The use of internal controls provides guaranteed protection against losses due to operating activities. * 2 points O True False 2 points Factors that cause the bank statement balance of a chequing account to be different from the business chequing account balance include: outstanding cheques, deposits in transit, deductions for bank fees, additions for interest, and errors. * True O False TechCom customer RDA Electronics paid off an $8,300 balance on its account receivable. TechCom should record the transaction as a debit to Accounts Receivable-RDA Electronics and a credit to Cash. * True False The aging of accounts receivable examines each account 2 receivable to estimate the amount that is uncollectible. * O True False The cost of an asset includes all normal and reasonable expenditures necessary to get it in place and ready for its intended use. * True False The double-declining balance method is applied by (1) calculating the asset's straight-line depreciation rate, (2) doubling it, (3) subtracting residual value from cost, and (4) multiplying the rate times the cost. * True O False 2 points An asset that cost $5,000 has a current book value of $2,000. A revision of the useful life of the asset estimates the asset has a remaining useful life of four years and will have a residual value of $400. Using the straight-line method, the revised depreciation will be $500 per year. * True False A privately held corporation has a limited life because it is 2 points tied to the physical lives of its owners. * True False The shareholders can vote to pay themselves a dividend. O True False Cumulative preferred shares carry the right to be paid bot current and all prior periods' unpaid dividends before any dividends are paid to common shareholders. * O True False 2 points Which of the following is NOT a principle of internal control? * O Responsibilities should be clearly established O Adequate records should be maintained O Responsibility for related transactions should be divided O Assets should be insured and employees bonded Audits should always be conducted by employees internal to the organization 2 points A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. As a result, in preparing this month's reconciliation, the amount of this cheque should be * O Added to the book balance of cash O Deducted from the book balance of cash O Added to the bank balance of cash O Deducted from the bank balance of cash 2po During the current year, TechCom concluded that a customer's $4,400 account receivable was uncollectible and that the account should be written off. What effect will this write-off have on TechCom's current year net income and balance sheet assuming the allowance method is used to account for bad debts? * O No effect on net income or on total assets O Decrease in net income; no effect on total assets O Decrease in net income; decrease in total assets O Increase in net income; no effect on total assets O No effect on net income, decrease in total assets Accounts receivable turnover measures * 2 points O How long it takes to sell inventory on credit O How often a company converts its average accounts receivable balance into cash during the period Measures the relationship of cash sales to credit sales How long it takes to sell inventory on credit and how often a company converts its average accounts receivable balance into cash during the period How often a company converts its average accounts receivable balance into cash during the period and measures the relationship of cash sales to credit sales On October 1 of this year, Sports World purchased a delivery van for $23,000 with a residual value of $3,000. The van has an estimated useful life of 5 years. Using straight-line depreciation and the half-year rule, how much depreciation expense should Sports World recognize on December 31 of this year? * O $1,000 O $1,333 O $1,465 O $2,000 0 $4,600 2 points Sports World purchased a machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. Sports World estimates that the machine could produce 750,000 units of product over its useful life. In the first year, 95,000 units were produced. In the second year, production increased to 111,000 units. Using the units-of- production method, what is the amount of depreciation that should be recorded for the second year?* O $26,640 O $22,800 O $28,000 O $36,000 $49,440 A main accounting issue for property, plant and equipment 2 points is * The cost of property, plant and equipment O Testing property, plant and equipment for impairment O Accounting for repairs and improvements to property, plant and equipment O Disposal of property, plant and equipment O All of these Buying shares in a corporation is attractive to investors because * O Shareholders are not liable for the corporation's actions and debts. O Shares are easily transferred. O A corporation has unlimited life. O Shareholders are not agents of the corporation. O All of these answers are correct. A dividend preference for preferred shares means that* 2 points Preferred shareholders are allocated their dividends before any dividends are allocated to common shareholders O Preferred shareholders are guaranteed dividend O Dividends are paid quarterly O Only preferred shareholders will receive dividends O All of these 2 points Bruce Corporation issued 8,000 common shares in exchange for land that has a fair market value of $184,000. The entry to record this transaction would include O A debit to Common Shares for $8,000 O A debit to Land for $8,000 A credit to Land for $184,000 O A credit to Common Shares for $184,000 O A debit to Common Shares for $184,000 Prepare journal entries to record the following transactions that occurred during the first 2 months of operations: Jan-10 Sold 95,000 common shares for $8 per share cash. 15 Exchanged 3,000 preferred shares for equipment with a fair market value of S45,000 Feb-01 Exchanged 500 preferred shares for legal fees incurred during organization worth $6,000. Your