Question

Question 1 4 pts

Which of the following represents the safeguarding of assets?

placing small, high-priced items in a locked display case

reducing payroll expenses to increase net income

purchasing rather than leasing company vehicles

allowing the company president to handle cash

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Question 2 4 pts

All of the following are objectives of a company’s internal control system except:

Encourage employees to follow policies.

Promote operation efficiency.

Ensure debt is paid in a timely manner.

Ensure accurate and reliable accounting records.

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Question 3 4 pts

Which account would we credit to open a new petty cash fund?

cash

petty cash

miscellaneous expense

petty cash expense

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Question 4 4 pts

Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?

a credit to petty cash for $127

a debit to travel expenses for $125

a credit to cash over and short for $2

a credit to cash for $125

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Question 5 4 pts

Our company wrote a check for $200 but mistakenly recorded the transaction in the general journal as $20. How would this error be included on the bank reconciliation?

as a deduction on the bank side

as an addition on the book side

as an addition on the bank side

as a deduction on the book side

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Question 6 4 pts

Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $1,000 and a deposit in transit of $2,000. What is the adjusted bank balance after we complete the bank reconciliation?

$7,000

$9,000

$11,000

$13,000

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Question 7 4 pts

Our company had the following financial information available for the current year:

• accounts receivable on December 31, $99,000;
• net credit sales for the year, $185,000;
• cash sales for year, $35,000; and
• accounts written off during the year, $12,500.

What account and amount would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?

bad debt expense, $12,500

accounts receivable, $12,500

allowance for doubtful accounts, $22,500

bad debt expense, $22,500

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Question 8 4 pts

Our company has decided to write off an uncollectible account of $3,000. What account would we credit to write off this account if our company uses the allowance method for bad debts?

bad debt expense

accounts receivable

allowance for doubtful accounts

cash

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Question 9 4 pts

At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?

bad debt expense, $30,000

allowance for doubtful accounts, $30,000

bad debt expense, $20,000

accounts receivable, $20,000

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Question 10 4 pts

On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we credit when we record the year-end adjusting entry on December 31, 2017?

interest revenue, $300

interest revenue, $350

interest receivable, $300

interest receivable, $350

Please answer all the questions ..its for the the exam i need to pass please thank you

Answer 1

Question 1:

The answer is option A : Placing small ,high priced items in a locked display case

Explanation: Because safeguarding of assets represents placing internal controls over Important items.

Reducing payroll expenses doesn't represent safeguarding of assets as it leads to decline in performance of employees.

Purchasing rather than leasing company vehicles -In this there is no point of safegaurding of assets

And handling cash by company president is not possible ,because he is in high position and busy in decision making activities.

Question 2:

Answer is option C

Ensure debt is paid in a timely manner are not the objectives of internal controls , Because internal controls is an organisational plan which is mainly designed to safeguard assets ,promote operational efficiency, to encourage employeea to comply policies of companies and to ensure accurate and reliable accounting records.

Question 3:

To open a new petty cash fund ,we should debit petty cash fund account and credit Cash account ,because cash is transfered to petty cash account and then the balance in cash account reduces. So,we should credit cash account.

Question 4:

Answer is option C- credit to cash over and short for $2 ,because as cash of $2 is missing we should credit cash account by $2 .

Question 5

Option is C

Explanation: We wrote a cheque for $200. So amount of $200 is reduced from bank account. But in journal we recorded as $20 ,so amount is higher in books than bank account. Therefore while doing bank reconciliation we should add $180 to match the amount with books

Question 6:

Answer is Option c

Explanation: Outstanding cheques totalled $1000. This $1000 is recorded in our books, but not in bank statement. So, to reconcile bank balance with books ,we should reduce $1000 in bank statement also.

And in same way, $2000 deposit in transit is recorded in books ,but not yet in bank. So add $2000 in bank.

The adjusted bank balance is $10,000-$1000+$2000=$11,000

Question 7:

Option is B

Explanation: When we uses direct write off method for bad debts, we should debit Bad debt expense account and credit Account receivable for $12,500.

Question 8:

When we are using allowance method for bad debts, first we should create an allowance for doubtful debts by debiting Allowance for doubtful debts and crediting account receivable. And when writing off the bad debts ,we should debit Bad debt expense account and credit Allowance for Bad debts account.

So option is C

Question 9:

Answer is option C

Explanation: Estimated bad debts for the year 2018 is 3% of net credit sales

Therefore estimated bad debts = $1,000,000*3%

= $30,000

And since we have credit balance of $10,000 in allowance for doubtful debts,it would be sufficient if we debit additional $20,000.

Question 10:

Answer is Option A

Explanation : For year ending of December 2017,interest revenue to be recorded is $300.

calculation : $12,000*5%*6/12 (assuming 5%interest rate is per annum)