Accounting exam 3 example #12630

Technology such as cash registers, check protectors, time clocks and personal identification scanners can improve internal control.

Good internal control dictates that a person who controls an asset also maintains that asset's accounting records.

Separation of duties divides responsibility for a transaction or a series of related transactions between two or more individuals or departments. Separation of duties reduces the risk of error and fraud.

The payee is the person who signs a check, authorizing its payment.

A voucher system is a set of procedures and approvals designed to control cash disbursements and the acceptance of obligations.

If the Cash Over and Short account has a debit balance at the end of the period, the amount is reported as miscellaneous revenue.

The petty cash fund should be reimbursed when it is nearing zero and at the end of the accounting period when financial statements are prepared

The entry necessary to establish a petty cash fund should include:

When a petty cash fund is in use:

Accounts receivable occur from credit sales to customers.

The formula for computing interest on a note is principal of the note times the annual interest rate times time expressed in fraction of year.

A company had net sales of $500,000 and an average accounts receivable of $80,000. Its accounts receivable turnover equals 6.25.

The aging method of determining bad debts expense is based on the knowledge that the longer a receivable is past due, the lower the likelihood of collection.

The matching principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period.

A company borrowed $1,000 by signing a six month promissory note at 5% interest. The total amount of interest is $25.

Plant assets refer to intangible assets that are used in the operations of a business.

Depreciation measures the actual decline in market value of an asset.

Inadequacy refers to the insufficient capacity of a company's plant assets to meet the company's growing productive demands.

Depreciation expense is calculated using estimates of an asset's salvage value and useful life.

A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

All of the following statements regarding uncertainty in liabilities are true except:

Employer payroll taxes:

Employers pay FICA taxes equal to the amount of FICA taxes withheld from the employees. Withhold employees' FICA taxes. Pay unemployment taxes to the federal government.Pay unemployment taxes to both the state and federal governments. All of the choices are correct.

The deferred income tax liability:

All of the following statements regarding FICA taxes are true except:

The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes are applied to the first $7,000 of an employee's pay. Assume that an employee earned $8,900. What is the amount of total unemployment taxes the employer must pay on this employee's wages?

Land improvements are:

A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?

An asset's book value is $18,000 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,000, the company should record:

Obligations due to be paid within one year or the company's operating cycle, whichever is longer, are:

All of the following statements regarding uncertainty in liabilities are true except

Known liabilities: Include accounts payable, notes payable, and payroll. Are obligations set by agreements, contracts, or laws. Are measurable. Are definitely determinable. All of the choices are correct.

Accounts payable:

Advance ticket sales totaling $6,000,000 cash would be recognized as follows:

A contingent liability:

Employers: Pay FICA taxes equal to the amount of FICA taxes withheld from the employees. Withhold employees' FICA taxes. Pay unemployment taxes to the federal government. Pay unemployment taxes to both the state and federal governments.

FUTA taxes are:

The deferred income tax liability:

All of the following statements regarding FICA taxes are true except:

Obligations not due within one year or the company's operating cycle, whichever is longer, are reported as current liabilities.

A single liability can be divided between current and noncurrent liabilities.

A company can have a liability even if the amount of the obligation is unknown.

A lawsuit is an example of a contingent liability for the defendant.

The full disclosure principle requires the reporting of contingent liabilities that are reasonably possible.

W2 Form

W4 form

A voucher system establishes procedures for: