Fundimental Accounting Principled

Question 1

The most liquid asset is

Answer 1

Cash

Question 2

All disbursements except petty cash payment should be made by

Answer 2

Prenumbered checks

Question 3

A written notice by a deposited instructing his bank to deduct a specific sum from his account and pay it to the person assigned is known as a

Answer 3

Check

Question 4

A check involves three parties

Answer 4

The drawer who write the check
The drawer, the bank on which it is drawn
The payee the person who is to be paid

Question 5

The signature on the back of the check shows that the accepts responsibility for that amount is known as an

Answer 5

Endorsement

Question 6

The endorsement that pose the greatest treat in the event of a lost or stolen check is

Answer 6

Blank

Question 7

The bank service charge is evidence by a

Answer 7

Debit memorandum

Question 8

A check that has been deposited but cannot be collected because of insufficient funds is labeled

Answer 8

NSF and is deducted by the book balance

Question 9

A fund is established for a fixed petty cash amount that is reimbursed by a single check for the amount expended under the

Answer 9

Imprest system

Question 10

If proof of petty cash is impossible, the account will have to be used this is called

Answer 10

Cash short and over.

Question 11

Special journals

Types of transactions that go into sales journal is

Answer 11

Sales transaction

Question 12

What type of transactions go into the purchase journal

Answer 12

When we make purchases we put them in the purchase journal

Question 13

What go into the cash receipts journals?

Answer 13

Cash receipt where cash is going up

Question 14

What goes into the cash payment journal

Answer 14

Cash that we receipt where cash is going down

Question 15

Types of Subsidiary ledger is

Answer 15

Account receivable
Account payable

Question 16

What does into the sales journal

Answer 16

Only the journals that have accounts receivable and sales

If sales include inventory it will also have the cost of goods sold and inventory recorded into this journal

We only post at the end of the time period and sum everything up

Then enter it into the general journal then post into the general ledger.

Question 17

What is recorded into the purchase journal?

Answer 17

Every time you purchase on account it is recorded

Then sum and post to the general journal then the ledger.

Question 18

What goes into the cash receipt journal, ?

Answer 18

Anytime we receive cash it is recorded or from account receivable cash

Then sum and out in the general journal then post to general ledger

Question 19

What goes into the cash payment journal?

Answer 19

Anytime cash goes out or we are paying cash , it is recorded in the cash payment journal (eg for supplies and other expenses

Question 20

How to calculate discount for sale purchases

And record payment received in purchase journal

Answer 20

Eg) sold merchandise for 1950.00
Some of the merchandise was return for a value of $250
Credit terms of 2/10, n30

1950.00-250=1700 Account receivable.
1700*2%=34 sales discount
1700-34=1666.00 cash

Question 21

Returns that take place in transactions from special journals is posted in the

Answer 21

General journal - debit account payable
Credit-inventory

Sales return and allowances - debit

A/R - credit

Inventory - Debit
CoGS-credit

Account payable- Debit
Inventory credit

Sales return and allowance- debit
Account Rec- credit

Question 22

Bad Debts review using aging account receivable method to calculate bad debts.

Giving the following age schedule calculate the balance necessary for the allowance of doubtful account.

Answer 22

Current A/r $125,000 1%=1,250
31 to 60 days 70,000. 2%=1400
61 to 90 days 55, 00. 4%=2,200
91 to 120 days 35,000. 5%=1750
Past 120 days 1,9000. 10%=1,900

Total. = $8,500 desired balance

Question 23

Record the December 31 journal entry for thus situation if unadjusted balance if allowances for doubtful account us $200 credit

Answer 23

8,500-200=8300
Bad debt Expense Dr 8300
Allowance for Doubtful accounts cr $8300

Question 24

Bank reconciliation entry for bank balance

Answer 24

Eg)Bank balance $7,984
Add: Deposit in transit $1,208.5+
Bank Error $44.5= 1253+$7,984=$9237

Deduct:
Outstanding cheques
#207. $446
#219. $141
#239 $578.05
#240. $125.00
#241. $609.00
#242. $101.95=2001-$9237=
Reconciled balance $7,236

Question 25

Bank reconciliation Book entry

Answer 25

Balance per book. $6,866
Add:
Book error $1,080
Collection Nr
Including 161
Interest. $1,961+$1,080=3041+6866=$9907

Deduct:
Nsf. $147+

No signature. $395+
EFT. $2090+
Service charge $40= $2671-9907=
Reconciled book balance$7,236

Question 26

How to make journal entry to record bad debt expense

Answer 26

Eg) Abc company use the % sales method to calculate bad debt expense. You are given the following information:

Total sales for the year were $7500(80%) of which are credit sales)The allowance for doubtful account has a balance of $400 debit balance. Bad debt expense is estimated to be 1.2% of credit sales. Make the necessity journal entry to record Bad Debt expense for the year. What is the balance for doubtful account for this journal entry

Sales 7,500
Credit sales 750080%=, $6,000
Bad debt expense as a % of sales = 60001.2%=72.000

Date
Dec31 account and explanation

Bad Debt expense. Dr 72,000

Question 27

When used to monitor and control operations , internal control systems are low priority for managers

Answer 27

False

Question 28

Separation of duties divides responsibility for a series of transactions between two or more employees or departments. Despite the increase complexity, separation of duties reduce the risk of error and fraud

Answer 28

True.

Question 29

Small differences between cash sales and the amount on the cash register are directly debited or credited to the cash account

Answer 29

False

Question 30

Outstanding cheques are checque the bank has paid and deducted from the customer account during the month

Answer 30

False

Question 31

Which of the following is not a principle of internal control

Answer 31

Audits should always be conducted by employees internal to the organization.

Question 32

Cash receipts are the results of

Answer 32

Cash sales and collection of account receivable

Question 33

The percentage of sales approach for estimating bad befts is based on the idea that a percent of a company credit sales for the period are uncollectible

Answer 33

True

Question 34

The account receivable approach uses income statement relationships to estimate bad debts

Answer 34

False

Question 35

It is a bad business practices to accept a note receivable in exchange for an overdue account receivable.

Answer 35

False

Question 36

Techcom had net sales of $480000 and average account receivable of $64.000. It’s account receivable turnover was 7.5

Answer 36

True