Theories IA1

1.
Which of the following items must be added to the cash balance per ledger in preparing a bank
reconciliation which ends with adjusted cash balance?
a. Note receivable collected by bank in favor of the depositor and credited to the account of
the depositor
b. NSF customer check
c. Service charge
d. Errorneous bank debit
2. In preparing a bank reconciliation, interest paid by the bank on combined current and saving
account is
a. Added to the bank balance
b. Subtracted from the bank balance
c. Added to the bank balance
d. Subtracted from the book balance
3. Which of the following would be added to the balance per bank statement to arrive at the
correct cash balance?
a. Outstanding check
b. Bank service charge
c. Deposit in transit
d. A customer’s note collected by the bank on behalf of the depositor

4. Which of the following must be deducted from the bank statement balance in preparing bank
reconciliation which ends with adjusted cash balance?
a. Deposit in transit
b. Outstanding check
c. Reduction of loan charged to the account of the depositor
d. Certified check
5. If the balance shown in the bank statement is less than the correct cash balance and neither the
entity nor the bank has made any errors, there must be
a. Deposits credited by the bank nut not yet recorded by the entity
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the entity
6. If the cash balance shown in the accounting records is less than the correct balance and neither
the entity nor the bank has made any errors, there must be
a. Deposits credited by the bank nut not yet recorded by the entity
b. Outstanding checks
c. Deposits in transit
d. Bank charges not yet recorded by the entity
7. Bank reconciliation are normally prepared on a monthly basis to identify adjustments needed in
the depositor’s records and to identify bank errors. Adjustments on the part of the depositor
should be recorded for
a. Bank errors, outstanding checks and deposits in transit.
b. All items except bank errors, outstanding in transit and deposit in transit
c. Book errors, bank errors, deposits in transit and outstanding checks.
d. Outstanding checks and deposits in transit.
8. Bank statements provide information about all of the following, except
a. Checks cleared during the period
b. NSF checks
c. Bank charges for the period
d. Errors made by the depositor
9. Which statement in relation to a certified check is false?

a. A certified check is a liability of the bank certifying it.
b. A certified check will be accepted by many persons who would not otherwise accept a
personal check.
c. A certified check is one drawn by a bank upon itself.
d. A certified check should not be included in the outstanding checks.
10. Which statement in relation to bank reconciliation is true?

a. Bank service charge will cause the cash balance per ledger to be higher than that reported
by the bank, all other things being equal.
b. Credit memos will cause the cash balance per ledger to be higher than that reported by the
bank, all other things being equal
c. Outstanding checks will cause the cash balance per ledger to be greater than the balance
reported by the bank, all other things being equal
d. The cash amount reported in the statement of financial position must be the balance
reported in the bank statement.
11. Posting is to the process of transferring information from

a. Journal to the general ledger
b. General ledger to the journal
c. Source document to the journal
d. Journal to the source document
12. Factors that shape an accounting information system include

a. Nature of business
b. Size of the entity and nature of business
c. Volume of data to be handled and size of entity
d. Nature of business, size of entity and volume of data to be handled
13. Which of the following is not a principal purpose of an unadjusted trial balance?
a. It proves that debits and credits of equal amounts are in the ledger.
b. It is the basis of any adjustments to the account balances.
c. It supplies a listing open accounts and their balances.
d. It proves that debits and credits were properly entered in the ledger accounts.
14. Numerous errors may exist even though the trial balance columns agree. Which is not one of
these errors?
a. A transaction is not journalized
b. Transportation error
c. A journal entry is posted twice
d. A transaction is recorded and posted at an incorrect amount
15. Reversing entries apply to

a. All adjusting entries
b. All deferrals
c. All accruals
d. All closing entries
16. Which method of recording bad debt loss is consistent with accrual accounting?
a. Allowance method
b. Direct writeoff method
c. Percent of sales method
d. Percent of accounts receivable method
17. A method of estimating bad debts that focuses on the income statement rather than the
statement rather than the statement of financial position is the allowance method based on
a. Direct writeoff
b. Aging the trade accounts receivable
c. Credit sales
d. The balance in the trade accounts receivable
18. If a company employs the gross method of recording receivables from customers, then sales
discounts taken should be reported as
a. A deduction from sales in the income statement.
b. An item of other expense in the income statement.
c. Sales discounts forfeited in the cost of sales section of the income statement.
d. A deduction from accounts receivables in determining the net realizable value.
19. Which of the following accounting principles primarily supports the use of allowance for
doubtful accounts?
a. Continuity principle c. Full-disclosure principle
b. Cost principle d. Matching principle
20. Short-term non-interest bearing notes receivable are usually recorded at their
a. discount value c. net realizable value
b. maturity value d. present value
21. What is consigned inventory?

a. Goods that are shipped and title transfers to the consignee.
b. Goods that are shipped out but title remains with the consignor.
c. Goods that are sold but payment is not required until the goods are sold.
d. Goods that have been segregated for shipment to a customer.
22. In a periodic system, the beginning inventory is

a. Net purchases minus cost of goods sold
b. Net purchases minus ending inventory
c. Total goods available for sale minus net purchases
d. Total goods available for sale minus cost of goods sold
23. Entities must allocate the cost of all goods available for sale between
a. The cost of goods on hand at the beginning and the cost of goods purchased during the
period.
b. The cost of goods on hand at the end and the cost of goods purchased during the period.
c. The income statement and the statement and the statement of financial position
d. All of the choices are correct
24. Sales where the goods are delivered only when the buyer makes final payment are called
a. Bill and hold sales
b. Sales subject to installation or inspection
c. Consignment sales
d. Layaway sales
25. Sales in which the buyer is not yet ready to take delivery but does take title are known as
a. Bill and hold sales
b. Sales subject to installation or inspection
c. Lay away sales
d. Sales with buyback

Theories IA1

Uploaded by

Copyright:

Available Formats

Theories IA1

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Theories IA1

Uploaded by

Copyright:

Available Formats

1.

d. A customer’s note collected by the bank on behalf of the depositor

9. Which statement in relation to a certified check is false?

10. Which statement in relation to bank reconciliation is true?

11. Posting is to the process of transferring information from

12. Factors that shape an accounting information system include

15. Reversing entries apply to

21. What is consigned inventory?

22. In a periodic system, the beginning inventory is

You might also like