ACCOUNTING-What are the two main functions of cash control systems

1. What are the two
main functions of cash control systems?
Control over cash and control over purchase orders
Control over
receipts and control over the bank account
Control over checks
and control over invoicing
Control over
receipts and control over payments

1. Some companies use
automated payment processing technology in which paper checks that may arrive
at a lockbox are converted into electronic payments then the check itself is
destroyed. This process is referred to as
internal control over payments.
electronic funds
transfer.
Check 21.
accounts receivable
conversion.
1. All of the
following are important elements of internal control over cash except
a cash reserve.
a petty cash
system.
the daily deposit
of all receipts.
a bank
reconciliation.
1. Current accounts
receivables are receivables that are expected to be collected within
one year or the current financing cycle, whichever is
longer.
one year or the
current operating cycle, whichever is shorter.
one year or the
current operating cycle, whichever is longer.
one year or the
current financing cycle, whichever is shorter.
1. Which of the
following types of discounts are offered to induce prompt payment by customers?
Sales discounts
Trade discounts
Quantity discounts
Nontrade discounts
1. Which of the
following statements about accounting for discounts is true?
The net price method highlights sales discounts not taken
and the gross price method highlights sales discounts taken.
The net price
method highlights trade discounts not taken and the gross price method
highlights trade discounts taken.
The net price
method highlights trade discounts taken and the gross price method highlights
trade discounts not taken.
The net price
method highlights sales discounts taken and the gross price method highlights
sales discounts not taken.
1. Which of the
following is an advantage of using the net price method for recording cash
discounts on credit sales?
It simplifies recording of sales returns and allowances.
It eases
communication with customers about their balances.
It conservatively
reflects current period sales revenue.
It requires less
record keeping than the gross method.
1. When the net price
method is used to record credit sales, the sales discounts not taken
account is reported as a(n)
addition to sales returns and allowances on the income
statement.
deduction from
selling expenses on the income statement.
addition to sales
revenue on the income statement.
deduction from
gross sales on the income statement.
1. Puzzle Company sold
merchandise on credit with a list price of $75,000. Terms were 3/10, n/30.
Which of the following entries correctly applies the indicated method to record
the sale?

Net Price Method

Accounts Receivable

72,750

Sales

72,750

Net Price Method

Accounts Receivable

75,000

Sales

75,000

Gross Price Method

Accounts Receivable

72,000

Sales

72,000

Gross Price Method

Accounts Receivable

72,750

Sales

72,750

1. Hole Sailors, Inc.
sold merchandise on credit with a list price of $12,000. Terms were 1/20, n/45.
Which of the following entries correctly applies the indicated method to record
the sale?

Net Price Method

Accounts Receivable

11,400

Sales

11,400

Gross Price Method

Accounts Receivable

12,000

Sales

12,000

Net Price Method

Accounts Receivable

10,800

Sales

10,800

Net Price Method

Accounts Receivable

12,000

Sales

12,000

1. The sales returns
and allowances account is reported as a
contra-revenue account on the income statement.
selling expense on
the income statement.
contra-asset
reducing accounts receivable on the balance sheet.
current liability
on the balance sheet.
1. On August 1, Party
Hearty Company sold merchandise on credit with a list price of $6,300. Terms
were 2/10, n/30. Which of the following entries correctly applies the indicated
method to receive the appropriate customer payment on August 15?

Gross Price Method

Cash

6,300

Accounts Receivable

6,300

Gross Price Method

Cash

6,300

Sales Revenue

126

Accounts Receivable

6,174

Net Price Method

Cash

6,174

Accounts Receivable

6,174

Net Price Method

Cash

6,174

Sales Revenue

126

Accounts Receivable

6,300

1. February 1, Adams Company
sold merchandise on credit with a list price of $8,400. Terms were 3/15, n/45.
Which of the following entries correctly applies the indicated method to
receive the appropriate customer payment on February 12?

Net Price Method

Cash

8,148

Accounts Receivable

8,148

Net Price Method

Cash

8,400

Sales Revenue

252

Accounts Receivable

8,148

Gross Price Method

Cash

8,400

Accounts Receivable

8,400

Gross Price Method

Cash

8,148

Accounts Receivable

8,148

1. When aging of
accounts receivable is used, each age group is multiplied by its own estimated
uncollectible percentage to determine each age group’s estimated uncollectible
amount. The sum of the amounts thus determined is the
amount of bad debt expense for the year.
increase to the
existing credit balance in the allowance for doubtful accounts.
amount that should
be written off as uncollectible for the year.
required ending
balance for the allowance for doubtful accounts.
1. When an
uncollectible account is written off under the allowance method, the effect of
the write-off is to
increase working capital.
increase the
accounts receivable net realizable value.
leave total assets
unchanged.
decrease net
income.
1. Bad debt expense is
normally reported on the income statement as a(n)
element of cost of goods sold.
contra-revenue
amount.
operating expense.
financial expense
in the other items section.
1. During 2016, a
company wrote off $7,500 in uncollectible accounts receivable. At the end of
the year, bad debt expense was estimated using a percent of gross sales. In
2017, the company collected $1,500 from an account that was written off in
2016. Recording this collection would include
a credit to Allowance for Doubtful Accounts.
a debit to Retained
Earnings.
an increase to net
receivables.
a decrease to gross
receivables.
1. Trainor Company
estimates bad debt expense using a percentage of credit sales (5%). The company
began its current year with an $8,500 balance in the allowance account. During
the current year, $10,500 of accounts receivable were written off, and $1,200
of previously written off accounts were collected. Credit sales for the year
were $255,000. The bad debt expense for the year was
$12,750
$11,550
$8,500
$10,500
1. Splitter Corporation
had total sales in the current year of $750,000 and credit sales of $650,000.
The Accounts Receivable balance was $450,000 on the balance sheet date and the
Allowance for Doubtful Accounts had a credit balance of $10,000 before
adjusting entries. Bad debt expense is estimated as 2% of credit sales. The
adjusting entry to record estimated bad debt expense would include a
a.$13,000 debit to Bad Debt Expense.
b.$13,000 credit to
Sales.
c.$13,000 debit to
Allowance for Doubtful Accounts.
d.$13,000 credit to
Bad Debt Expense.
1. Under the allowance
method of recording bad debts, which of the following entries, if any, would be
made to write off actual uncollectible accounts of $5,500?

Bad Debt Expense

5,500

Allowance for Doubtful Accounts

5,500

Allowance for Doubtful Accounts

5,500

Accounts Receivable

5,500

Bad Debt Expense

5,500

Accounts Receivable

5,500

No entry is needed.

1.
Based on the following information:

Sales returns and allowances
(credit sales)

$
25,000

Cash sales

1,200,000

Unadjusted balance in Allowance
for Doubtful Accounts

1,000

credit

Credit sales

2,535,000

2.
If bad debts are estimated to be 3% of net credit sales, the adjusting entry to
recognize uncollectible accounts will include a debit to expense for
3. $75,300
4. $76,050
5. $75,270
6. $76,020
7.
Based on the following information:

Credit sales

$172,000

Collections on accounts receivable
during the year

170,000

Cash sales

810,000

Unadjusted debit balance in
Allowance for Doubtful Accounts

40

Sales returns and allowances for
credit sales

2,000

Accounts receivable, beginning of
the year

14,000

8.
If expected bad debts are estimated to be 1 1/2% of ending accounts
receivable, the adjusting entry to recognize bad debts will include a debit to
Bad Debt Expense for
9. $170
10. $210
11. $190
12. $250

1. During 2016,
Blueberry, Inc. recovered and collected $4,200 from an account that had been
written off for over a year. At the end 2016, prior to the adjusting entry for
bad debt expense, Blueberry, Inc.’s balances for Accounts Receivable and
Allowances for Doubtful Accounts were $750,000 (debit) and $5,500 (credit),
respectively. After the bad debt expense entry was posted, the net realizable
value of accounts receivable was $675,000. Bad debt expense for the 2016 was
$69,500
$80,500
$79,200
$73,200

1. Pineapple’s Fruit
Smoothies began the year with a $4,200 credit balance in its Allowances for
Doubtful Accounts. During the year, it accrued $21,500 of bad debt expense and
wrote off accounts totaling $28,000. At year-end, a percentage of the
outstanding accounts receivable indicated that a $4,800 allowance should be
provided for on that date. The year-end adjustment for bad debt expense should
be
$4,800
$7,100
$3,000
$2,300

1.
Wholesale Stuff, Inc. sells to retailers on account. Sales for
the year totaled $9,900,000. The company uses the aging method for determining
bad debt expense. The aging report and related information includes:

Time
Outstanding

Gross
Balance

Percentage
Uncollectible

< 30 days $660,000 1% 30-60 days 330,000 5% < 60 days 110,000 10% 2. The unadjusted balance in the allowance account at year end is $1,700 credit. What is the amount of bad debt expense for the year? 3. $34,100 4. $35,800 5. $30,690 6. $32,400 1. Wholesale Stuff, Inc. sells to retailers on account. Sales for the year totaled $9,900,000. The company uses the aging method for determining bad debt expense. The aging report and related information includes: Time Outstanding Gross Balance Percentage Uncollectible < 30 days $660,000 1% 30-60 days 330,000 5% < 60 days 110,000 10% 2. The unadjusted balance in the allowance account at year end is $1,700 credit. What is the estimated net realizable value of receivables at year end? 3. $1,064,200 4. $1,067,600 5. $1,065,900 6. $1,098,300 1. Freeman Corporation estimates uncollectible accounts using a percentage of outstanding accounts receivable. After the year-end adjustment for bad debt expense was made, the company's records reflected the following information: Accounts written off $ 1,600 Collection on accounts previously written off 300 Allowance for uncollectible accounts at January 1 1,700 Accounts receivable at December 31 100,000 Credit sales 900,000 Bad debt percentage 1.5% 2. The bad debt expense for the year was 3. $1,100 4. $1,500 5. $1,400 6. 13,500 1. Which method for estimating uncollectible accounts receivable is considered to be income-statement oriented? aging of accounts receivable method percentage of outstanding accounts receivable method Direct write-off method percentage of net sales method 1. If a company usually sells its accounts receivable, it records any factoring commissions as a(n) liability. receivable. loss. expense. 1. A company transfers ownership control of accounts receivable in all of the following financing arrangements except Securitizing receivables. Pledging receivables. Selling receivables. Factoring receivables. 1. What is the difference between pledging receivables and assigning receivables. There is no difference; these are two terms for the same type of financing arrangement. Receivables are pledged without recourse; receivables are assigned with recourse. Receivables are pledged with recourse; receivables are assigned without recourse. Pledging involves selling the receivables; assigning involves using the receivables as collateral for a loan. 1. Which of the following is an example of a factoring agreement? Selling an individual account receivable to a bank Pledging an single large account receivable to a bank Assigning a group of accounts receivable as collateral for a loan Selling financial securities that are collateralized by accounts receivable 1. The Trey Co. sells $75,000 of accounts receivable to a factor and receives 90% of the value of the factored accounts less a 15% commission based on the gross amount of factored accounts receivable. After the journal entry to record this factoring transaction is made, Trey Co.'s total assets will be reduced by $7,500. reduced by $11,250. increased by $41,000. reduced by $67,500. 1. Assume that the custodian of a $500 petty cash fund has $62 in currency plus $412 in receipts at the end of the month. The entry to replenish the petty cash fund will include a credit to Cash for $438. a credit to Cash Short and Over for $26. a credit to Cash for $412. a debit to Petty Cash for $438. 1. The entry to replenish the petty cash fund for $250 of various minor expenses would include a debit to Cash for $250. credit to Petty Cash for $250. credit to Cash for $250. debit to Petty Cash for $250. 1. What type of account is Cash Short and Over? Expense Asset Liability Deferred revenue 1. After completing the bank reconciliation, which of the following reconciling items would require an adjusting journal entry on the company's books? service charges outstanding checks cash on hand deposits in transit 1. After completing the bank reconciliation, which of the following reconciling items would require an adjusting journal entry on the company's books? service charges outstanding checks cash on hand deposits in transit 1. Brad's Market's accountant is preparing its May bank reconciliation and has collected the following data: Per Books Per Bank May 1 balance $11,600 $10,000 May deposits 24,600 21,200 May checks 27,800 29,000 Note collected (includes 10% interest) -- 4,400 May service charge -- 20 May 31 balance 8,400 6,580 2. Additionally, deposits in transit and outstanding checks from April's reconciliation were $4,400 and $2,800, respectively. The correct balance for Cash at May 31 should be 3. $10,960 4. $11,180 5. $13,980 6. $12,780 1. Hunter's, Inc. reported a balance of $1,410 in its cash account at the end of the month. There were $1,200 of deposits in transit and $1,150 of checks outstanding. The bank statement showed a balance of $1,510, service charges of $70, and the collection of a note plus interest. The note had a face value of $170. How much interest did the bank collect for the company? $30 $50 $290 $390 1. After the company completes the bank reconciliation, it makes journal entries for adjustments it made to both the bank statement and the company records. it made to the bank statement balance only. made on the statement of cash flows. it made to the company records only. 1. When completing the bank reconciliation, deposits in transit would be added to the company's records. added to the bank statement balance. deducted from the company's records. deducted from the bank statement balance. 1. Deposits made directly by the bank would be added to the company's records. deducted from the company's records. deducted from the bank statement balance. added to the bank statement balance.  

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