Questions and Answers of College Accounting A Contemporary Approach 5th Edition

Jarrett Company’s inventory turnover ratio was nine times in 20X1 and eight times in 20X2. Did Jarrett Company sell its inventory more quickly, or more slowly, in 20X2 compared to 20X1?
Various adjustments made at Adams Company are listed below. Which of the adjustments would normally be reversed?a. Adjustment for accrued payroll taxes expenseb. Adjustment for supplies usedc.
Which of the following is true for the Cash Short or Over account?a. Cash Short or Over is debited when there is a cash shortage.b. Cash Short or Over is debited when there is a cash overage.c. The
Petty Cash is categorized as a(n):a. Expense.b. Revenue.c. Liability.d. Asset.
What is the term for the person or firm issuing a check?a. Draweeb. Drawerc. Payeed. Bank
What is the book balance of cash?
Southern Gift Shop, a retail business, started business on April 29, 20X1. It keeps a $300 change fund in its cash register. The cash receipts for the period from April 29 to April 30, 20X1, are
Candy’s Cupcakes, a retail business, started business on June 25, 20X1. It keeps a $300 change fund in its cash register. The cash receipts for the period from June 25 to June 30, 20X1, are
The Polynesian Gift Shop, a retail business, started business on April 25, 20X1. It keeps a $225 change fund in its cash register. The cash receipts for the period from April 25 to April 30, 20X1,
John Saldanha is the owner and manager of The Car Spa. The Car Spa provides various car wash and car detailing services. The Car Spa also sells snacks and gift items in its waiting area. The Car Spa
Which of the following records the receipt of a promissory note from a customer with an overdue accounts receivable balance?a. Debit Cash, credit Accounts Receivableb. Debit Cash, credit Notes
Which of the following is the journal entry to record the establishment of a petty cash fund?a. Debit Cash, credit Petty Cashb. Debit Petty Cash, credit Cashc. Debit Petty Cash, credit Accounts
Why does a payee endorse a check before depositing it?a. It is the legal process by which the payee transfers ownership of the check to the bank.b. It is a form of identification verification.c. The
On January 2, 20X1, The Orange Legal Clinic issued Check 2108 for $400 to establish a petty cash fund. Indicate how this transaction would be recorded in a general journal. Use 1 as the journal page
Mike Ryan is the owner of Ryan Contractors, a successful small construction company. He spends most of his time out of the office supervising work at various construction sites, leaving the operation
Why is a bank reconciliation prepared?
Alec Rubino is the sole owner of Spectra Medical Instruments (Spectra), a small but successful distributor of medical supplies. Alec inherited the business from his father and is not really
How would the receipt of a $62 refund for supplies returned be recorded in a general journal? The supplies were paid for with cash.a. Debit Cash, credit Accounts Payableb. Debit Supplies, credit
Which of the following is not an example of good internal control over cash receipts?a. Cash receipts should be deposited in the bank promptly.b. Cash receipts should be kept in a cash register, a
Which of these bank reconciliation items require journal entries?a. Outstanding checksb. Deposits in transitc. A check properly written by the company but paid at the wrong amount by the bankd. NSF
What information is shown on the bank statement?
On January 2, 20X1, Vanessa’s Beauty Supplies Inc. issued Check 3100 for $400 to establish a petty cash fund. On January 31, Check 3159 was issued to replenish the petty cash fund. An analysis of
The following excerpt was taken from The Home Depot, Inc., 2018 Annual Report (for the fiscal year ended February 3, 2019):Analyze:1. What percentage of total assets is made up of cash and cash
Sara’s Beauty Salon keeps a $100 change fund. At the end of the day, sales per the register tape were $885, and the cash count was $992. What is the amount of the cash shortage or overage?a. $7
Which journal entry could be used to record the replenishment of the petty cash fund?a. Debit Petty Cash, credit Cashb. Debit Supplies, debit Delivery Expense, credit Cashc. Debit Supplies, debit
On the bank reconciliation, outstanding checks should be:a. Added to the balance on bank statement.b. Deducted from the balance on bank statement.c. Added to the balance in books.d. Deducted from the
Johnson Corporation received a bank statement showing a balance of $15,900 as of October 31, 20X1. The firm’s records showed a book balance of $15,572 on October 31. The difference between the two
On August 31, 20X1, the balance in the checkbook and the Cash account of the Sonoma Creek Bed and Breakfast was $13,031. The balance shown on the bank statement on the same date was $13,997.NOTESa.
On July 31, 20X1, the balance in Northwest Appliance’s checkbook and Cash account was $9,318.59. The balance shown on the bank statement on the same date was $10,442.03.NOTESa. The following checks
Which items are considered cash?a. Currencyb. Funds on deposit in the bankc. Money ordersd. All of these
Which of the following is not an example of good internal control over cash payments?a. Make all payments from petty cash instead of using checksb. Use prenumbered checksc. Issue checks only with an
Which of the following does not require an adjustment to the financial records?a. Deposits in transitb. Bank service chargec. Check that was incorrectly recorded by the firm at $115 but was paid by
At Pleasonton Delivery and Courier Service, the following items were found to cause a difference between the bank statement and the firm’s records. Indicate whether each item will affect the bank
In preparing the bank reconciliation at February 28, 20X1, for Awesome Dudes Moving Corporation, the following errors were discovered in the firm’s records:a. The checkbook and the general journal
Which of the following would be considered a cash equivalent?a. A certificate of deposit with a maturity of six monthsb. A certificate of deposit with a maturity of three monthsc. A note receivable
On the bank reconciliation statement, you would not find a list of:a. Deposits in transit.b. Canceled checks.c. Outstanding checks.d. NSF checks.
Venturi Office Supplies received a bank statement showing a balance of $73,047 as of March 31, 20X1. The firm’s records showed a book balance of $72,987 on March 31. The difference between the two
On August 1, 20X1, the accountant for Midwest Imports downloaded the company’s July 31, 20X1, bank statement from the bank’s website. The balance shown on the bank statement was $28,750. The July
On December 1, 20X1, Sofia Sartori, the accountant for Classic Appliances, downloaded the company’s November 30, 20X1, bank statement from the bank’s website. The balance shown on the bank
What is a promissory note? What entry is made to record the collection of a promissory note and interest?
Which of the following are features of online banking?a. A business can deposit checks using a dedicated scanner.b. A business can receive electronic funds transfers from customers.c. A business can
Flores Company received a bank statement showing a balance of $13,000 on November 30, 20X1. During the bank reconciliation process, Flores Company’s accountant noted the following bank errors:1. A
What is a check?
The following data were taken from a firm’s bank reconciliation statement: book balance, $7,910; deposit in transit, $150; NSF check from a customer, $200; outstanding checks, $5,000; bank service
The following financial data are for the dental practice of Dr. Jose Ortiz when he began operations in July. Determine the amounts that would appear in Dr. Ortiz’s balance sheet.1. Owes $42,000 to
The Business Center had the transactions listed below during the month of June. Show how each transaction would be recorded in the accounting equation. Compute the totals at the end of the month. The
On December 1, Karl Zant opened a speech and hearing clinic. During December, his firm had the following transactions involving revenue and expenses. Did the firm earn a net income or incur a net
The accounts and transactions of Brian Carter, Counselor and Attorney at Law, follow.INSTRUCTIONSAnalyze the transactions. Record each in the appropriate T accounts. Use plus and minus signs in front
All the journal entries shown below contain errors. The entries were prepared by an employee of Helena Corporation who does not have an adequate knowledge of accounting.INSTRUCTIONSExamine the
Journal entries and adjusting journal entries can be used to conceal theft of company assets as well as to inflate a company’s profits or deflate company losses. One of the biggest bankruptcies and
What is book value?
What is the proper classification of the Sales Tax Payable account?a. Revenueb. Liabilityc. Expensed. Contra-revenue
Sedona Company had sales of $100,000, sales returns and allowances of $4,000, and sales discounts of $500. What are net sales?a. $103,500b. $95,500c. $104,500d. $96,500
Types of business operations are:a. Service, merchandising, corporation.b. Sole proprietorship, merchandising, manufacturing.c. Service, merchandising, manufacturing.d. Service, merchandising,
A wholesale business offers a trade discount of 35 percent on a list price of $7,200. At what amount should the wholesale business record the sale?a. $4,680b. $7,200c. $2,520d. $9,720
Benjamin Ocampo is the owner of In Style Housewares, a housewares store that sells a wide variety of items for the kitchen, bathroom, and home. In Style Housewares offers a company credit card to its
What is the name of the account used to record sales of merchandise inventory?a. Sales Returns and Allowancesb. Accounts Receivablec. Fees Incomed. Sales
A company that buys $5,000 of goods from a wholesaler offering trade discounts of 20 and 10 percent will pay what amount for the goods?a. $2,200b. $3,500c. $3,475d. $3,600
What purposes does the schedule of accounts receivable serve?
Field Hardware Supply makes a sale on account for $100, plus 6 percent sales tax. In journalizing this transaction, what amount should be debited to Accounts Receivable?a. $100b. $94c. $106d. $6
What is the account classification of the Sales Discounts account?a. Expenseb. Liabilityc. Contra-revenued. Asset
Ferrero Bakery made a sale of $80, plus 5 percent sales tax, to a customer using a bank credit card. The credit card company charges a 2 percent discount fee. What is the amount of the credit card
An account manager would like to know the balance of a certain customer’s account. That information can be found in thea. Sales account in the general ledger.b. Accounts receivable ledger.c.
The journal entry to record the return of product by a customer would include a:a. Debit to Sales.b. Debit to Sales Returns and Allowances.c. Credit to Sales Returns and Allowances.d. Credit to Sales.
On April 1, Olympic Company made a sale of $500 on account with terms of 2/10, n/30 to Mendocino, Inc. Mendocino, Inc., returned $100 of product as defective on April 3. On April 9, Mendocino, Inc.,
A schedule of accounts receivable prepared at the end of the month should:a. Match, in total, the balance of the Accounts Receivable account in the general ledger.b. Match, in total, the balance of
Johnson Distributors, a wholesale firm, made sales using the following list prices and trade discounts. What amount should be recorded for each sale?1. List price of $7,000 and trade discounts of 35
On April 1, Moloney Musical Instruments sold merchandise on account to Fronke’s Flutes for $7,000 on Invoice 1001, terms 2/10, n/30. Payment was received in full from Fronke’s Flutes, less
Post the entries in the general journal below to the Accounts Receivable account in the general ledger and to the appropriate accounts in the accounts receivable ledger for Valentino Company. Assume
(a) When is the Credit Card Expense account debited when a customer uses a bank credit card to pay for a purchase? (b) When is the Card Card Expense account debited when a customer uses an
1. Use the final balances of the customer accounts after completing Exercise 7.9 to prepare a schedule of accounts receivable for Valentino Company at January 31, 20X1.2. Should the total of your
What document does a business submit to a credit card company to collect amounts owed for purchases by customers using a credit card issued by a credit card company?
What is the name of the account used to record the fees charged by the credit card company to the seller?
What is a trade discount? Why do some firms offer trade discounts to their customers?
What is the name of the account used to record purchases of merchandise inventory?a. Freight Inb. Purchases Returns and Allowancesc. Purchasesd. Sales
The total of the schedule of accounts payable should equal the balance of which general ledger account(s)?a. Purchasesb. Accounts Payablec. Accounts Receivabled. The sum of the Purchases and Freight
Bill Evans began Evans Distributors, a sporting goods distribution company, in January 20X1 and engaged in the transactions below. Assume Evans Distributors and its customers take advantage of all
Which of the following best describes the Purchases Returns and Allowances account?a. A contra-expense account with a normal debit balanceb. A contra-expense account with a normal credit balancec. A
In the accounts payable ledger, a supplier’s account has a beginning balance of $5,800. Subsequently, a purchase of $1,600 from this supplier is journalized and then posted. What is the balance of
Provisions Grocery Store purchased merchandise on account from Federal Grocers for $500.00 on April 6, terms 2/10, n/30. Federal Grocers prepaid freight charges of $25.00 and added them to the
Which of the following is not evidence of effective internal controls of purchases?a. All purchases should be made only after proper authorization is given in writing.b. The computations on the
What is a purchase return?
The following financial statement excerpt is taken from the 2018 Annual Report (for the fiscal year ended February 3, 2019) for The Home Depot, Inc.:1. The Cost of Sales amount on The Home Depot,
What form is sent to the supplier to order goods?a. Purchase invoiceb. Purchase orderc. Purchase requisitiond. Sales invoice
June’s Garden Supplies purchases merchandise on account from Lawn Supplies, Inc. The list price is $1,600, with a trade discount of 25 percent, terms 1/10, n/30. June’s Garden Supplies pays the
What is a purchase allowance?
The customer’s accounting department should compare the purchase invoice from the supplier to:a. The Purchases account and the sales invoice.b. The Purchases account and the purchase order.c. The
What is the relationship of the Accounts Payable account in the general ledger to the accounts payable subsidiary ledger?
At the beginning of September, Helen Rojas started Rojas Wealth Management Consulting, a firm that offers financial planning and advice about investing and managing money. On September 30, the
Using the information provided in Exercise 2.8, prepare a statement of owner’s equity for the month of September and a balance sheet for Rojas Wealth Management Consulting as of September 30,
Based on the accounts reflected below, the missing value for Equipment for the fundamental accounting equation to be in balance is what amount? Assume that all accounts have normal balances.a.
The company owner took $5,000 cash for personal use. What is the entry for this transaction?a. Debit Cash and credit Caleb Parker, Capitalb. Debit Cash and credit Caleb Parker, Drawingc. Debit Caleb
Find the balance of the Cash account.a. $48,200b. $66,900c. $64,000d. $116,000 + 72,000 44,000 Cash 24,000 10,000 10,400 4,700
An essential element of a strong system on internal control and fraud prevention is the segregation of duties of employees. Segregation of duties increases the likelihood that a single employee does
The following journal entries were prepared by an employee of International Marketing Company who does not have an adequate knowledge of accounting.INSTRUCTIONSExamine the journal entries carefully
Review the following excerpt taken from the Walmart consolidated balance sheet as of January 31, 2018. Analyze:1. When the accountant for Walmart records a purchase of property and equipment, what
What is posting?
Several transactions that occurred during December 20X1, the first month of operation for Wells’ Accounting Services, follow. The company uses the general ledger accounts listed
In a compound journal entry:a. If two accounts are debited, two accounts must be credited.b. If two accounts are debited, at least one account must be credited.c. Total debits must equal total
Assume you are the accountant for Catalina Industries. John Catalina, the owner of the company, is in a hurry to receive the financial statements for the year ended December 31, 20X1, and asks you

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