Question 1 A method of estimating bad debts expense that involves...

Question 1
A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and the length of time past due is the:
Percent of accounts receivable method.
Aging of investments method.
Direct write-off method.
Aging of accounts receivable method.
Percentage of sales method.

Question 2
Brinker Brinker accepts make all major bank credit cards, including First Savings Bank's, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should on May 26 to record the deposit?
Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800.
Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales $4,800.
Debit Cash $4,800; credit Sales $4,800.
Debit Accounts Receivable $4,800; credit Sales $4,800.
Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800.

Question 3
On October 17 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the allowance method is used to account for bad
debts, what effect will this write-off have on the company's net income and total assets?
Increase in net income: no effect on total assets.
Decrease in net income: no effect on total assets.
No effect on net income: decrease in total assets.
No effect on net income; no effect on total assets.
Decrease in net income: decrease in total assets.

Question 4
On Allowance December for 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $95,250;
Doubtful Accounts, credit balance of $921. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?
$5,660.
$5,715.
$4,794.
$5,770.
$6,636.

Question 5
Honoring a note receivable indicates that the maker has:
Paid in full.
Cosigned.
Signed.
Guaranteed.
Notarized.

Question 6
Failure by a promissory notes' maker to pay the amount due at maturity is known as:
Protesting a note.
Dishonoring a note.
Depreciating a note.
Discounting a note.
Closing a note.

Question 7
Sellers allow customers to use credit cards for all of the following reasons except:
To increase total sales volume.
To speed up receipt of cash from the credit sale.
To lessen the risk of extending credit to customers who cannot pay.
To be able to charge more due to fees and interest.
To avoid having to evaluate a customer's credit standing for each sale.

Question 8
Jax Recording Studio purchased $7,800 in electronic components from Music World. Jax signed a 60-day, 8% promissory note for $7,800. Music World's journal entry to record the collection on the maturity date is:
Debit Cash $7,904; credit Notes Receivable $7,800; credit Interest Revenue $104
Debit Cash $7,904; credit Notes Receivable $7,904
Debit Accounts Receivable $7,904; credit Notes Receivable $7,800; credit Interest Receivable $104
Debit Cash $7,800; credit Accounts Receivable $7,800
Debit Notes Receivable $7,800; credit Cash $7,904; credit Interest Revenue $104

Question 9
Jasper makes a $25,000, 90-day, 7% cash loan to Clayborn Co. Jasper's entry to record the transaction should be:
Debit Notes Payable $25,000; credit Accounts Payable $25,000.
Debit Notes Receivable $25,000; credit Sales $25,000.
Debit Accounts Receivable $25,000; credit Notes Receivable $25,000.
Debit Cash $25,000; credit Notes Receivable for $25,000.
Debit Notes Receivable for $25,000; credit Cash $25,000.


Question 10
Lemming makes an $18,750, 120-day, 8% cash loan to Notions Co. on November 1. Lemming's end-of-period adjusting entry on December 31 should be:
Debit Cash for $250; credit Notes Receivable $250.
Debit Interest Revenue $500; credit Notes Receivable $500.
Debit Interest Receivable $500; credit Interest Revenue $500.
Debit Interest Receivable $250; credit Interest Revenue $250.
Debit Notes Receivable $500; credit Interest Revenue $500.

Question 11
The matching principle, as applied to bad debts, requires:
That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.
That bad debts not be written off.
The use of the direct write-off method for bad debts.
That bad debts be disclosed in the financial statements.
The use of the allowance method of accounting for bad debts.


Question 12
Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day, 6% promissory note for the $4,000. Food Supplier's journal entry to record the collection on the maturity date is:
Debit Notes Receivable $4,000; credit Cash $4,000
Debit Notes Receivable $4,060; credit Sales $4,060
Debit Cash $4,060; credit Notes Receivable $4,060
Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000
Debit Cash $4,000; debit Interest Receivable $60; credit Sales $4,000

Question 13
Ferguson Co. has a $200 petty cash fund. At the end of the first month the accumulated receipts represent $43 for delivery expenses, $127 for merchandise inventory, and $12 for miscellaneous expenses. The fund has a
balance of $18. The journal entry to record the reimbursement of the account includes a:
Credit to Cash Over and Short for $18.
Debit to Cash Over and Short for $18.
Credit to Inventory for $127.
Credit to Cash for $182.
Debit to Petty Cash for $200.


Question 14
The internal document prepared by a department manager that informs the purchasing department of its merchandise needs and requests that the merchandise be purchased is the
Receiving report.
Purchase requisition.
Invoice approval.
Purchase order.
Invoice.

Question 15
The impact of technology on internal controls includes:
Elimination of the need for regular audits.
Elimination of separation of duties.
Reduced processing errors.
Elimination of the need to bond employees.
Elimination of fraud.

Question 16
Franklin Company's bank reconciliation as of August 31 is shown below.
Bank balance                $14,237          Book balance          $13,162
+ Deposit in transit          4,500            Bank service fees          -50
Outstanding checks       -3,900            Note collected            1,725
Adjusted book balance   $14,837                                           $14,837
The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:
Debit Cash $4,500; credit Sales $4,500.
Debit Misc. Expense $3,900; credit Cash $3,900.
Debit Notes Receivable $1,725; credit Cash $1,725.
Debit Cash $50; credit Bank Service Fee Expense $50.
Debit Cash $1,725; credit Notes Receivable $1,725.


Question 17
Cash, not including cash equivalents, includes:
Money market funds.
IOUs.
Postage stamps.
Customer checks, cashier checks, and money orders.
Two-year certificates of deposit.

Question 18
Which of the following events would cause a bank to debit a depositor's account?
The bank collects a note receivable and related interest on the depositor's behalf.
There are outstanding checks drawn on the account at month-end.
There are deposits in transit on the account at month-end.
The bank corrects an error from previous month by adding $75 to the depositor account.
The depositor orders new checks through the bank at a cost of $50.

Question 19
In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:
Cash balance per company books on January 30    $4,725
Deposits in transit at month-end                                 $1,800
Outstanding checks at month-end                              $520
Bank service charges                                                 $25
EFT automatically paid monthly, not yet recorded by Maxi    $380
An NSF check returned on a customer account          $265
The adjusted cash balance per the books on January 31 is:
$4,585
$5,855
$5,335
$4,815
$4,055

Question 20
On a bank reconciliation, the amount of an unrecorded bank service charge should be:
Added to the bank balance of cash.
Noted in memorandum form only.
Deducted from the book balance of cash.
Deducted from the bank balance of cash.
Added to the book balance of cash.