11) 11) If inventory items may be identified individually, the business could easily use this method of inventory costing: A) specific-unit-cost B) FIFO C) weighted-average cost D) average cost 12) 12) Which of the following methods represents the most accurate cost? A) average cost B) weighted average cost C) specific-unit-cost D) FIFO 13) 13) A jeweller selling unique, high-priced items of jewellery would most likely use which method of inventory costing? A) FIFO B) weighted average cost C) average cost D) specific-unit-cost 14) 14) When the FIFO method is used, ending inventory is assumed to consist of the: A) most recently purchased units B) oldest units C) units with the lowest per unit cost D) units with the highest per unit cost TRUE FALSE. Write T if the statemer Y V se. 1) Internal control is the organizational plan that companies use to protect their assets and records. 1) 2) 3) 4) 5) 6) 2) Different people should perform various accounting duties to minimize errors and the opportunities for fraud. 3) External auditors are entirely independent of a business. 4) A deposit in transit has been recorded by the bank but not the company. 5) An NSF cheque should be added to the bank balance on a bank reconciliation 6) An NSF cheque would be entered into the books by a debit to accounts receivable. 7) To maintain effective internal control, all incoming mail should be opened by a mailroom employee who does not have access to the accounting records. 8) If a customer's cheque that has been deposited is returned with the bank statement marked "insufficient funds (NSF)," it would appear on the bank reconciliation as a deduction from the ending book balance. 9) The initial entry to establish a petty cash fund involves a debit to cash and a credit to petty cash. 10) The petty cash fund must be replenished on the balance sheet date, otherwise the ledger will not balance. 7) 8) 9) 10) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answer the question. 11) 11) Internal control does not: A) promote operational efficiency B) guarantee a company will not go bankrupt help safeguard the assets a business uses in its operations D) prevent and detect error and fraud 12) 12) Which of the following auditors are employees of the business? A) insurance auditors B) internal auditors C) income tax auditors 1 or2 g external auditors Et Crea 13) 13) The three parties to a cheque are the A) bank, maker, and payor signer, depositor, and endorser B) bank, payee, and the government D) maker payer, and bank 14) 14) A system that relies on electronic communications, not paper documents, to transfer cash is known as: A) electronic remittance B) electronic funds transfer C) electronic imaging D) electronic mail 15) 15) Which of the following would be a reconciling item on the bank side of the reconciliation? A) collection of note receivable for $1,000 B) bank recorded a $2,000 deposit as $200 nonsufficient funds cheque for $75 D) service fee of $20 16) 16) Which of the following items used to reconcile cash does not require an adjusting entry? A) bank service charge B) outstanding cheques C) interest earned D) note collected by the bank 17) 17) If the balance on the bank statement does not equal the balance in the company's cash account: A) the bookkeeper made a mistake B) It is perfectly normal for the two balances to be different C) both the bank and the bookkeeper made a mistake D) the bank made a mistake 18) 18) A cheque cashed by the payee for $2,200 was recorded in the makers accounting records for $220. On a bank reconciliation: A) $1,980 will be added to the bank balance B) $1,980 will be added to the book balance C) $1,980 will be deducted from the book balance D) $1,980 will be deducted from the bank balance 19) 19) In a bank reconciliation, a $400 NSF cheque is: A) deducted from the bank balance C) deducted from the book balance B) added to the bank balance D) added to the book balance 20) 20) The Candy Place received a bank statement showing a balance of $5,350. What is the adjusted balance if there was a bookkeeper error of $200 in the depositor's favour, two outstanding cheques totalling $720, a service charge of $15, a deposit in transit of $165, and interest revenue of $21 earned by the depositor? A) $4,995 B) $5,016 C) $4,795 D) $4,601 Edit Creat 1) 2) TRUE FALSE. Write 'T if the statement is true and 'F if the statement is false. 1) Internal control is the organizational plan that companies use to protect their assets and records. 2) Safeguarding the assets the business uses in its operations is the sole purpose of an effective system of internal control. 3) It is necessary for the owners and top managers to demonstrate the importance of internal controls in order to expect the employees to take the controls seriously 4) It is poor planning to have employees rotate through jobs. 3) 4) 5) 5) Separation of authorization of transactions from custody of related assets is related to proper separation of duties 6) 6) The Cash Short and Over account is debited when sales revenue exceeds cash receipts 7) 7) The "adjusted bank balance in a bank reconciliation is always equal to the bank statement balance plus all deposits in transit. 8) 9) 8) To maintain effective internal control, all incoming mail should be opened by a mailroom employee who does not have access to the accounting records. 9) The petty cash fund must be replesyshed on the balance sheet date, otherwise the ledger will not balance. 10) Accountants have additional incentives for ethical behaviour and are expected to maintain luigher standards than society in general. 10) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answer the question. 11) Which of the following auditors are employees of the business? A) income tax auditors B) insurance auditors C) external auditors D) internal auditors 12) 13) 12) Two or more employees working together to defraud a company is referred to as: A) embezzlement B) team work fraud D) collusion 13) A limits access to a local network. A) marker B) point-of-sale terminal C) firewall D) computer-virus device 14) 14) All of the following are documents used to control a bank account except a(n): A) bank reconciliation B) signature card C) deposit ticket D) invoice % Edit & Cre 15) The three parties to a cheque are the: A) bank, maker, and payor C) maker, payee, and bank 15) B) bank, payee, and the government D) signer, depositor, and endorser 16) 16) A system that relies on electronic communications, not paper documents, to transfer cash is known as: A) electronic remittance B) electronic imaging electronic mail D) electronic funds transfer 17) 17) Which of the following would be a reconciling item on the bank side of the reconciliation? A) collection of note receivable for $1,000 B) bank recorded a $2,000 deposit as $200 C) service fee of $20 D) nonsufficient funds cheque for $75 18) 18) Outstanding cheques are cheques: A) not yet mailed by the payor C) not yet deducted on the books B) not yet paid by the bank D) that have been paid by the bank 19) 19) A cheque cashed by the payee for $2,200 was recorded in the makers accounting records for $220. On a bank reconciliation: A) $1,980 will be deducted from the book balance B) $1,980 will be added to the yok balance C) $1,980 will be added to the bank balance D) $1,980 will be deducted from the bank balance 20) 20) In a bank reconciliation, a $400 NSF cheque is: A) deducted from the bank balance C) added to the bank balance B) added to the book balance D) deducted from the book balance TRUE FALSE. Write 'T' if the statement is true and Fir the statement is false, 1) 1) The accounts receivable account in tle general ledger serves as a control account because it summarizes the total of the receivables from all customers 2) 2) A bookkeeper should not be allowed to handle cash 3) 3) The credit department should have no access to cash 4) Selling on credit creates both a benefit and a cost. 5) 5) The allowance for doubthul accounts is a contra account to cash. 6) 6) The allowance for doubtful accounts is a contra account to accounts receivable and has a normal credit balance 7) 7) The percent-of-sales method for estimating uncollectibles is also known as the income statement approach 8) 8) Bad-debt expense is a contra asset account 9) 9) The direct write-off method is the preferred way to apply the accrual basis for measuring bad-debt expense since it matches revenues and expenses on the income statement. 10) 10) Both credit cards and debit cards bear a risk for the card holder, the issuer, and the business accepting the card. 11) 11) The person or business to which the maker of a note promises future payment is called the payee 12) 12) The maturity value of a 15%, 90 day-note for $10,000 is $9,625 13) 13) A 10% six month note receivable for the principal amount of $1,000 will earn interest revenue of $100. 14) 14) The balance sheet of Rogers Company reports: accounts receivable (less allowance for doubtful accounts of $25,700), 5695,500. Therefore Rogers Company's gross accounts receivable must be $721,200. 15) 15) If the maker of a note does not pay at maturity, the maker is said to dishonour the note. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answer the question. 16) 16) A critical element of internal control over collection of accounts receivable is: A) setting up a petty cash account B) depositing the cash from the cash register on a daily basis C) the separation of cash-handling and cash-accounting duties D) using a cheque writing machine 17) 17) If the allowance method of accounting for doubtful receivables is used, what account is credited in the entry to write off a customer's account as uncollectible! A) allowance for doubtful accounts B) sales returns and allowances C) bad debt expense D) accounts receivable 18) Allowance for doubtful accounts has a credit balance of $900 at the end of the current year (prior 18) to adjustment). An analysis of the aged accounts in the customers ledger indicates uncollectible accounts of $16,000. The adjusting entry would require a debit to A) bad debt expense for $16,900 B) bad-debt expense for $15,100 C) allowance for doubtful accounts for $16.900 D) allowance for doubthul accounts for $15,100 19) You are informed that Warren Hodges, one of your customers, has dedared bankruptcy. Hodges 19) has an account with your company with a current balance of $2,300. Using the allowance method, the entry to write off the uncollectible account involves: A) a debit to Hodges's accorgt receivable and a credit to bad debt experbe B) a debit to allowance for doubtful accounts and a credit to the Hodges's account receivable C) a debit to bad-debt expense and a credit to Hodges's account receivable D) a debit to Hodges's account receivable and a credit to allowance for doubtful accounts 20) 20) Mandy Smith's account was written off last year. She owed City Company $5,000. Using the allowance method, the journal entry to reinstate her account involves A) a debit to Smith's account receivable and a credit to bad-debt expense B) a debit to bad-debt expense and a credit to Smith's account receivable C) a debit to allowance for doubtful accounts and a credit to Smith's account receivable D) a debit to Smith's account receivable and a credit to allowance for doubtful Accounts 21) 21) Using the balance sheet approach to estimate uncollectibles, accounts that are 90 days old are: A) less likely to be collected than accounts 360 days old B) more likely to be collected than accounts 30 days old C) equally likely to be collected as accounts 360 days old D) less likely to be collected than accounts 30 days old 22 22) The current credit balance in allowance for doubtful accounts before adjustment is 5658. An aging schedule reveals 53.500 of uncollectible accounts. The ending balance in allowance for doubtful accounts should be: A) 52.542 B) $4.158 C) $658 D) $3.500 23) 23) The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The journal entry for estimated uncollectible accounts should be prepared for: A) $658 B) $2,842 C) $3,500 D) $4,158 24) 24) Under the allowance method, if uncollectible account write-offs during the year exceed the allowance amount, the balance in allowance for doubtful accounts at year end prior to adjustment: A) will be zero B) will be a debit C) should be deducted from accounts receivable D) should be adjusted by debiting it to bring the balance back to zero 25) The allowance for doubtful accounts has a current debit balance of $2,550. Bad-debt expense is estimated to be 3% of net credit sales. If net credit sales were $250,000, which of the following would be part of the adjusting entry for bad-debt expense? A) debit allowance for doubtful accounts for $7,500 B) credit allowance for doubtful accounts for $4,950 C) debit bad-debt expense for $10,500 D) debit bad-debt expense for $7,500 25)