Question 1 (2 points)

Accounts receivable less the allowance for uncollectible accounts is known as net realizable value, or the amount of cash expected from the collection of present customer balances.

Question 1 options:

1) True

2) False

Question 2 (2 points)

The bank reconciliation is an informal financial statement that is used by management.

Question 2 options:

1) True

2) False

Question 3 (2 points)

Hall uses aging to estimate uncollectible. Accounts of $100,000 are less than 30 days old (98% collectible); $50,000 are 30 to 60 days old (90% collectible); $25,000 are 61-120 days old (50% collectible); and the remaining $10,000 is 10% collectible. (Assume the starting balance was zero.)

Question 3 options:

1)

The Uncollectible Accounts Expense should be $7,000.

2)

The Uncollectible Accounts Expense should be $9,000.

3)

The Uncollectibles Accounts Expense should be $28,500.

4)

Cannot be determined from the information given

5)

None of these

Question 4 (2 points)

A cash system with excellent internal controls should require all significant disbursements to be made by check.

Question 4 options:

1) True

2) False

Question 5 (2 points)

King Triton Company uses an allowance method for recording uncollectible receivables. King Triton was notified by Flounder that payment on a $7,500 receivable would be forthcoming. King Triton had previously written off the receivable from Flounder. The proper journal entry for King Triton to record to reinstate the receivable into the accounts is:

Question 5 options:

1)

Accounts Receivable7,500

Allow. for Uncollectible Accts7,500

2)

Allow. for Uncollectible Accts7,500

Sales7,500

3)

Accounts Receivable7,500

Sales7,500

4)

Accounts Receivable7,500

Uncollectible Accounts Expense7,500

Question 6 (2 points)

A decrease in the days outstanding in receivables could be indicative of declining business conditions.

Question 6 options:

1) True2) False

Question 7 (2 points)

Jaq Company regularly sells goods to customers who use Discover credit cards. Credit card sales on June 8 amounted to $9,000 and were subject to a 3% bank fee. Eastland should record sales of:

Question 7 options:

1)

$9,270

2)

$8,730

3)

$9,000

4)

None of these

Question 8 (2 points)

A bank reconciliation revealed cash per the bank statement of $1,484, cash per company records of $1,681, bank charges of $21, deposits in transit of $317, outstanding checks of $231, and NSF checks of $90. The correct cash balance is:

Question 8 options:

1)

$1,479

2)

$1,570

3)

$1,490

4)

$1,777

5)

None of these

Question 9 (2 points)

Under the cash basis of accounting, revenues are recognized in the period of cash receipt, while expenses are recognized in the period incurred.

Question 9 options:

1)

True

2)

False

[KB1]This wording doesn't make sense, but I'm not sure what it's supposed to be.

Question 10 (2 points)

When reconciling the ending cash balance per the bank statement to the correct adjusted cash balance, how would outstanding checks be handled?

Question 10 options:

1)

Added to the balance per the bank statement

2)

Depends on the nature of the outstanding checks

3)

Outstanding checks would be ignored

4)

None of these

Question 11 (2 points)

If Drizella should collect an account in 2020 that was written off in 2019, Drizella would debit Cash for the amount received and credit:

Question 11 options:

1)

An income account entitled Adjustment of Prior Period Earnings

2)

The Accounts Receivable account

3)

The Bad Debts Expense account

4)

None of these

Question 12 (2 points)

Prince Eric Company uses an allowance method to account for bad debts. Prince Eric estimates that 9% of the outstanding accounts receivable will be uncollectible. At the end of the year, Prince Eric has outstanding accounts receivable of $500,000 and a debit balance in the Allowance for Uncollectible Accounts of $15,000. Prince Eric should record uncollectible accounts expense of:

Question 12 options:

1)

$60,000

2)

$15,000

3)

$45,000

4)

$55,500

Question 13 (2 points)

Gus uses an allowance method for recording bad debts. Gus determined that $7,500 of accounts receivable from Jaq Corporation are uncollectible. The entry Gus should make to write off the Jaq account would include:

Question 13 options:

1)

A credit to Cash for $7,500

2)

A credit to Allowance for Uncollectible Accounts for $7,500

3)

A credit to Accounts Receivable for $7,500

4)

A credit to Uncollectible Accounts Expense for $7,500

5)

None of these

Question 14 (2 points)

Scuttle Company uses an allowance method for recording uncollectibles. Scuttle determined that $8,000 due from Prince Eric will not be collected. The entry Scuttle should record to write off the Prince Eric account is:

Question 14 options:

1)

Uncollectible Accts Expense8,000

Accounts Receivable8,000

2)

Sales8,000

Accounts Receivable8,000

3)

Uncollectible Accts Expense8,000

Allow. for Uncollectible Accts8,000

4)

Allow. for Uncollectible Accts8,000

Accounts Receivable8,000

Question 15 (2 points)

Cinderella uses aging to estimate uncollectibles. Accounts of $150,000 are less than 30 days old (96% collectible); $80,000 are 30 to 60 days old (85% collectible); $35,000 are 61-120 days old (50% collectible); and the remaining $10,000 is 10% collectible.

Question 15 options:

1)

The Allowance for Uncollectibles should have a balance of $6,000.

2)

The Allowance for Uncollectibles should have a balance of $17,500.

3)

The Allowance for Uncollectibles should have a balance of $44,500.

4)

The Allowance for Uncollectibles should have a balance of $29,500.

5)

None of these

Question 16 (2 points)

The amount of the difference between the balance per bank statement and balance per books requires a journal entry.

Question 16 options:

1) True

2) False

Question 17 (2 points

In preparing a bank reconciliation, outstanding checks should be added back to the ending balance per the bank statement.

Question 17 options:

1) True.

2) False

Question 18 (2 points)

Generally, the allowance method is considered preferable to the direct write-off method because the allowance method:

Question 18 options:

1)

Recognizes expense when a specific account is determined to be uncollectible

2)

Reflects the actual facts as they have taken place

3)

Recognizes the expense of a bad debt in the same period as the sale

4)

Relies on estimates, which are always accurate and stable among years

Question 19 (2 points)

Fairy Godmother had an aging revealed [KB1]a target year-end allowance of $120,000. The balance in Allowance for Uncollectibles, before adjustment, contained a $10,000 debit balance.

Question 19 options:

1)

The Uncollectibles Accounts Expense should be increased by $60,000.

2)

The Uncollectibles Accounts Expense should be increased by $70,000.

3)

The Uncollectibles Accounts Expense should be increased by $110,000.

4)

The Uncollectibles Accounts Expense should be increased by $150,000.

5)

None of these

Question 20 (2 points)

Which statement about internal control for cash disbursements is false?

Question 20 options:

1)

All significant disbursements should be made by check.

2)

Cash in the ledger should be reconciled to cash reported by the bank.

3)

The individual responsible for signing checks should not also prepare the checks.

4)

Petty cash receipts should be kept for a period of time.

5)

All of the above