Accounting 1 Chapters 8 - 9 Test

The Sarbanes-Oxley Act of 2002 was passed by Congress due to the public outcry after the financial scandals of the early 2002s.

Internal control is enhanced by separating the control of a transaction from the record-keeping function.

If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as an "other income" item on the income statement.

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.

A check for $342 was erroneously charged by the bank as $432. In order for the bank reconciliation to balance, you must add $90 to the bank statement balance.

If an adjustment for an NSF check is made in a company's bank reconciliation, then the company must have written a bad check during the month.

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.

Expenditures from a petty cash fund are documented by a petty cash receipt.

When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

Generally Accepted Accounting Principles do not normally allow the use of the direct write-off method of accounting for uncollectible accounts.

Although Allowance for Doubtful Accounts normally has a credit balance, it may have either a debit or a credit balance before adjusting entries are recorded at the end of the accounting period.

Allowance for Doubtful Accounts is a liability account.

At the end of a period (before adjustment), Allowance for Doubtful Accounts has a debit balance of $500. Net credit sales for the period totaled $800,000. If bad debt expense is estimated at 1% of net credit sales, the amount of bad debt expense to be recorded in the adjustment entry is $8,500.

When accounting for uncollectible receivables and using the percentage of sales method, the matching principle is violated.

The maturity value of a 12%, 60-day note for $5,000 is $5600.

The balance of the Allowance for Doubtful Accounts is added to Accounts Receivable on the balance sheet.

The number of days' sales in receivables is an estimate of the length of time the accounts receivables have been outstanding.

When a clerk enters a sale and the customer can see the amount displayed and is given a cash receipt, this is an example of a preventive control.

When companies sell their receivables to other companies, the transaction is called factoring.

Which one of the following below reflects a weak internal control system?

The debit balance in Cash Short and Over at the end of an accounting period is reported as:

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $450. This item would be included on the bank reconciliation as a(n):

The amount of deposits in transit is included on the bank reconciliation as a(n):

A $150 petty cash fund has cash of $44 and receipts of $94. The journal entry to replenish the account would include a:

A note receivable due in 18 months is listed on the balance sheet under the caption:

The two methods of accounting for uncollectible receivables are the allowance method and the:

One of the weaknesses of the direct write-off method is that it:

After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?

A debit balance in the allowance for Doubtful Accounts:

The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles:

Dalton Company uses the allowance method to account for uncollectible receivables. Dalton has determined that the Irish Company account is uncollectible. To write-off this account, Dalton should debit: