeper had recorded a checkwritten for $454 as $544 in the cash disbursements journal.
For the bank reconciliation, the $90 error should be:
Select one:
A. Deducted from balance per general ledger
B. Added to balance per general ledger
C. Deducted from balance per bank statement
D. Added to balance per bank statement
42. Which depreciation method does not consider salvage value inits first year calculation?
Select one:
A. Straight line
B. Double-declining balance
C. Units of production
D. None of the above
43. Which of the following features should not be included in agood system of internal accounting control over cash?
Select one:
A. Monthly bank reconciliations are prepared by the person whomakes the daily bank deposits.
B. Cash handling is separated from the recording of cashtransactions.
C. All receipts are deposited daily in the bank.
D. All major disbursements are made by check, and an imprestfund is used for petty cash disbursements.
45. At May 31, Stephen Company has outstanding checks totaling$19,600. The bank reconciliation for May should show these checksas a(n):
Select one:
A. Deduction from balance per bank statement
B. Addition to balance per general ledger
C. Addition to balance per bank statement
D. Deduction from balance per general ledger
46. Southwest Company uses the allowance method of recordingcredit losses. In November 2016, Southwest wrote off the $3,600account of Gamma Company. In January 2017, Gamma paid the$3,600.
The entry or entries to record the payment is/are:
Select one:
A.
Allowance for Doubtful Accounts
3,600
Accounts Receivable–Gamma Co.
3,600
B.
Accounts Receivable–Gamma Co.
3,600
Bad Debts Expense
3,600
Cash
3,600
Accounts Receivable–Gamma Co.
3,600
C.
Cash
3,600
Recoveries of Accounts Written Off
3,600
D.
Accounts Receivable–Gamma Co.
3,600
Allowance for Doubtful Accounts
3,600
Cash
3,600
Accounts Receivable–Gamma Co.
3,600
49. An aging of Calypso Company’s accounts receivable indicatesthat $40,000 is estimated to be uncollectible. If Allowance forDoubtful Accounts has a $6,000 credit balance, the adjustment torecord bad debts for the period will require a:
Select one:
A. Debit to Bad Debts Expense for $40,000
B. Credit to Allowance for Doubtful Accounts for $40,000
C. Debit to Bad Debts Expense for $34,000
D. Debit to Allowance for Doubtful Accounts for $34,000
50. Athens, Inc.’s June bank statement shows a June 30 balanceof $18,100. Prior to reconciliation, its books show a cash balanceof $18,420. The information below pertains to Athens:
Deposits in transit
$1,400
Checks outstanding
960
Bank service charges
40
Error in Athens Inc.’s records overstating cash disbursement
180
Check of another company charged erroneously against
Athens Inc.’s bank account
500
Bank statement shows bank collected a note receivable
and interest income for Athens Inc.
480
The reconciled cash balance at June 30 on the bankreconciliation should be:
Select one:
A. $19,040
B. $18,680
C. $18,540
D. $20,200
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