Question 1: What are two objectives of internal control?
Question 2: Which of these is not an element of internal control?
A. Control environment
B. Risk assessment
C. Control procedures
D. Monitoring
E. These are all elements of internal control
Question 3: What is NOT a control procedure?
A. Mandatory vacations
B. Separating responsibilities for related operations
C. Proofs and security measures
D. Only using local suppliers
E. None of the above
Question 4 What level of assurance do internal controls provide?
A. Absolute
B. Reasonable
C. Guaranteed
D. Satisfactory
E. None of the above
Question 5: What is a compensating balance?
A. A minimum cash balance required by a bank
B. The maximum cash balance that a bank allows
C. Separating duties between the CEO and CFO
D. Defining effective controls over cash and cash equivalents
E. None of the above
Question 6: Bank reconciliations are not usually necessary because the bank statement and company cash balances always match
A. True
B. False
Question 7: The same employee should record cash receipts and prepare the daily deposit slips
A. True
B. False
Question 8: Why don't internal controls provide 100% assurance?
Question 9: Dennis and Roberto work in the Treasury department, and have a great working relationship. Due to the fact that they work so well together, and get along so well, the two of them always alternate their vacations so that the one does not feel bad. What possible problems could arise from this situation?
Question 10: Accounts receivable represents:
A. Revenue without cash payments
B. Cash payments without revenue
C. Unearned revenue
D. Pre-paid assets
E. None of the above
Question 11: What are the two methods of accounting for uncollectible accounts receivable?
A. Estimation, and Percentage of Completion
B. Percentage of Collectability and Net Sales
C. Direct Write Off and Allowance For Doubtful Accounts
D. Allowance and Percent of Net Assets
E. None of the above
Question 12: Easy Peesy Corporation has total sales of $500,000 during the month, and $275,000 of sales on account. Based on the best estimates of management, 3% of credit sales collected during every month will be uncollectible. What is the entry to account for this?
A. Bad Debt Expense, Debit $8,250. A/R, Debit $8,250
B. Bad Debt Expense, Debit $8,250, Allowance, Credit $8,250
C. A/R - October, Credit $15,000, Allowance, Debit $15,000
D. Bad Debt Expense, Debit $15,000, Allowance, Credit $15,000
E. None of the above
Question 13: ABC Corp has several receivables outstanding out the end of October 2014, and has specifically identified several A/R balances as at-risk. Management has determined that the A/R associated with Brian Turner is worthless, and the balance at this time is $20,000. What is the entry to record this amount? No allowance has been established at ABC Corp.
A. Bad Debt Expense, Debit $20,000. A/R Brian Turner, Credit $20,000
B. A/R Brian Turner, Debit $20,000. Bad Debt Expense, Credit $20,000
C. Allowance, Credit $20,000. Bad Debt Expense, Debit $20,000
D. A/R - Credit $20,000. Retained Earnings, Debit $20,000
E. None of the above
Question 14: Global Toys, Inc. has A/R as follows
What is the total estimated uncollectible A/R?
Question 15: When is bad debt expense recorded, and A/R written off, under the direct write-off method?
Question 16: A 90-day, 12% note dated August 1, 2014, for $10,000 is issued from KPMH to D-Drock, Corporation.
What is the interest rate paid on the note?
How much interest expense is paid?
Which company receives the interest income?
Question 17: Net Sales for DEF Corp. had $10,000,000, and cash sales account for 20% of net sales for the period. Accounts receivable at the beginning of the year were $2,500,000 and $3,750,000 at the end of the year. What is the A/R turnover ratio?
A. 2.6
B. 3.5
C. 2.7
D. 3.2
E. None of the above
Question 18: XYZ Corp has recorded an allowance of $50,000 for uncollectible receivables during the current year. During the second half other year, $25,000 of A/R are recognized as worthless and are written off. What is the entry?
A. Bad Debt Expense, Debit $25,000. Allowance, Credit $25,000
B. Allowance, Debit $25,000. A/R, Credit $25,000
C. Allowance, Credit $25,000. A/R, Debit $25,000
D. No entry necessary
E. None of the above
Question 19: What is another phrase used to describe fixed assets?
A. Plant, property, and equipment
B. Land and improvements
C. Equipment, improvements, and useful life
D. Un-depreciated assets
E. None of the above
Question 20: Fixed assets are offered for sale as part of normal operations
A. True
B. False
Question 21: QRD Company has an asset with a useful life of 10 years, and capitalized costs of $250,000. QRD uses a straight-line depreciation methodology - what is the accumulated depreciation balance at the end of year 4?
A. $50,000
B. $25,000
C. $75,000
D. $100,000
E. None of the above
Question 22: Land can be depreciated
A. True
B. False
Question 23: What are the four financial statements?
Question 24: What is the accounting equation?
Question 25: Accumulated deprecation and allowance for doubtful accounts are both:
A. Liabilities
B. Equities
C. Contra-assets
D. Assets
E. None of the above
Question 26: Hickory Company purchases a depreciable asset with a value of $24,000 and residual value of $2,000. This asset has a useful life of 6 years: What is the depreciation expense?
A. $4,620
B. $4,260
C. $5,550
D. $5,125
E. None of the above
Question 28: Accumulated amortization is the equivalent of accumulated depreciation, for intangible assets
A. True
B. False
Question 28: What is the life of a patent?
A. 30 years
B. Owner's life + 20 years
C. 20 years
D. 70 years
E. None of the above
Question 29: DKI Company acquires an intangible asset, a patent, for $300,000 at the beginning of year one. The patent has a useful life of 15 years at the time of acquisition. What is the amortization expense taken in year 3, and what is the balance in the accumulated amortization account and the end of year 3?
A. $20,000, $60,000
B. $20,000, $0
C. $60,000, $0
D. $20,000, $80,000
E. None of the above
Question 30: When is it acceptable, under U.S. GAAP, for companies to recognize goodwill?
Question 31: The listing of all of the accounts used by a business is called:
A. The chart of accounts
B. The general ledger
C. The sub-ledger
D. The backup ledger
E. None of the above
Question 32: Company GHR borrows, in the form of a $25,000 note payable, in order to purchase inventory from ZZ Topp, Inc. The note is outstanding for 180 days and pays 12% interest.
What is the actual interest rate paid on the note?
How much interest is paid?
Which company receives the interest income?
Question 33: What kind of asset is cash?
Fungible
Non-current
Intangible
None of the above
Question 34: List two internal controls over payroll that should be in effect
Question 35: What three broad areas that many ratios focus on?