1. The amount of bad debt expense can be estimated by:
a. the percent of sales approach
b. the percent of accounts receivable approach
c. the aging of accounts receivable approach
d. both the percent of sales approach and the percent of accounts receivable approach
e. all of these answers are correct
2. Principles of internal control include:
a. record purchases using the gross method
b. divide responsibilities for related transactions
c. perform regular and independent reviews
d. divide responsibilities for related transactions and perform regular and independent reviews
e. all of these are answers are correct
3. A bank statement includes:
a. a list of outstanding cheques
b. a list of petty cash amounts
c. the beginning and ending balance of the depositor's chequing account
d. a list of the outstanding cheques and a list of petty cash amounts
e. all of these answers are incorrect
4. On June 30, the Cash account of Lutness Company had a normal balance of $4,300. During July the account was debited for a total of $3,400 and credited for a total of $3,600. What was the balance in the Cash account on August 1?
a. $0
b. $4,100 debit
c. $3,400 credit
d. $3,400 debit
e. $4,100 credit
5. Which accounting principle requires reporting expenses in the same period as the sales they helped to produce?
a. materiality
b. going concern
c. matching
d. cost
e. business entity
6. Unearned revenues are:
a. revenures that have been earned and received
b. revenues that have been earned but not yet collected
c. liabilities created by advance cash payments from customers for products or services
d. recorded as an asset in the accounting records
e. increases to owners' equity
7. The excess of expenses over revenues for a period is:
a. net assets
b. equity
c. net loss
d. net income
e. a liability
8. Cost of goods sold is:
a. another term for net sales
b. the term used for the cost of buying and preparing merchandise
c. an operating expense
d. also called gross margin
e. the cost of goods sold to customers
9. A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance, and financial statements, and which is an optional step in the accounting process, is a(n):
a. adjusted trial balance
b. worksheet
c. post-closing trial balance
d. unadjusted trial balance
e. book of final entry
10. A perpetual inventory system:
a. gives a continuous record of the amount of inventory on hand
b. uses a Purchases account for the cost of new merchandise purchased
c. was historically used by companies that sold large quantities of low-value items
d. is not widely used in practice
e. all of these answers are correct
11. As long as a company accurately records credit sales information, it is not necessary to have accounts for specific customers.
True
False
12. Employment Insurance is withheld from wages earned, with the withholding to stop in 2012 as soon as the employee has earned $4,500.
True
False
13. In the partnership form of business, the owners of a business are called shareholders.
True
False
14. Goods on consignment are goods shipped by their owner, called the consignee, to another party called the consignor.
True
False
15. Damaged goods are not counted in inventory if they cannot be sold.
True
False
16. TechCom customer RDA Electronics paid off an $8,300 balance on its account receivable. TechCom should record the transaction as a debit to Accounts Receivable, RDA Electronics and a credit to Cash.
True
False
17. Canada Pension Plan is withheld from wages earned, except the withholding stops each year as soon as the employee has earned the maximum pensionable earnings for that year.
True
False
18. On the worksheet, a loss is indicated if the total of the Income Statement Debit column exceeds the total of the Income Statement Credit column.
True
False
19. An internal control system is comprised of the policies and procedures companies use to protect assets, ensure reliable accounting, and promote efficient operations.
True
False
20. Since the revenue recognition principle requires that revenues be earned, there is no such thing as unearned revenues in accounting.
True
False