Connect Acct 211 Quiz 3 (Spring 2014) with 100% Correct Answers

Acct 211
Assignment: Quiz 3
2014 Spring D- LearnSmart 31

1.

Assume that a company using a purchases journal made an
error in totaling the journal’s accounts payable column. The error should be
discovered:

When the purchases journal is posted to the general ledger.

When the sum of the vendor accounts does not equal the
balance in the Purchases journal.

When the total of the schedule of accounts payable is
compared with the balance of the Accounts Payable account.

When the creditors receive their payments.

When the financial statements are prepared.
2.

A subsidiary ledger that contains a separate account for
each supplier (creditor) to the company is a(n):

Controlling account.

Accounts receivable ledger.

Accounts payable ledger.

General ledger.

Special journal.
3.

Subsidiary ledgers do all of the following except:

Remove excessive detail from the general ledger.

Provide up-to-date information on customer or other specific
account balances.

Aid in error identification for individual accounts.

Help with division of labor (recordkeeping tasks).

Eliminate the need for individual postings to the customer
or supplier accounts
4.

The sales journal is used for recording:

Credit purchases.

Credit sales.

Cash sales.

Cash purchases.

Cash receipts.
5.

A company received payment of $9,800 from a customer within
the discount period. Identify the journal the transaction would be recorded in.

Cash disbursements journal.

Sales journal.

Cash receipts journal.

Purchases journal.

General journal.
6.

All of the following statements regarding accounting
information systems are true except:

Accounting information systems collect and process data from
transactions and events.

Accounting information systems organize data in useful
forms.

Accounting information systems do not establish internal
control procedures.

Accounting information systems are crucial to effective
decision making.

Accounting information systems communicate information to
business decision makers.
7.

Assume that a company uses a sales journal, a purchases
journal, a cash receipts journal, a cash disbursements journal, and a general
journal. A sales return for credit on account would be recorded in the:

Sales journal.

General journal.

Cash receipts journal.

Accounts receivable ledger.

Cash disbursements journal.
8.

The control principle for accounting information systems
requires that the:

Benefits from an activity outweigh the costs of the
activity.

System report useful, understandable, timely, and pertinent
information for effective decision making.

System must have internal controls.

System adapts to changes in the company, business
environment, and needs of decision makers.

System conforms to a company’s activities, personnel, and
structure.
9.

An accounts receivable ledger is:

A subsidiary ledger that contains an account for each credit
customer.

A list of the balances of selected accounts in the accounts
receivable ledger that is added to show the total amount of the significant
accounts receivable outstanding.

A book of original entry that is designed and used for
recording only a specified type of transaction.

The ledger that contains the financial statement accounts of
a business.

A subsidiary ledger that contains a separate account for
each creditor (supplier) to the company.
10.

Information processors:

Include information storage.

Interpret, transform, and summarize information for use in
analysis and reporting.

Are components of an accounting system that keep data in
accessible form.

Are the means to take information out of an accounting
system and make it available to users.

Include scanners.
11.

Outstanding checks refer to checks that have been:

Written, recorded, sent to payees, and received and paid by
the bank.

Written and not yet recorded in the company books.

Held as blank checks.

Written, recorded on the company books, sent to the payee,
but have not yet been paid by the bank.

Issued by the bank.
12.

An expense resulting from failing to take advantage of cash
discounts on purchases is called:

Sales discounts.

Trade discounts.

Purchases discounts.

Discounts lost.

Discounts earned.
13.

A remittance advice is:

An explanation for a payment by check.

A bank statement.

A voucher.

An EFT.

A cancelled check.
14.

On a bank reconciliation, an unrecorded debit memorandum for
printing checks is:

Noted as a memorandum only.

Added to the book balance of cash.

Deducted from the book balance of cash.

Added to the bank balance of cash.

Deducted from the bank balance of cash.
15.

Which of the following events would cause a bank to debit a
depositor’s account?

The depositor authorizes the bank to charge the depositor’s
account $50 for new checks.

The bank collects a note receivable and related interest on
the depositor’s behalf.

The depositor determines there are outstanding checks drawn
on the account at month-end.

The depositor determines there are deposits in transit on
the account at month-end.

The bank determines it incorrectly charged the depositor’s
account twice for the monthly service charge in a previous month.
16.

The impact of technology on internal controls includes:

Reduced processing errors.

Elimination of the need for regular audits.

Elimination of the need to bond employees.

Elimination of separation of duties.

Elimination of fraud.
17.

A company made a bank deposit on September 30 that did not
appear on the bank statement dated as of September 30. In preparing the
September 30 bank reconciliation, the company should:

Deduct the deposit from the bank statement balance.

Send the bank a debit memorandum.

Deduct the deposit from the September 30 book balance and
add it to the October 1 book balance.

Add the deposit to the book balance of cash.

Add the deposit to the bank statement balance.
18.

Managers place a high priority on internal control systems
for all of the reasons listed below except:
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Prevention of avoidable losses.

Planning of operations.

Monitoring of company performance.

Monitoring of employee performance.

Assurance that no loss will occur.
19.

Internal control systems are:

Developed by the Securities and Exchange Commission for
public companies.

Developed by the Small Business Administration for
non-public companies.

Developed by the Internal Revenue Service for all U.S.
companies.

Required by Sarbanes-Oxley (SOX) to be documented and
certified if the company’s stock is traded on an exchange.

Required only if a company plans to engage in interstate
commerce.
20.

The gross method of recording purchases refers to the method
of recording:

Purchases at the invoice price less any cash discounts.

Specified amounts and timing of payments that a buyer agrees
to make in return for being granted credit.

Purchases at the full invoice price, without deducting any
cash discounts.

Inventory at its selling price.

Inventory at the lower of cost or market.
21.

Failure by a promissory notes’ maker to pay the amount due
at maturity is known as:

Protesting a note.

Closing a note.

Dishonoring a note.

Discounting a note.

Depreciating a note.
22.

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All of the following statements regarding recognition of
receivables under U.S. GAAP and IFRS are true except:

U.S. GAAP and IFRS have similar asset criteria that apply to
recognition of receivables.

Receivables that arise from revenue-generating activities
are subject to broadly similar criteria for U.S. GAAP and IFRS.
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The realization principle under IFRS implies an arm’s length
transaction occurs.

Both refer to the realization principle and an earnings
process.

Differences arise mainly from industry-specific guidance
under U.S. GAAP.
23.

The matching principle prescribes:

That expenses be ignored if their effect on the financial
statements is unimportant to users’ business decisions.

The use of the direct write-off method for bad debts.

The use of the allowance method of accounting for bad debts.

That bad debts be disclosed in the financial statements.

That bad debts not be written off.
24.

The quality of receivables refers to:

The creditworthiness of sellers.

The speed of collection.

The likelihood of collection without loss.

Sales turnover.

The interest rate.
25.

All of the following are true regarding credit card expense
except:

Credit card expense may be classified as a
“discount” deducted from sales to get net sales.

Credit card expense may be classified as a selling expense.

Credit card expense may be classified as an administrative
expense.

Credit card expense is not recorded by the seller.

Credit card expense is a fee the seller pays for services
provided by the card company.
26.

The account receivable turnover measures:

How long it takes to sell accounts receivable to a factor.

How often, on average, receivables are received and
collected during the period.

The relation of cash sales to credit sales.

How long it takes to sell merchandise inventory.

All of the options are correct.
27.

The buyer who purchases and takes ownership of another
company’s accounts receivable is called a:

Payer.

Pledger.

Factor.

Payee.

Pledgee.
28.

Under IFRS, the term provision:

Refers to expense.

Usually refers to a liability whose amount or timing is
uncertain.

Means establishing a provision for bad debts.

Means establishing a contra-asset account.

Means establishing an asset account.
29.

The person who signs a note receivable and promises to pay
the principal and interest is the:

Maker.

Payee.

Holder.

Receiver.

Owner.
30.

An accounting procedure that (1) estimates and reports bad
debts expense from credit sales during the period the sales are recorded, and
(2) reports accounts receivable at the estimated amount of cash to be collected
is the:

Allowance method of accounting for bad debts.

Aging of notes receivable.

Adjustment method for uncollectible debts.

Direct write-off method of accounting for bad debts.

Cash basis method of accounting for bad debts.