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Accounting
Q:
sales taxes collected by a retailer from a customer are expenses a.of the retailer b.of the customers c.of the government d.that are not recognized by the retailer until they are submitted to the government
Q:
The amount of cash to be reported on the balance sheet at June 30 is the a. total of the Cash column in the cash receipts journal as of June 30 b. adjusted balance appearing in the bank reconciliation for June 30 c. total of the Cash column in the cash payments journal as of June 30 d. balance as of June 30 on the bank statement
Q:
on january 1, 2012, keisler company, a calendar-year company, issued $500,000 of notes payable, of which $125,000 is due on january 1 for each of the next four years. the proper balance sheet presentation on december 31, 2012, is a.current liabilities, $500,000 b.long-term debt , $500,000 c.current liabilities, $125,000; long-term debt, $375,000 d.current liabilities, $375,000; long-term debt, $125,000
Q:
Cash equivalents a. are illegal in some states b. will be converted to cash within two years c. will be converted to cash within 90 days d. will be converted to cash within 120 days
Q:
on january 1, 2012, ermler company, a calendar-year company, issued $800,000 of notes payable, of which $200,000 is due on january 1 for each of the next four years. the proper balance sheet presentation on december 31, 2012, is a.current liabilities, $800,000 b.long-term debt , $800,000 c.current liabilities, $400,000; long-term debt, $400,000 d.current liabilities, $200,000; long-term debt, $600,000
Q:
What entry is required in the company's accounts to record outstanding checks? a. debit Accounts Receivable; credit Cash b. debit Cash; credit Accounts Receivable c. debit Cash; credit Accounts Payable d. no entry required
Q:
the current portion of long-term debt should a.be paid immediately b.be reclassified as a current liability c.be classified as a long-term liability d.not be separated from the long-term portion of debt
Q:
Credit memos from the bank a. decrease a bank customer's account b. are used to show a bank service charge c. show that a company has deposited a customer's NSF check d. show that the bank has collected a note receivable for the customer
Q:
a retail store credited the sales account for the sales price and the amount of sales tax on sales. if the sales tax rate is 5% and the balance in the sales account amounted to $315,000, what is the amount of the sales taxes owed to the taxing agency? a.$300,000 b.$315,000 c.$15,750 d.$15,000
Q:
A bank statement a. is a credit reference letter written by the company's bank b. shows a company the financial position of the bank as of a certain date c. is a bill from the bank for services rendered d. shows the activity that increased or decreased the company's account balance
Q:
a retail store credited the sales account for the sales price and the amount of sales tax on sales. if the sales tax rate is 5% and the balance in the sales account amounted to $189,000, what is the amount of the sales taxes owed to the taxing agency? a.$180,000 b.$189,000 c.$9,450 d.$9,000
Q:
a company receives $174, of which $14 is for sales tax. the journal entry to record the sale would include a adebit to sales tax expense for $14 b.debit to sales tax payable for $14 c.debit to sales for $174 d.debit to cash for $174
Q:
Entries are made to the petty cash account when a. making payments out of the fund b. recording shortages in the fund c. replenishing the petty cash fund d. establishing the fund
Q:
a company receives $88, of which $8 is for sales tax. the journal entry to record the sale would include a a.debit to sales tax expense for $8 b.credit to sales tax payable for $8 c.debit to sales for $88 d.debit to cash for $80
Q:
the amount of sales tax collected by a retail store when making sales is a.a miscellaneous revenue for the store b.a current liability c.not recorded because it is a tax paid by the customer d.recorded as an operating expense
Q:
unearned rental revenue is a.a contra account to rental revenue b.a revenue account c.reported as a current liability d.debited when rent is received in advance
Q:
An element of internal control is a. risk assessment b. journals c. subsidiary ledgers d. controlling accounts
Q:
Which of the following is not an element of internal control? a. risk assessment b. monitoring c. information and communication d. cost-benefit considerations
Q:
sales taxes collected by a retailer are recorded by a.crediting sales taxes revenue b.debiting sales taxes expense c.crediting sales taxes payable d.debiting sales taxes payable
Q:
interest expense on an interest-bearing note is a.always equal to zero b.accrued over the life of the note c.only recorded at the time the note is issued d.only recorded at maturity when the note is paid
Q:
A business that requires all cash payments be made by check cannot use a petty cash system. a. True b. False
Q:
the interest charged on a $50,000 note payable, at the rate of 6%, on a 60-day note would be a.$3,000 b.$1,500 c.$750 d.$500
Q:
the interest charged on a $50,000 note payable, at the rate of 6%, on a 90-day note would be a.$3,000 b.$1,500 c.$750 d.$500
Q:
Most companies that have several bank accounts, petty cash, and cash on hand would list each separately on the balance sheet. a. True b. False
Q:
A customer's check received in settlement of an account receivable is considered cash. a. True b. False
Q:
the interest charged on a $200,000 note payable, at the rate of 6%, for a year would be a.$12,000 b.$6,000 c.$3,000 d.$1,000
Q:
the interest charged on a $200,000 note payable, at the rate of 6%, on a 60-day note would be a.$12,000 b.$6,000 c.$3,000 d.$2,000
Q:
After a bank reconciliation is completed, journal entries are prepared for all adjusting items appearing in the bank section and the company section of the bank reconciliation. a. True b. False
Q:
In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records. a. True b. False
Q:
the interest charged on a $200,000 note payable, at the rate of 6%, on a 90-day note would be a.$12,000 b.$6,000 c.$3,000 d.$1,000
Q:
The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges. a. True b. False
Q:
On October 1, Sam's Painting Service borrows $80,000 from National Bank on a 3-month, $80,000, 4% note. The entry by Sam's Painting Service to record payment of the note and accrued interest on January 1 is
Q:
A backlog in recording transactions is an example of a warning sign from the accounting system. a. True b. False
Q:
On October 1, Sam's Painting Service borrows $80,000 from National Bank on a 3-month, $80,000, 4% note. What entry must Sam's Painting Service make on December 31 before financial statements are prepared?
Q:
as interest is recorded on an interest-bearing note, the interest expense account is a.increased; the notes payable account is increased b.increased; the notes payable account is decreased c.increased; the interest payable account is increased d.decreased; the interest payable account is increased
Q:
In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records. a. True b. False
Q:
There are three internal control objectives and they are to safeguard the company's reputation, ensure accurate financial reports, and ensure compliance with applicable laws. a. True b. False
Q:
West County Bank agrees to lend Drake Builders Company $100,000 on January 1. Drake Builders Company signs a $100,000, 6%, 6-month note. What entry will Drake Builders Company make to pay off the note and interest at maturity assuming that interest has been accrued to June 30?
Q:
Sarbanes-Oxley’s purpose is to maintain public confidence and trust in the financial reporting of companies. a. True b. False
Q:
if bonds are issued at a premium, the stated interest rate is a.higher than the market rate of interest b.lower than the market rate of interest c.too low to attract investors d.adjusted to a higher rate of interest
Q:
The ratio of cash to monthly cash expenses includes both cash and cash equivalents in the numerator. a. True b. False
Q:
if the market rate of interest is lower than the contractual interest rate, the bonds will sell at a.face value b.a premium c.a discount d.an unknown amount
Q:
For efficiency of operations and better control over cash, a company should maintain only one bank account. a. True b. False
Q:
a corporation issues $400,000, 8%, 5-year bonds on january 1, 2012, for $416,800. interest is paid annually on january 1. if the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized in december 31, 2012s adjusting entry is a.$28,640 b.$32,000 c.$35,360 d.$3,360
Q:
on january 1, 2012, $1,000,000, 5-year, 10% bonds, were issued for $1,060,000. interest is paid annually on january 1. if the issuing corporation uses the straight-line method to amortize premium on bonds payable, the monthly amortization amount is a.$8,833 b.$12,000 c.$1,200 d.$1,000
Q:
The bank reconciliation is an important part of the system of internal controls. a. True b. False
Q:
gomez corporation issues 800, 10-year, 8%, $1,000 bonds dated january 1, 2012, at 96. the journal entry to record the issuance will show a a.debit to cash of $800,000 b.credit to discount on bonds payable for $32,000 c.credit to bonds payable for $768,000 d.debit to cash for $768,000
Q:
To enhance internal control, the bank reconciliation should be prepared by an employee who does not take part in or record cash transactions. a. True b. False
Q:
the market value (present value) of a bond is a function of all of the following except the a.dollar amounts to be received b.maturity date c.market interest rate d.type of bonds
Q:
When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished. a. True b. False
Q:
. If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as "Other Income" on the income statement. a. True b. False
Q:
the present value of a $10,000, 5-year bond, will be less than $10,000 if the a.contractual rate of interest is less than the market rate of interest b.contractual rate of interest is greater than the market rate of interest c.bond is convertible d.contractual rate of interest is equal to the market rate of interest
Q:
Internal control is enhanced by separating the control of a transaction from the record-keeping function. a. True b. False
Q:
if bonds are issued at a discount, it means that the a.financial strength of the issuer is suspect b.market interest rate is higher than the contractual interest rate c.market interest rate is lower than the contractual interest rate d.bondholder will receive effectively less interest than the contractual rate of interest
Q:
A voucher system is an example of an internal control procedure over cash payments. a. True b. False
Q:
the market rate of interest is often called the a.stated rate b.effective rate c.coupon rate d.contractual rate
Q:
If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have exceeded cash overages for the period. a. True b. False
Q:
molina corporation issues 3,000, 10-year, 8%, $1,000 bonds dated january 1, 2012, at 103. the journal entry to record the issuance will show a a.debit to cash of $3,000,000 b.debit to premium on bonds payable for $90,000 c.credit to bonds payable for $3,000,000 d.credit to cash for $3,090,000
Q:
In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement. a. True b. False
Q:
yanik corporation issues 1,000, 10-year, 8%, $1,000 bonds dated january 1, 2012, at 97. the journal entry to record the issuance will show a a.debit to cash of $1,000,000 b.debit to discount on bonds payable for $30,000 c.credit to bonds payable for $970,000 d.credit to cash for $970,000
Q:
A compensating balance occurs when a bank may require a company to maintain a maximum cash balance. a. True b. False
Q:
the carrying value of bonds will equal the market price a.at the close of every trading day b.at the end of the fiscal period c.on the date of issuance d.every six months on the date interest is paid
Q:
When the voucher system is used, the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor. a. True b. False
Q:
the statement "bond prices vary inversely with changes in the market rate of interest" means that if the a.market rate of interest increases, the contractual interest rate will decrease b.contractual interest rate increases, then bond prices will go down c.market rate of interest decreases, then bond prices will go up d.contractual interest rate increases, the market rate of interest will decrease
Q:
when bonds are issued at a premium, the total interest cost of the bonds over the life of the bonds is equal to the amount of a.interest paid over the life of the bond b.interest paid over the life of the bond plus the amount of premium at sale point c.interest paid over the life of the bond minus the amount of premium at sale point d.premium at sale point
Q:
The petty cash fund eliminates the need for a bank checking account. a. True b. False
Q:
All bank memos reported on the bank reconciliation require entries in the company's accounts. a. True b. False
Q:
selling the bonds at a premium has the effect of a.causing the total cost of borrowing to be higher than the bond interest paid b.causing the total cost of borrowing to be lower than the bond interest paid c.raising the effective interest rate above the state interest rate d.increasing the amount of cash paid for interest each 6 months
Q:
In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement. a. True b. False
Q:
*on january 1, sewell corporation issues $1,000,000, 5-year, 12% bonds at 96 with interest payable on january 1. what is the carrying value of the bonds at the end of the third interest period? a.$984,000 b.$976,000 c.$944,000 d.$928,000
Q:
on january 1, sewell corporation issues $1,000,000, 5-year, 12% bonds at 96 with interest payable on january 1. the entry on december 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a a.debit to interest expense, $60,000 b.debit to interest expense, $120,000 c.credit to discount on bonds payable, $8,000 d.credit to discount on bonds payable, $4,000
Q:
The amount of the "adjusted balance" appearing on the bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date. a. True b. False
Q:
Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the bank's records. a. True b. False
Q:
when the straight-line method of amortization is used for a bond discount, the amount of interest expense for an interest period is calculated by a.adding the amount of discount amortized for that period to the amount of cash paid for interest during the period b.subtracting the amount of discount amortized for that period from the amount of cash paid for interest during the period c.multiplying the face value of the bonds by the stated interest rate d.multiplying the face value of the bonds by the market interest rate
Q:
when the straight-line method of amortization is used for a bond premium, the amount of interest expense for an interest period is calculated by a.adding the amount of premium amortized for that period to the amount of cash paid for interest during the period b.subtracting the amount of premium amortized for that period from the amount of cash paid for interest during the period c.multiplying the face value of the bonds by the stated interest rate d.multiplying the face value of the bonds by the market interest rate
Q:
An example of good internal controls over cash payments is the taking of all cash discounts offered. a. True b. False
Q:
parker company issued ten-year, 9%, bonds payable in 2012 at a premium. during 2012, the companys accountant failed to amortize any of the bond premium. the omission of the premium amortization will a.not affect net income for 2012 b.cause retained earnings at the end of 2012 to be overstated c.cause net income for 2012 to be overstated d.cause net income for 2012 to be understated
Q:
Money orders are considered cash. a. True b. False
Q:
A voucher is a written authorization to make a cash payment. a. True b. False
Q:
larson company issued $500,000 of 8%, 5-year bonds at 106. assuming straight-line amortization and annual interest payments, what is the amount of the amortization at each interest payment point? a.$3,000 b.$6,000 c.$40,000 d.$34,000