45.One of the major steps in achieving internal control over accounts receivable is that the Billing department reviews the sales order, the customer's credit file, and decides whether and how much credit should be extended.(1 Point)

True

False

46.If the account Cash Over and Short has a debit balance, it is reported in the balance sheet as a current asset.(1 Point)

True

False

47.On June 1, 2018, Jensen Company acquired an 8%, ten-month note receivable from a customer in settlement of an existing account receivable of $130,000. Interest and principal are due at maturity. Jensen's entry to record the collection of this note at maturity includes a:(4 Points)

Credit to Interest Receivable of $6,067.

Credit to Interest Receivable of $2,600.

Credit to Notes Receivable of $140,400.

Credit to Interest Revenue of $6,067.

48.As of December 31, 2018, Chippewa Company has $26,440 cash in its checking account, as well as several other items listed below: Bank credit card slips signed by customers $ 3,600 Money market fund balance $ 25,000 Investment in U.S. Treasury bills, mature within 90 days $ 80,000 Checks received from customers, but not yet deposited in the bank $ 4,600 Investment in ATT 7% bonds, maturing June 2022 $ 70,000 - What amount should be shown in Chippewa's December 31, 2018, balance sheet as "Cash and cash equivalents"?(1 Point)

$59,640

$30,040

$139,640

$209,640

49.The higher a company's accounts receivable turnover rate, the more liquid the company's receivables.(1 Point)

True

False

50.On December 30, 2018, Varsity Corporation sold available for sale marketable securities costing $800,000 for $860,000 cash. The securities were purchased on January 2, 2016 and the market value of the securities on December 31, 2016 and December 31, 2017 was $820,000 and $780,000, respectively. How much gain or loss will Varsity report in its income statement for the year ending December 31, 2018?(2 Points)

A $20,000 loss.

A $40,000 gain.

An $80,000 gain.

A $60,000 gain.

51.A write down of inventory due to obsolescence reduces the amount in the Inventory account and may increase the amount in the Cost of Goods Sold account.(1 Point)

True

False

52.The unused portion of a line of credit:(1 Point)

Requires a compensating balance in order to keep the line of credit open.

Decreases a company's liquidity.

Can be used at any time by drawing a check on a special bank account.

Is reported as a current liability in the balance sheet.

53.If the allowance method is used, the recovery of an account receivable previously written-off results in a gain being recorded on the income statement.(1 Point)

True

False

54.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 Under the LIFO cost flow assumption, the cost of this item to be included as inventory in the company's year-end balance sheet is:(3 Points)

$37,500.

$36,500.

$42,000.

$36,000.

55.When interest is collected, it is debited to the Interest Revenue account and credited to the Notes Receivable account.(1 Point)

True

False

56.In preparing a bank reconciliation, a service charge shown on the bank statement should be:(1 Point)

Added to the balance per the depositor's records.

Deducted from the balance per the bank statement.

Deducted from the balance per the depositor's records.

Added to the balance per the bank statement.

57.The accounting records of Golden Company showed cash of $15,250 at June 30. The balance per the bank statement at June 30 was $15,125. The only reconciling items were deposits in transit of $3,200, outstanding checks totaling $4,100, an NSF check for $1,000 returned by the bank which Golden had not yet charged back to the customer, and a bank service charge of $25. The preparation of the bank reconciliation should indicate that Golden's adjusted cash balance at June 30 is:(5 Points)

$14,475.

$15,525.

$14,225.

$15,375.

58.During periods of inflation, when comparing LIFO with FIFO:(2 Points)

LIFO inventory and cost of sales would be higher.

LIFO inventory would be lower and cost of sales would be higher.

LIFO inventory would be higher and cost of sales would be lower.

LIFO inventory and cost of sales would be lower.

59.Entries made in the general journal after preparing a bank reconciliation are called closing entries.(1 Point)

True

False

60.The maker of a note is the party to whom payment is to be made.(1 Point)

True

False

61.After preparing a bank reconciliation, a journal entry would be required for which of the following:(1 Point)

A deposit in transit.

A deposit made by a company with a similar name and credited to your account.

A check for $48 given to a supplier but not yet recorded by the company's bank.

Interest earned on the company's checking account.

62.Internal control is strengthened by a policy of making payments by check, from cash receipts, or from a petty cash fund.(1 Point)

True

False

63.On October 12, 2017, Neptune Corporation invested $700,000 in short-term available-for-sale marketable securities. The market value of this investment was $730,000 at December 31, 2017, but had slipped to $725,000 by December 31, 2018. Assuming Neptune does not sell this investment, the fair value accounting adjustment necessary at December 31, 2018, includes:(2 Points)

A $25,000 credit to Unrealized Holding Gain on Investments.

A $5,000 debit to Investments in Marketable Securities.

A $5,000 debit to Unrealized Holding Gain on Investments.

A $725,000 debit to Investments in Marketable Securities.

64.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 LIFO cost flow assumption, it should record this inventory shrinkage by:(3 Points)

Crediting Cost of Goods Sold $7,500.

Debiting Cost of Goods Sold $7,500.

Crediting Cost of Goods Sold $7,000.

Debiting Cost of Goods Sold $7,000.

65.An advantage of the average-cost method of accounting for inventory is that the inventory is valued in the balance sheet at current replacement costs.(1 Point)

True

False

66.Kennedy Company uses the balance sheet approach in estimating uncollectible accounts expense. The company prepares an adjusting entry to recognize this expense at the end of each month. During the month of July, the company wrote-off a $3,500 receivable and made no recoveries of previous write-offs. Following the adjusting entry for July, the credit balance in the Allowance for Doubtful Accounts was $3,000 larger than it was on July 1. What amount of uncollectible account expense was recorded for July?(2 Points)

$2,500.

$6,500.

$1,500.

$1,000.

67.In general, the longer an account receivable is outstanding, the greater the likelihood it will be collected.(1 Point)

True

False