16 ACCOUNTING 1 QUESTIONS

30. The following information pertains to Ponce Company:

Cash balance per bank statement	$14,350
Cash balance per general ledger	15,080
Bank service charge	40
Deposits in transit to bank	1,800
Outstanding checks	1,310
NSF check returned by bank	200

Ponce should show the following reconciled cash balance from the bank reconciliation on its balance sheet:

Select one:

A. $13,540

B. $14,840

C. $16,110

D. $16,890

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 account under the direct write-off method

B. Does not affect net income or total assets

C. Debits Bad Debts Expense and credits Allowance for Uncollectible Accounts

D. Will increase total assets

34. Fifth Ohio Bank collected a note for Charlie Company. This collection, not yet recorded in Charlies books, appears on the bank 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 Company finds that Check No. 951 was written for $28.70 on the books, but the 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 ending balance

B. On the bank side, deduct $54 from payments and add $54 to ending balance

C. On the book side, deduct $54 from payments and add $54 to ending balance

D. On the book side, add $54 to payments and deduct $54 from ending balance

36. Goodwill can be recorded as an asset when:

Select one:

A. A business is purchased and payment is made in excess if the fair value of the identifiable net assets

B. A business has above normal profitability compared to other businesses in its industry

C. A business can determine that it has created customer goodwill and name recognition

D. An offer is received to purchase the business at a price in excess of the value of the assets

37. On November 16, 2016, Soccer Company borrowed $20,000 from Ball Company and gave a 90-day, 12% note. On December 31, 2016 the end 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 machine for $160,000. Its estimated useful life is eight years with an expected salvage value of $12,000.

Assuming double-declining balance depreciation, 2016 depreciation 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 truck for $29,400. Its estimated useful life is seven years or 200,000 miles. The trucks expected salvage value is $1,400. During 2016, the truck was driven 20,000 miles.

Assuming units-of-production depreciation, 2016 depreciation expense 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 component identified 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 vice president discovered that the bookkeeper had recorded a check written 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 in its 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 a good system of internal accounting control over cash?

Select one:

A. Monthly bank reconciliations are prepared by the person who makes the daily bank deposits.

B. Cash handling is separated from the recording of cash transactions.

C. All receipts are deposited daily in the bank.

D. All major disbursements are made by check, and an imprest fund 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 checks as 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 recording credit losses. In November 2016, Southwest wrote off the $3,600 account 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 indicates that $40,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $6,000 credit balance, the adjustment to record 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 balance of $18,100. Prior to reconciliation, its books show a cash balance of $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 bank reconciliation should be:

Select one:

A. $19,040

B. $18,680

C. $18,540

D. $20,200