Please indicate the correct/best answer by circling the appropriate letter.

NAME____________________________________________

1. Separation of duties
2. Sound personal policies
3. Limited access
4. Recording transactions

2. A form which includes the vendor’s address and contains a description of the items ordered, the expected price, terms and shipping date is called a (n)

1. Purchase order
2. Purchase requisition
3. Invoice
4. Receiving report

3. The entry to record the setting up of a $200 petty cash fund would be

1. Cash - operating 200.00

Petty cash 200.00

2. Petty cash 200.00

Cash - operating 200.00

3. Petty cash expense 200.00

Cash - operating 200.00

4. Office expense 200.00

Petty cash 200.00

4. The entry to record the replenishment of a petty cash fund would include a:

1. Debit to petty cash
2. Credit to cash
3. Credit to petty cash
4. Credit to office expense

5. The process of carefully checking an employee’s background and insuring the company against theft by that person is called

1. Bonding
2. Management goals
3. Imprest system
4. Voucher system

6. If owner’s equity were $38,000 and total assets were $56,000, then total liabilities would be:

1. $94,000
2. $18,000
3. $20,000
4. $74,000

7. An owner investment of cash into the business would include a:

1. Credit to capital
2. Credit to cash
3. Debit to accounts receivable
4. Credit to revenue

8. The Phillips Co. gathered the following information pertaining to its year ended December 31, 1996 prior to any adjustments:

Net sales for the year $780,000

Accounts receivable 12/31 165,000

Allowance for Doubtful accounts

at 12/31 3,200 credit

Aging of accounting receivable at 12/31/96:

1. 30 days $92,000

31 - 60 days 36,000

61 - 90 days 23,000

over 90 days 14,000

total $165,000

Assume Phillips uses the aging of Accounts Receivable method for estimating bad debts. Phillips estimates that b ad debts will be aged as follows: 3% for (1-30 days), 5% for (31 - 60 days), 8% for (61-90 days), and 20% for (0ver 90 days). The adjusting entry to record bad debt expense for the year is:

1. Bad debt expense $9,200

Allowance for uncollectible accounts $9,200

b. Bad debt expense 12,400

Accounts receivable 12,400

3. Uncollectible account expense 6,000

Allowance for uncollectible accounts 6,000

4. Uncollectible account expense 9,200

Allowance for uncollectible accounts 9,200

9. Reny & Co. accepted a nine-month $14,000 note receivable, with 6% interest from McKenna Company on September 1, 1996. Reny & Company’s year end is December 31. The amount of interest on this note to be recognized by Reny & Co. in 1997 is

1. $630
2. $840
3. $280
4. $350

10. The interest on a $60,000 note at 8% for four months is:

1. $750
2. $1,600
3. $4,800
4. $14,400

11. The direct write-off of uncollectible accounts does not meet the requirements of the:

1. Revenue recognition principle
2. Matching principle
3. Full disclosure principle
4. Historical cost principle

12. A company with net sales of $850,000, a beginning balance of net receivables of $230,000 and an ending balance of net receivables of $190,000 has a days’ sales in accounts receivable of:

1. 99 days
2. 82 days
3. 92 days
4. 90 days

13. An example of a contra account is:

1. prepaid insurance
2. unearned revenue
3. office equipment
4. accumulated depreciation

14. The most liquid asset is:

1. prepaid rent
2. cash
3. accounts receivable
4. supplies

15. All of the following are acceptable(per GAAP) methods of valuing inventory except:

1. LIFO
2. Estimating retail method
3. FIFO
4. Average cost

16. Which of the following inventory costing methods requires a company to keep track of the actual movement of individual inventory items.

1. LIFO
2. Specific Identification
3. FIFO
4. Weighted-average

17. FOB destination means that:

1. Merchandise should be included in the buyer’s inventory as of the date it is shipped by the seller.
2. The seller should record sales revenue as soon as the merchandise has been shipped.
3. Title to the merchandise passes to the buyer upon receipt at the buyer’s warehouse
4. The goods are shipped within the State

18. Data from a Company for the first month of operations follow:

1/1 Purchased 23 units @ $73

1/6 Sold 15 units

1/12 Purchased 7 units @ $76

1/17 Sold 10 units

1/20 Purchased 5 units @ $78

1/25 Sold 4 units

1/29 Sold 3 units

Calculate ending inventory using the FIFO perpetual inventory method

1. $234
2. $250
3. $219
4. $228

19. Which accounting convention supports the lower of-cost-or market rule

1. Matching
2. Going concern
3. Conservatism
4. Reliability

20. The set of programs that cause the computer to perform the work desired is called the:

1. Software
2. Network
3. Hardware
4. Server

1. The following data have been gathered for Syncronics, Inc.:

1. The July 31 bank balance was $4,000
2. The bank statement included $65 in service charges
3. The bank collected a $900 note from Alpha co. The face value of the note was $850.
4. Checks outstanding totaled $525.00
5. The July 31 deposit of $350 did not appear on the bank statement
6. The bookkeeper had erroneously recorded a $50 check as $500. The check was written to a vendor to pay off a debt.
7. Included with the canceled checks was a check written by Syncronize Corporation for $200 which was deducted from Syncronics’ account.
8. The bank statement also included an NSF check written by Multimedia Inc. for a $460 payment on account.
9. The cash account showed a balance of $3,200 on July 31.

Required:

1. Prepare the July 31 bank reconciliation for Syncronics, Inc.

2. Prepare any required entries to bring the book balance up-to-date.

2. Cambell Co. had an accounts receivable balance of $300,000 and a credit balance in Allowance for Uncollectible Accounts of $16,000 at January 1, 1996. During the year, the company recorded the following transactions;

1. Sales on account, $1,000,000
2. Sales returns and allowances from credit customers, $50,000
3. Collections from customers, $925,000
4. Worhtless accounts written off $20,000
5. and 6. Written-off accounts collected $4,000.

The Company’s past history indicates that 3.0 percent of net credit sales will not be collected.

Required:

1. record separate general journal entries for each of the six items listed above.

2. record the general journal entry on December 31, 1996 for the estimated uncollectible accounts expense for the year. Net Sales Method.

3. In Chronological order, the inventory, purchases and sales of a single product for a recent month are as follows:

Units Amount P/Unit

Nov 1 Beginning inventory 500 $11.00

Nov 5 Purchase 100 $11.25

Nov 7 Sale 50 $20.00

Nov 12 Purchase 200 $11.50

Nov 15 Sale 150 $22.00

Nov 22 Purchase 400 $12.00

Nov 30 Sale 300 $23.00

Required:

Using the periodic inventory system, compute the:

• Cost of goods sold
• gross margin

Use the following inventory cost assumptions:

1. Average cost
2. FIFO
3. LIFO

4. Indicate on which statement (Income statement, Balanc Sheet, or Statement of Owner’s Equity) the following accounts would appear:

1. Allowance for Uncollectible accounts
2. Dividends
3. Notes receivable
4. Interest income
5. Prepaid rent
6. Unearned revenue
7. Uncollectible account expense
8. Insurance expense
9. Owner’s withdrawal
10. Repair revenue
11. Sales
12. Accounts receivable
13. Cash