ACC 557 Week 6, Quiz - Graded 100% Latest Version.docx

ACC 557 Week 6, Quiz - Graded 100% Latest V 1. A bank statement A). is a bill from the bank for services rendered. B). is a credit reference letter written by the depositor's bank. C). shows the activity which increased or decreased the depositor's account balance. D). lets a depositor know the financial position of the bank as of a certain date. 2. The principles of internal control activities are used in the A). internationally but not in the U.S. B). in the U.S. and Canada but not globally. C). globally. D). U.S.but not globally. 3. Postage stamps on hand are considered to be A). cash. B). petty cash. C). a prepaid expense. D). cash equivalents. 4. Tangible frauds include A). asset misappropriation. B). false pretenses. C). counterfeiting. D). All of these. 5. All of the following requirements about internal controls were enacted under the Sarbanes- Oxley Act except; A). independent outside auditors must eliminate redundant internal controls. B). independent outside auditors must attest to the level of internal control. C). companies must develop sound internal controls over financial reporting. D). companies must continually assess the functionality of internal controls. 6. A deposit made by a company will appear on the bank statement as a A). debit. B). credit. C). debit memorandum. D). credit memorandum. 7. In large companies, the independent internal verification procedure is often assigned to A). computer operators. B). management. C). internal auditors. D). outside CP 8. An aging of a company's accounts receivable indicates that $10,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a A). debit to Bad Debts Expense for $8,900. B). credit to Allowance for Doubtful Accounts for $10,000. C). debit to Bad Debts Expense for $10,000. D). debit to Allowance for Doubtful Accounts for $8,900. 9. A reasonable amount of uncollectible accounts is evidence A). that the credit policy is too strict. B). of poor judgments on the part of the credit manager. C). that the credit policy is too lenient. D). of a sound credit policy. 10. Kill Corporation's unadjusted trial balance includes the following balances (assume normal balances): Accounts Receivable $ 750,000 Allowance for Doubtful Accounts 15,000 Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debts expense will the company record? A). $15,000 B). $44,100 C). $30,000 D). $45,000 11. Using the percentage-of-receivables basis, the uncollectible accounts for the year is estimated to be $31,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 debit before adjustment, what is the amount of bad debts expense for the period? A). $31,000 B). $38,000 C). $7,000 D). $24,000 12. Using the following information: 12/31/12 Accounts receivable $ 525,000 Allowance (35,000 ) Cash realizable value $ 490,000 During 2013, sales on account were $145,000 and collections on account were $100,000. Also during 2013, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $40,000. Bad debts expense for 2013 is A). $40,000. B). $13,000. C). $5,000. D). $8,000. 13. If a retailer regularly sells its receivables to a factor, the service charge of the factor should be classified as a(n) A). contra asset. B). other expense. C). selling expense. D). interest expense. 14. During 2013, Alfred Inc. had sales on account of $132,000, cash sales of $54,000, and collections on account of $84,000. In addition, they collected $1,450 which had been written off as uncollectible in 2012. As a result of these transactions, the change in the accounts receivable balance indicates a A). $102,000 increase. B). $100,550 increase. C). $46,550 increase. D). $48,000 increase. 15. A 5%, 120-day note receivable is received from a customer to settle an existing account receivable of $75,000. Assuming a 360 day year, the accounting entry for acquisition of the note will include a A). debit to Notes Receivable for $75,000 and no entry for interest. B). debit to Notes Receivable for $76,250. C). debit to Notes Receivable for $78,720. D). credit to Interest Revenue for $1,250.