Financial Accounting

The principle of establishing responsibility does not include

authorization of transactions.

one person being responsible for one task.

independent internal verification.

approval of transactions.

Which one of the following is not necessarily a party to a check?

Maker

Buyer

Payee

Payer

Blank checks

should be safeguarded.

should be pre-signed.

should not be prenumbered.

do not need to be safeguarded since they must be signed to be valid.

If the month-end bank statement shows a balance of $24,000, outstanding checks are $18,000, a deposit of $5,000 was in transit at month end, and a check for $1,000 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

$38,000

$24,000.

$11,000.

$12,000.

A debit memorandum would not be issued by the bank for

the collection of a notes receivable.

a bank service charge.

the wiring of funds.

the issuance of traveler’s checks.

All of the following would involve a debit memorandum except

interest earned.

the cost of printing checks.

a bank service charge.

an NSF check.

Internal control is defined, in part, as a plan that safeguards

all balance sheet accounts.

capital stock.

assets.

liabilities.

In 2013, Boyle Company had credit sales of $900,000 and granted sales discounts of $20,000. On January 1, 2013, Allowance for Doubtful Accounts had a credit balance of $22,000. During 2012, $37,500 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2013?

$10,900

$26,400

$33,100

$11,500

An aging of a company’s accounts receivable indicates that $10,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

debit to Allowance for Doubtful Accounts for $8,900.

debit to Bad Debts Expense for $10,000.

debit to Bad Debts Expense for $8,900.

credit to Allowance for Doubtful Accounts for $10,000.

The accounts receivable turnover ratio is computed by dividing

total sales by ending net accounts receivable.

net credit sales by average net accounts receivable.

net credit sales by ending net accounts receivable.

total sales by average net accounts receivable.

The allowance method of accounting for uncollectible accounts is required if

the company charges interest on accounts receivable.

the company is a retailer.

the company makes any credit sales.

bad debts are significant in amount.

In recording the sale of accounts receivable, the commission charged by a factor is recorded as

Service Charge Expense.

Loss on Sale of Receivables.

Bad Debts Expense.

Commission Expense.

Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $27,000. If the balance of the Allowance for Doubtful Accounts is $8,000 debit before adjustment, what is the amount of bad debts expense for that period?

$35,000

$8,000

$19,000

$27,000

On November 1, Gentle Company received a $3,000, 10%, three-month note receivable. The cash to be received by Gentle Company when the note becomes due is:

$3,050.

$3,000.

$3,075.

$3,300.

At the end of May, the unadjusted trial balance of Barker Industries included the following accounts: Debit Credit Sales (75% represent credit sales) $400,000 Accounts Receivable $240,000 Allowance for Doubtful Accounts 1,800

Barker uses the percentage of sales approach in estimating uncollectible accounts expense. The uncollectible accounts expense is estimated to be 3% of credit sales. What is the amount of uncollectible accounts expense recognized in Barker’s income statement for May?

$9,000.

$4,800.

$7,200.

$10,800.