Module06_Final_Exam_Cameron_White_Company_update

QUESTION 1
The Sales Returns and Allowances
A. account is presented on the balance sheet as a deduction from Accounts Receivable.
B. on the income statement as a deduction from Sales.
C. on the income statement as an addition to Sales.
D. on the balance sheet as a deduction from Capital.
1 points

QUESTION 2
If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were
A. $50,000
B. $54,000
C. $46,000
D. $4,000
1 points

QUESTION 3
The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes:
A. debit to Accounts Receivable and a credit to Sales Returns and Allowances.
B. a debit to Return Expense and a credit to Accounts Receivable.
C. a debit to Sales and a credit to Sales Returns and Allowances.
D. a debit to Sales Returns and Allowances and a credit to Accounts Receivable.
1 points

QUESTION 4
With the accrual basis of accounting, it is appropriate to recognize revenue from a credit sale
A. on the date the account is collected in full.
B. on the date of the sale.
C. each time a payment on an account balance is received.
D. either on the date of the sale or when the amount of the sale is collected.
1 points

QUESTION 5
On December 31, prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $200. An age analysis of the accounts receivable produces an estimate of $1,000 of probable losses from uncollectible accounts. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
A. $1,000.
B. $800.
C. $200
D. $1,200
1 points

QUESTION 6
When the allowance method of recognizing losses from uncollectible accounts is used, the entry to record the write-off ofa specific account consists of
A. a debit to Uncollectible Accounts Expense and a credit to Accounts Receivable.
B. a debit to Uncollectible Accounts Expense and a credit to Allowance for Doubtful Accounts.
C. a debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts.
D. a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
1 points

QUESTION 7
A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for
A. $3,000.
B. $1,500
C. $1,800.
D. $1,200
1 points

QUESTION 8
When a firm uses the allowance method to provide for losses, the collecting of an account previously written off as uncollectible requires an entry
A. to reduce the balance of Uncollectible Accounts Expense.
B. to increase the balance of the Sales account.
C. to reinstate the account receivable.
D. to decrease the balance of the Allowance for Doubtful Accounts.
1 points

QUESTION 9
On December 31, prior to adjustments, the balance of Accounts Receivable is $16,000 and Allowance for Doubtful Accounts has a credit balance of $95. The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year. The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
A. $895.
B. $800.
C. $95.
D. $705.
1 points

QUESTION 10
The adjusting entry to record accrued interest on a note receivable requires
A. a debit to Interest Revenue and a credit to Interest Receivable.
B. a debit to Interest Receivable and a credit to Interest Revenue.
C. a debit to Interest Income and a credit to Notes Receivable.
D. a debit to Interest Revenue and a credit to Cash.
1 points

QUESTION 11
When a company issues a promissory note, the accountant records an entry that includes a credit to Note Receivable for
A. the maturity value of the note.
B. the face value less the interest that will accrue.
C. the face value of the note.
D. the face value of the note plus the interest that will accrue.
1 points

QUESTION 12
How much interest will accrue on a $20,000 face value, 60-day note that bears interest at 9 percent a year (based on a 360 day year)?
A. $300
B. $450.
C. $900
D. $1,800
1 points

QUESTION 13
Notes payable which are to be satisfied with current assets and are due within one year are usually shown
A. in the Current Liabilities section of the balance sheet,
B. in the Other Expenses section of the income statement.
C. in the Long-Term Liabilities section of the balance sheet.
D. in the Current Assets section of the balance sheet.
1 points

QUESTION 14
Upon collection of the amount due on a $6,000 face value, 90-day note with interest at 10 percent a year, the Note Receivable account is
A. debited for $6,000.
B. credited for $6,000.
C. debited for $6,600.
D. credited for $6,150.
1 points

QUESTION 15
The balance sheet shows
A. the amount of net income or loss.
B. the financial position of a business at a given time.
C. all revenues and expenses.
D. the results of business operations.
1 points

QUESTION 16
Amounts that a business must pay in the future are known as
A. expenses.
B. accounts payable.
C. stock.
D. accounts receivable.
1 points

QUESTION 17
Examples of assets are
A. investments by the owner and revenue.
B. cash and accounts receivable.
C. cash and rent expense.
D. cash and revenue.
1 points

QUESTION 18
A net loss results
A. when assets are greater than liabilities.
B. when expenses are greater than revenue.
C. when expenses are greater than assets.
D. when revenue is greater than expenses.
1 points

QUESTION 19
The income statement shows
A. the total value of the business.
B. revenue and stockholders’ equity.
C. the financial position of a business on a specific date.
D. the results of operations for a period of time.
1 points

QUESTION 20
If liabilities are $4,000 and stockholders’ equity is $15,000, assets are
A. $4,000.
B. 15,000.
C. $19,000.
D. $9,000.
1 points

QUESTION 21
Assets and liabilities are reported on
A. the income statement.
B. the statement of stockholders’ equity.
C. both the balance sheet and the income statement.
D. the balance sheet.
1 points

QUESTION 22
The rent paid for future months is a (n)
A. asset.
B. liability.
C. expense.
D. revenue.
1 points

QUESTION 23
Credits are used to record
A. decreases in assets and stockholders’ equity and increases in liabilities.
B. decreases in assets, liabilities, and stockholders’ equity.
C. increases in liabilities and stockholders’ equity.
D. decreases in liabilities and increases in assets and stockholders’ equity.
1 points

QUESTION 24
Debits are used to record increases in
A. revenue and stockholders’ equity.
B. assets and revenue.
C. assets and liabilities.
D. assets and expenses.
1 points

QUESTION 25
A firm paid cash to apply against a debt. To record this transaction, the accountant would
A. debit Accounts Receivable and credit Cash.
B. debit Cash and credit Accounts Payable.
C. Debit Cash and credit Accounts Receivable.
D. debit Accounts Payable and credit Cash.
1 points

QUESTION 26
When charge customers pay cash to apply against their accounts, the amount is recorded
A. on the debit side of the Accounts Receivable account and the credit side of the Cash account.
B. on the debit side of the Cash account and the credit side of the Accounts Receivable account.
C. on the debit side of the Cash account and the credit side of the Fees Income account.
D. on the debit side of the Accounts Payable account and the credit side of the Cash account.
1 points

QUESTION 27
The account used to record increases in stockholders’ equity from the sale of goods or services is
A. the stock account.
B. the revenue account.
C. the Cash account.
D. the dividends account.
1 points

QUESTION 28
Which of the following types of accounts normally have debit balances?
A. assets and revenue.
B. expenses and assets.
C. assets, liabilities, and stockholders’ equity.
D. liabilities and Stockholders’ equity.
1 points

QUESTION 29
Which of the following groups contain only accounts that normally have credit balances?
A. salaries expense and accounts payable.
B. accounts payable and equipment.
C. fees income and stock.
D. accounts receivable and fees income.
1 points

QUESTION 30
The journal entry to record the sale of services on credit should include
A. a debit to Cash and a credit to Accounts Receivable.
B. a debit to Fees Income and a credit to Accounts Receivable.
C. debit to Accounts Receivable and a credit to Stock.
D. a debit to Accounts Receivable and a credit to Fees Income.
1 points

QUESTION 31
The journal entry to record the purchase of equipment for a $100 cash down payment and abalance of $400 due in 30 days would include
A. a debit to Equipment for $500, a credit to Cash for $100, and a credit to Accounts Payable for $400.
B. a debit to Equipment for $100 and a credit to Cash for $100.
C. a debit to Equipment for $100 and a credit to Accounts Payable for $400.
D. debit to Equipment for $500 and a credit to Cash for $500.
1 points

QUESTION 32
The journal entry to record the payment of the current month utility bill would include
A. a debit to Utilities Expense and a credit to Cash.
B. a debit to Utilities Expense and a credit to Stock.
C. a debit to Utilities Expense and a credit to Accounts Payable.
D. a debit to stockholders’ equity and a credit to Cash.
1 points

QUESTION 33
The journal entry to record the payment of dividends for the month is:
A. a debit to Common Stock and a credit to Cash.
B. a debit to dividends and a credit to Cash.
C. a debit to dividends and a credit to common stock.
D. a debit to cash and a credit to dividends.
1 points

QUESTION 34
The journal entry to record the payment of salaries should include
A. a debit to Cash and a credit to Salaries Expense.
B. debit to Salaries Expense and a credit to Cash.
C. a debit to Stock and a credit to Cash.
D. a debit to Salaries Expense and a credit to Accounts Payable.
1 points

QUESTION 35
On a balance sheet, Accumulated Depreciation—Equipment is reported
A. as a deduction from the total of the assets.
B. as a liability.
C. as a deduction from the cost of the equipment.
D. as an expense.
1 points

QUESTION 36
If the prepaid expenses are not adjusted, assets on the balance sheet
A. will be understated.
B. will be overstated.
C. will not be affected.
D. may be either overstated or understated.
1 points

QUESTION 37
If long-term assets are not adjusted, expenses on the income statement
A. will be understated.
B. will not be affected.
C. will be overstated.
D. may be either overstated or understated.
1 points

QUESTION 38
The entry to replenish a petty cash fund includes
A. a debit to Petty Cash Fund and a credit to Cash.
B. debits to various expense accounts and a credit to Petty Cash Fund.
C. debits to various expense accounts and a credit to Cash.
D. a debit to Cash and a credit to Petty Cash.
1 points

QUESTION 39
On May 1, 20–, a firm purchased a 1-year insurance policy for $1,800 and paid the full premium in advance. The insurance expense associated with this policy for 20—is
A. $1,800.
B. $1,050.
C. $600.
D. $1,200.
1 points

QUESTION 40
To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be
A. deducted from the book balance.
B. added to the book balance.
C. added to the bank statement balance.
D. deducted from the bank statement balance.
1 points

QUESTION 41
A firm appropriately wrote a check for $78 but entered the amount as payment of $87. On a bank reconciliation statement this error would be shown as
A. deduction of $9 from the book balance.
B. a deduction of $9 from the bank statement balance.
C. an addition of $9 to the book balance.
D. an addition of $9 to the bank statement balance.
1 points

QUESTION 42
The entry to record a purchase of merchandise on credit using a perpetual inventory system Includes
A. a credit to Merchandise Inventory and a debit to Accounts Payable.
B. a debit to Purchases (COGS) and a credit to Accounts Payable.
C. a debit to Accounts Payable and a credit to Purchases.
D. a debit to Merchandise Inventory and a credit to Accounts Payable.
1 points

QUESTION 43
A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?
A. $24,000
B. $36,000
C. $27,000
D. $21,000
1 points

QUESTION 44
A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $16,000 Early in the year, 8,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 2,000 units?
A. $24,000
B. $10,000
C. $12,000
D. $8,000
1 points

QUESTION 45
Which of the following is allowed under generally accepted accounting principles?
A. An owner lists the full cost of his or her personal automobile, which is occasionally used for business purposes, on the company’s balance sheet.
B. The Equipment ledger account shows a balance of $55,000. This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.
C. A company was offered $60,000 for land that it had purchased for $15,000. The company did not sell the land but increased the Land account to $60,000.
D. A large company recorded the $20 cost of a tool as an expense, although the item is expected to be used for 3 years.
1 points

QUESTION 46
An accountant who records revenue when a credit sale is made rather than waiting for the receipt of cash from the customer is
A. violating generally accepted accounting principles.
B. following the conservatism convention.
C. following the consistency principle.
D. following the accrual principle.
1 points

QUESTION 47
The FASB has concluded that financial reporting rules should
A. be in compliance with income tax law.
B. help companies minimize the taxes they must pay.
C. concentrate on providing helpful information to present and potential investors and creditors.
D. concentrate on providing helpful information to management.
1 points

QUESTION 48
Keeping the personal assets of the owner of a business separate from the assets of the firm is an example of
A. following the going concern assumption.
B. following the separate entity assumption.
C. applying the realization principle.
D. applying the conservatism convention.
1 points

QUESTION 49
Internal control is:
A. The process that helps a business achieve its objectives such as operating efficiently and effectively.
B. The preparation of fraudulent financial statements.
C. The reconciliation of the bank’s cash balance to the book’s cash balance.
D. The act of stealing a business’ assets.
1 points

QUESTION 50
Separation of duties refers to separating all of these functions except which of the following?
A. Hiring personnel
B. Maintaining custody of assets
C. Authorizing transactions
D. Keeping accounting records
1 points

QUESTION 51
Which of the following is not a control activity?
A. Security measures
B. Mandatory vacations
C. Proper authorization
D. Risk assessment
1 points

QUESTION 52
What is the amount of the net realized value for accounts receivable?
A. $13,500
B. $14,600
C. $12,400
D. $1,100
1 points

QUESTION 53
What is the amount of the net book value for store equipment?
A. $9,000
B. $4,000
C. $6,500
D. $2,500
1 points

QUESTION 54
What is the amount of the total current assts?
A. $109,650
B. $108,550
C. $76,650
D. $75,550
1 points

QUESTION 55
What is the amount of the total plant and equipment?
A. $39,000
B. $47,000
C. $28,000
D. $36,000
1 points

QUESTION 56
What is the amount of total assets?
A. $109,650
B. $108,550
C. $111,550
D. $155,550
1 points

QUESTION 57
What is the amount of the total current liabilities?
A. $29,000
B. $59,000
C. $29,400
D. $12,500
1 points

QUESTION 58
What is the amount of the total long-term liabilities?
A. $59,000
B. $26,000
C. $42,900
D. $26,400
1 points

QUESTION 59
What is the amount of the total stockholders’ equity?
A. $166,950
B. $56,150
C. $49,000
D. Not determinable
1 points

QUESTION 60
What is the amount of net income for the period?
A. $7,150
B. $7,700
C. $109,150
D. $56,150
1 points

QUESTION 61
Which of the following is NOT a factor in the fraud triangle?
A. Rationalization
B. Perceived opportunity
C. Perceived Pressure
D. Perceived Risk
1 points

QUESTION 62
A company may be limited in their internal control procedures because the cost of hiring enough people to implement the procedures:
A. outweighs the benefits of the system.
B. can prevent collusion.
C. can limit employee distractions.
D. has nothing to do with the effectiveness of the internal control system.
1 points

QUESTION 63
Which element of internal control deals with establishing procedures for things such as handling of incoming checks?
A. Monitoring
B. Control environment
C. Control activities
D. Risk assessment
1 points

QUESTION 64
Which element of internal control deals with identifying weaknesses of the internal control system?
A. Risk assessment
B. Information and communication
C. Control environment
D. Monitoring
1 points

QUESTION 65
To arrive at an accurate balance on the bank reconciliation statement, deposits in transit should be:
A. Deducted from the bank statement balance
B. Deducted from the book balance
C. Added to the book balance
D. Added to the bank statement balance