1. The maturity date of a note receivable:
- Is the day the note is due to be repaid.
- Is the day the note was signed.
- Is the date of the first payment.
- Is the day of the credit sale.
- Is the last day of the month.
2. A voucher system is a series of prescribed control procedures:
- Used to ensure that the company sells on credit only to creditworthy customers.
- Designed to eliminate the need for subsidiary ledgers.
- Used almost exclusively by small companies.
- Designed to control cash disbursements and the acceptance of obligations.
- Designed to determine if the company is operating profitably.
3.The impact of technology on internal controls includes:
- Reduced processing errors.
- Elimination of the need to bond employees.
- Elimination of the need for regular audits.
- Elimination of fraud.
- Elimination of separation of duties.
4.Teller purchased merchandise from TechCom on October 17 of the current year and TechCom accepted Teller's $4,800, 90-day, 10% note. If the note is dishonored, what entry should TechCom make on January 15 of the next year?
- Debit Cash $4,920; credit Notes Receivable $4,920.
- Debit Accounts Receivable $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.
- Debit Cash $4,920; credit Interest Revenue $20; credit Interest Receivable $100, credit Notes Receivable $4,800.
- Debit Cash $4,920; credit Interest Revenue $100; credit Interest Receivable $20, credit Notes Receivable $4,800.
- Debit Notes Receivable $4,800; debit Interest Receivable $120; credit Sales $4,920.
5.The buyer who purchases and takes ownership of another company's accounts receivable is called a:
- Payee.
- Factor.
- Pledgee.
- Pledger.
- Payer.
7.On a bank reconciliation, an unrecorded debit memorandum for printing checks is:
- Added to the book balance of cash.
- Deducted from the bank balance of cash.
- Added to the bank balance of cash.
- Deducted from the book balance of cash.
- Noted as a memorandum only.
8.A company plans to decrease a $200 petty cash fund to $75. The current balance in the account includes $45 petty cash payment in receipts and $165 in currency. The entry to reduce the fund will include a:
- Credit to Cash for $90.
- Debit to Cash Short and Over for $10.
- Credit to Petty Cash for $165.
- Debit to Cash for $90.
- Debit to Miscellaneous Expenses for $35.
9.MixRecording Studios purchased $7,800 in electronic components from TechCom. MixRecording Studios signed a 60-day, 10% promissory note for $7,800. If the note is dishonored, what is the amount due on the note?
- $7,800
- $8,050
- $130
- $8,130
- $7,930
10.A credit sale of $3,275 to a customer would result in:
- A credit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
- A credit to Sales and a credit to the customer's account in the accounts receivable subsidiary ledger.
- A debit to the Accounts Receivable account in the general ledger and a debit to the customer's account in the accounts receivable subsidiary ledger.
- A debit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
- A credit to the Accounts Receivable account in the general ledger and a credit to the customer's account in the accounts receivable subsidiary ledger.
11. Pre-numbered printed checks are an example of which internal control principle?
- Perform regular and independent reviews.
- Technological controls.
- Maintain adequate records.
- Establish responsibilities.
- Divide responsibility for related transactions.
12.The document that the purchasing department prepares and sends to the vendor to place an order is the
- Invoice.
- Purchase order.
- Purchase requisition.
- Invoice approval.
- Receiving report.
14.Pledging receivables:
- Allows firms to raise cash.
- Allows a firm to retain ownership of its receivables.
- All of the options are correct.
- Should be disclosed in the financial statements.
- Does not transfer risk of bad debts to the lender.
18.An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):
- Trial reconciliation.
- Analysis of debits and credits.
- Internal audit.
- Bank audit.
- Bank reconciliation.
19.All of the following statements regarding recognition of receivables under U.S. GAAP and IFRS are true except:
- Receivables that arise from revenue-generating activities are subject to broadly similar criteria for U.S. GAAP and IFRS.
- Differences arise mainly from industry-specific guidance under U.S. GAAP.
- The realization principle under IFRS implies an arm's length transaction occurs.
- U.S. GAAP and IFRS have similar asset criteria that apply to recognition of receivables.
- Both refer to the realization principle and an earnings process.
20.On a bank reconciliation, the amount of an unrecorded bank service charge should be:
- Added to the bank balance of cash.
- Added to the book balance of cash.
- Noted in memorandum form only.
- Deducted from the bank balance of cash.
- Deducted from the book balance of cash.