MULTIPLE CHOICE
1. The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
2. The control principle related to NOT having the same person authorize and pay for goods is known as
3. Maximum benefit from independent internal verification is obtained when
4. Allowing only designated personnel to handle cash receipts is an example of
5. Storing cash in a company safe is an application of which internal control principle?
6. Reconciling the bank statement monthly is an example of
7. A voucher system is a series of prescribed control procedures
8. The size of the petty cash fund is dependent on
9. A $100 petty cash fund has cash of $18 and receipts of $86. The journal entry to replenish the account would include a
10. A check returned by the bank marked “NSF” means
11. A bank reconciliation should be prepared
12. Deposits in transit
13. When making a payment from the petty cash fund for postage stamps, the following journal entry is made
14. A bank may issue a credit memorandum for
15. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of
16. Interest is usually associated with
17. Which of the following would require a compound journal entry?
18. If a company fails to record estimated bad debts expense
19. The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the
20. An aging of a company’s accounts receivables indicates that $9,000 are estimated to be uncollectable. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
21. A reasonable amount of uncollectible accounts is evidence
22. Bad debt Expense is reported on the income statement as
23. Two bases for estimating uncollectible accounts are
24. Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $25,000. If the balance of the Allowance for Doubtful Accounts is $8000 debit before adjustment, what is the amount of bad debts expense for that period?
25. The sale of receivables by a business
26. A company regularly sales its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables
27. The interest on a $2,000, 6%, 90 day note receivable is
28. A note receivable is a negotiable instrument which
29. When a note is accepted to settle an open account, Notes receivables is debited for the note’s
30. Which of the following are also called trade receivables?
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