15.Which of the following does not contribute toward achieving internal control over cash?(1 Point)

The practice of making small cash disbursements directly from the current day's cash receipts

The practice of approving every expenditure before the cash disbursement is made

The use of a petty cash fund

The preparation of cash budgets

16.Financial assets describe not just cash, but all assets that are easily and directly convertible into known amounts of cash, except marketable securities.(1 Point)

True

False

17.For the last several years Conway Corporation has operated with a gross profit rate of 40%. On January 1 of the current year, the company had on hand inventory with a cost of $600,000. Purchases of merchandise during January amounted to $150,000, and sales for the month were $360,000. Using the gross profit method, what is the estimated inventory at January 31?(2 Points)

$534,000

$144,000

$216,000

$360,000

18.In a periodic inventory system, understating the amount of ending inventory will cause an understatement of gross profit in the current year.(1 Point)

True

False

19.A bank reconciliation explains the differences between:(1 Point)

The balance per bank statement and cash expected to be on hand according to the cash forecast.

Cash receipts and cash disbursements for the period.

The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period.

The balance per bank statement and the cash balance per the accounting records of the depositor.

20.A major purpose of using an Allowance for Doubtful Accounts is to recognize uncollectible accounts expense in the same accounting period as the related sales that caused the expense.(1 Point)

True

False

21.In preparing the bank reconciliation, certain transactions recorded by the depositor may not have been recorded by the bank. Which of the following is an example of this type of transaction?(1 Point)

Service charges

Credit for interest earned

Charges for NSF checks

Outstanding checks

22.At December 31, before adjusting and closing the accounts had occurred, the Allowance for Doubtful Accounts of Seaboard Corporation showed a debit balance of $3,200. An aging of the accounts receivable indicated the amount probably uncollectible to be $2,100. Under these circumstances, a year-end adjusting entry for uncollectible accounts expense would include a:(2 Points)

Debit to the Allowance for Doubtful Accounts for $1,100.

Debit to Uncollectible Accounts Expense of $2,100.

Debit to Uncollectible Accounts Expense of $5,300.

Credit to the Allowance for Doubtful Accounts for $1,100.

23.In the bank reconciliation, every adjustment to the balance per depositor's records requires a journal entry.(1 Point)

True

False

24.If the note receivable bears interest, the amount debited to Notes Receivable is for the maturity amount of the note.(1 Point)

True

False

25.Companies with perpetual inventories need not take physical inventory counts because inventory amounts are perpetually available.(1 Point)

True

False

26.The bookkeeper prepared a check for $68 but accidentally recorded it as $86. When preparing the bank reconciliation, this should be corrected by:(1 Point)

Subtracting $18 from the bank balance.

Adding $18 to the bank balance.

Adding $18 to the book balance.

Subtracting $18 from the book balance.

27.Which of the following practices best illustrates efficient management of cash?(1 Point)

Cash budgets (forecasts) are prepared only one month in advance in order to avoid the need for constant revision.

Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year.

All cash resources are held in the checking account to maximize liquidity.

The accountant records all cash receipts and payments when reconciling the bank account at the end of each month.

28.At year-end, the perpetual inventory records of Anderson Co. indicate 60 units of a particular product in inventory, acquired at the following dates and unit costs: Purchased in August: 30 units at $750 per unit. Purchased in November: 30 units at $700 per unit. A complete physical inventory taken at year-end indicates only 50 units of this product actually are on hand Assuming that Anderson uses the FIFO cost flow assumption, it should record this inventory shrinkage by:(3 Points)

Debiting Cost of Goods Sold $7,500.

Crediting Cost of Goods Sold $7,000.

Crediting Cost of Goods Sold $7,000.

Crediting Cost of Goods Sold $7,500.

29.For the purpose of delaying income taxes, during an inflationary period, which method would be best?(2 Points)

FIFO

Taxes would be the same under each assumption

Average cost

LIFO

30.A line of credit is an advance agreement by a bank to lend a company any amount of money up to a specified limit.(1 Point)

True

False