Multiple Choice Questions

Which one of the following below reflects a weak internal control system?
  • does not affect net income in the period it is collected.
  • violates the matching principle.
  • addition to the balance per bank statement.
  • a single employee is responsible for collecting and recording of cash.
If an adjustment for an NSF check is made in a company's bank reconciliation, then the company must have written a bad check during the month.
  • True
  • False
If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as an "other income" item on the income statement.
  • True
  • False
In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.
  • True
  • False
The amount of deposits in transit is included on the bank reconciliation as a(n):
  • addition to the balance per the company's records.
  • a single employee is responsible for collecting and recording of cash.
  • an expense on the income statement.
  • addition to the balance per bank statement.
The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.
  • True
  • False
The debit balance in Cash Short and Over at the end of an accounting period is reported as:
  • an expense on the income statement.
  • addition to the balance per bank statement.
  • direct write-off method.
  • violates the matching principle.
One of the weaknesses of the direct write-off method is that it:
  • an expense on the income statement.
  • violates the matching principle.
  • direct write-off method.
  • addition to the balance per bank statement.
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,What is the net realizable value of the accounts receivable?
  • investments.
  • True
  • $289,000
  • False
A $150 petty cash fund has cash of $44 and receipts of $The journal entry to replenish the account would include a:
  • does not affect net income in the period it is collected.
  • addition to the balance per the company's records.
  • addition to the balance per bank statement.
  • debit to Cash Over and Short for $13.
When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.
  • True
  • False
Expenditures from a petty cash fund are documented by a petty cash receipt.
  • True
  • False
The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles:
  • addition to the balance per bank statement.
  • debit to Cash Over and Short for $13.
  • does not affect net income in the period it is collected.
  • addition to the balance per the company's records.
Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.
  • True
  • False
A check drawn by a company for $340 in payment of a liability was recorded in the journal as $This item would be included on the bank reconciliation as a(n):
  • debit to Cash Over and Short for $13.
  • addition to the balance per bank statement.
  • addition to the balance per the company's records.
  • does not affect net income in the period it is collected.
At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $Net credit sales for the period totaled $800,If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjustment entry is $8,500.
  • True
  • False
The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2002s.
  • True
  • False
A debit balance in the allowance for Doubtful Accounts:
  • an expense on the income statement.
  • violates the matching principle.
  • indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. note: Write-off is less than the Allowance method.
  • addition to the balance per the company's records.
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Multiple Choice Questions
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