Ch. 7-10 Practice Questions Flashcards
The principles of internal control consist of all of the following except:
generally accepted accounting principles.
The following measure is recommended to obtain maximum benefit from independent internal verification:
all of these answers are correct.
The concept of reasonable assurance rests on the premise that:
the cost of establishing control procedures should not exceed their expected benefit.
Cash consists of:
coins, currency, checks, money orders, money on hand or on deposit in a bank or similar depository.
Internal control over cash disbursements is more effective when payments are made by:
check.
The bank would debit the customer’s account for all of the following items except:
collection of a note receivable.
Examples of cash equivalents include:
Treasury bills, commercial paper, and money market funds.
A cash budget contains three sections:
cash receipts, cash disbursements, and financing.
The cash receipts section of the cash budget contains:
all of these answers are correct.
The cash disbursements section of the cash budget contains:
all of these answers are correct.
To ensure receivables are not overstated on the balance sheet, they are reported:
both at their cash (net) realizable value and less estimated uncollectible receivables.
Which of the following is the most liquid asset?
Receivables.
Receivables are often classified as:
accounts, notes, other.
All of the following are “other receivables” except:
petty cash.
The method of accounting for bad debt expense, which conforms to GAAP is:
allowance method.
An aging schedule of accounts receivable
arranges the accounts by the length of time they have been unpaid.
When the allowance method is used and an account is subsequently written off as uncollectible, the following account is debited:
Allowance for Doubtful Accounts.
When using the allowance method, the balance in the Allowance for Doubtful Accounts:
all of these answer choices are correct.
Notes receivable:
all of these answer choices are correct.
On May 1, Smith Company makes sales of $10,000 to Jones Company. Jones needs longer than the normal 30 days to pay and signs a 90 day 8% note. On May 1, Smith Company should
debit Notes Receivable for $10,000.
The cost of an asset less its salvage value is referred to as:
depreciable cost.
An exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant is a:
patent.
The most widely used method of depreciation is the:
straight-line method.
The Blooming Miracles Flower Shop bought a delivery van on January 1, 2017. The van cost $18,000 and had an expected salvage value of $3,000. The life of the van was estimated to be 5 years or 150,000 miles.
- The depreciable cost of the van is:
$15,000.
The depreciation expense for 2017 using the straight-line method of depreciation is:
$3,000.
Using the straight-line method of depreciation, the book value of the van at the beginning of the third year would be:
$12,000.
The following method(s) is (are) accelerated method(s) of depreciation:
both the declining-balance method and MACRS.
Depreciation is dependent on a number of estimates. When a change in an estimate is required, the change is made:
both in the current year and in the future years.
All of the following are intangible assets except:
coal reserves.
An exclusive right to reproduce and sell artistic or published work is a:
copyright.
Liabilities are
all of these answer choices are correct.
Notes payable provide the lender
both written documentation and interest income.
Assume the tax rate in your state is 8%. Your cash register does not have a key for sales tax. However, the total amount of cash received for sales and sales tax during the month of June was $27,000. Sales for the month of June totaled
$25,000.
All of the following would have unearned revenue except
the local Slurp and Burp.
When the market rate of interest is greater than the contractual rate of interest
bonds will be issued at a discount.
The cash inflows during the year that resulted from the principal portion of debt transactions is provided in the
Financing activities section of the cash flow statement.
The times interest earned ratio uses income before interest expense and taxes because
this number best represents the amount available to pay interest.
A bond issued at a premium
has a stated rate of interest that exceeds the market rate.
Discount on Bonds Payable
both is a contra liability and is deducted from bonds payable on the balance sheet.
Contingencies must be accrued as liabilities if
both the company can determine a reasonable estimate of the debt and it is probable the company will suffer a loss.
