A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company”s accounts?
When a firm uses internal auditors, it is adhering to which one of the following internal control elements?
When merchandise sold is assumed to be in the order in which the purchases were made, the company is using a. first-in, last-out. b. average cost. c. last-in, first-out. d. first-in, first-out.
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What entry is required in the company”s accounts to record outstanding checks? a. debit Cash; credit Accounts Receivable b. debit Accounts Receivable; credit Cash c. debit Cash; credit Accounts Payable d. none
Merchandise inventory at the end of the year was inadvertently overstated. Which of the following statements correctly states the effect of the error on net income, assets, and owner”s equity? a. Net income is overstated, assets are overstated, owner”s equity is overstated. b. Net income is understated, assets are understated, owner”s equity is understated. c. Net income is understated, assets are understated, owner”s equity is overstated. d. Net income is overstated, assets are overstated, owner”s equity is understated
Credit memos from the bank a. decrease a bank customer”s account. b. show that a company has deposited a customer”s NSF check. c. show the bank has collected a note receivable for the customer. d. are used to show a bank service charge.
Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is a. an addition to the balance per bank statement. b. a deduction from the balance per company”s records. c. a deduction from the balance per bank statement. d. an addition to the balance per company”s reco
Which one of the following below reflects a weak internal control system? a. A single employee is responsible for collecting and recording of cash. b. All employees must take their vacations. c. A single employee is responsible for comparing a receiving report to an invoice. d. All employees are well supervised.
Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company”s accounts? a. debit Cash; credit Other Income b. debit Miscellaneous Administrative Expense; credit Cash c. debit Accounts Payable; credit Cash d. debit Cash; credit Accounts Payable
A $150 petty cash fund has cash of $44 and receipts of $93. The journal entry to replenish the account would include a a. credit to Petty Cash for $49. b. debit to Cash for $93. c. credit to Cash for $44. d. debit to Cash Over and Short for $13.
If the revenues are correctly reported and the Gross Profit of a company is understated, what is the effect on Owner”s Equity? a. Correctly Stated b. Understated c. Overstated d. None of these choices are correct.
The notification accompanying a check that indicates the specific invoice being paid is called a a. remittance advice. b. debit memo. c. credit memo. d. voucher.
The bank reconciliation a. is sent to the bank for verification. b. should be prepared by an employee who records cash transactions. c. is part of the internal control system. d. is for information purposes only.
A voucher a. is received from customers to explain the purpose of a payment. b. system is used to control cash receipts. c. system is an internal control procedure to verify that the assets in the ledger are the ones the company owns. d. is normally prepared in the Accounting Department.
Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n) a. deduction from the balance per bank statement. b. addition to the balance per company”s records. c. addition to the balance per bank statement. d. deduction from the balance per company”s records.
Which of the following items that appeared on the bank reconciliation did not require an adjusting entry? a. NSF checks b. Bank service charges c. A check for $630, recorded in the check register for $360. d. Deposits in transit
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n) a. deduction from the balance per the company”s records. b. deduction from the balance per the bank statement. c. addition to the balance per the company”s records. d. addition to the balance per the bank statement.
Which of the following would be deducted from the balance per books on a bank reconciliation? a. Deposits in transit b. Service charges c. Outstanding checks d. Notes collected by the bank
An element of internal control is a. journals. b. risk assessment. c. controlling accounts. d. subsidiary ledgers.
Kristin”s Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory? a. Merchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin”s Boutique as of December 31, 2010. b. Kristin has in its warehouse merchandise on consignment from Abby Co. c. Kristin has merchandise on hand which has been returned by customers because of wrong size. d. Kristin has sent merchandise to various retailers on a consignment basis.
Following the completion of the bank reconciliation, an adjusting entry was made that debited cash and credited Interest Revenue. Therefore the bank reconciliation must have included an item that was a. deducted from the balance per company”s records. b. added to the balance per bank statement. c. deducted from the balance per bank statement. d. added to the balance per company”s records
Cost flow is in the reverse order in which costs were incurred when using a. first-in, first-out. b. last-in, first-out. c. weighted average. d. average cost.
The type of account and normal balance of Petty Cash is a(n) a. expense, debit. b. liability, credit. c. revenue, credit. d. asset, debit.
Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n) a. addition to the balance per company”s records. b. addition to the balance per bank statement. c. deduction from the balance per company”s records. d. deduction from the balance per bank statement.
The inventory costing method that reports the earliest costs in ending inventory is a. FIFO. b. average cost. c. specific identification. d. LIFO.
If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is a. FIFO. b. LIFO. c. average. d. periodic
A necessary element of internal control is a. systems analysis. b. database. c. systems design. d. information and communication.
The debit recorded in the journal to reimburse the petty cash fund is to a. Petty Cash. b. Cash. c. various accounts for which the petty cash was disbursed. d. Accounts Receivable.
Under the _________ inventory method, accounting records maintain a continuously updated inventory value. a. periodic b. physical c. perpetual d. retail
Journal entries based on the bank reconciliation are required in the company”s accounts for a. deposits in transit. b. bank errors. c. book errors. d. outstanding checks.
Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the a. creditor”s ledger. b. purchase ledger. c. inventory ledger. d. customer”s ledger.
Taking a physical count of inventory a. has no internal control relevance. b. is not necessary when a periodic inventory system is used. c. should be done near year-end. d. is not necessary when a perpetual inventory system is used.
During times of rising prices, which of the following is not an accurate statement? a. LIFO will result in a higher cost of goods sold than FIFO. b. LIFO will result in higher income taxes than FIFO. c. Average costing will yield results that are between those of FIFO and LIFO. d. FIFO will result in a higher net income than LIFO.
A bank statement a. is a bill from the bank for services rendered. b. shows the activity that increased or decreased the company”s account balance. c. lets a company know the financial position of the bank as of a certain date. d. is a credit reference letter written by the company”s bank
Cash equivalents include a. coins and currency. b. stocks and short-term bonds. c. money market accounts and commercial paper. d. checks.
Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items? a. LIFO b. FIFO c. Specific Identification d. Average
Intermediate Accounting, Binder Ready Version16th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield