Practice test for ACCT I chapters 7 & 8

22 February 2023
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All of the following statements regarding internal control procedures are true except:
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Internal control procedures are not affected by the cost-benefit principle.
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The accounting principle that prescribes an accounting information system to report useful, understandable, timely, and pertinent information for effective decision-making is the:
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Relevance principle.
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All of the following statements regarding accounting information systems are true except:
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Accounting information systems are less important than ever to decision makers.
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Input devices include:
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Bar-code readers.
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The special journals of many accounting systems include the:
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General Ledger.
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The sales journal is used for recording:
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Credit sales.
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A log that is used to record and post transactions of a similar type is a:
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Special journal.
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When a company uses special journals, the general journal is used for selected transactions and events including:
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Recording adjusting transactions.
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A subsidiary ledger:
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Is a listing of individual accounts and amounts with a common characteristic.
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A subsidiary ledger that contains a separate account for each supplier (creditor) to the company is a(n):
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Accounts payable ledger.
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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:
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General journal.
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The use of an Accounts Payable controlling account:
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Reduces the number of accounts in the general ledger.
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Enterprise-resource planning software:
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Refers to programs that help manage a company's vital operations.
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An approach that enters and processes data as soon as source documents are available is called:
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Online processing.
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Which of the following does not apply to enterprise resource planning (ERP) software:
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ERP can not be used to share data with customers and suppliers.
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A business segment:
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Is a part of a company that is separately identified by its products, services, or geographic market.
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When the sales journal's column for accounts receivable and sales is totaled at the end of the month, its total is:
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Debited to Accounts Receivable and credited to Sales.
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A list of all the accounts in the accounts receivable ledger with their balances and the total is a(n):
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Schedule of accounts receivable
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After posting is completed, there may be an error if:
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sum of the customer account balances does not equal the general ledger Accounts Receivable controlling account balance.
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Assume that a company using a purchases journal made an error in totaling the journal's accounts payable column. The error should be discovered:
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When the total of the schedule of accounts payable is compared with the balance of the Accounts Payable account.
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The accounting principle that prescribes an accounting information system conform with a company's activities, personnel, and structure is the:
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Compatibility principle.
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All of the following statements regarding input devices are true except:
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Input devices are always reliable and no controls are needed to verify accuracy of input.
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For a retailer required to collect sales taxes from customers, all of the following adaptations would be made to the sales journal except:
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A Sales Taxes Payable debit column would be added.
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A company borrowed $50,000 from a bank by signing a long-term note payable. Identify the journal the transaction would be recorded in.
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Cash receipts journal.
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A company received payment of $9,800 from a customer within the discount period. Identify the journal the transaction would be recorded in.
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Cash receipts journal.
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An internal control system consists of all of the following policies and procedures except ones designed to:
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Guarantee a return to investors.
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The principles of internal control include:
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Establish responsibilities.
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Internal control systems are:
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Required by Sarbanes-Oxley (SOX) to be documented and certified if the company's stock is traded on an exchange.
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The following information is available for Johnson Manufacturing Company at June 30: Cash in bank account $ 6,455 Inventory of postage stamps $ 74 Money market fund balance $12,400 Petty cash balance $ 350 NSF checks from customers returned by bank $ 867 Postdated checks received from customers $ 391 Money orders $ 257 A nine-month certificate of deposit maturing on December 31 of current year $ 8,000 Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
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$19,462 Add $6,455 of cash in bank + $12,400 of money market fund, $350 of petty cash balance + $257 of money orders = $19,462.
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A check involves three parties:
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The maker, the payee, and the bank.
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A remittance advice is:
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An explanation for a payment by check.
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For which item does a bank NOT issue a debit memorandum?
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To notify a depositor of a deposit to their account.
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Preparing a bank reconciliation on a monthly basis is an example of:
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Protecting assets by proving accuracy of cash records.
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The number of days' sales uncollected:
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Is used to evaluate the liquidity of receivables.
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The days' sales uncollected ratio is used to:
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Estimate how much time is likely to pass before the amount of accounts receivable is received in cash.
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The number of days' sales uncollected:
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All of these.
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Internal control procedures for cash receipts require that:
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All of these.
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The entry to record reimbursement of the petty cash fund for postage expense should include:
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A debit to Postage Expense.
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In reimbursing the petty cash fund:
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Appropriate expense accounts are debited
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Martha Company has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts: December 4: Freight charge for merchandise purchased $ 42 December 7: Freight charge for delivery to customer $ 66 December 12: Purchase of office supplies $ 31 December 18: Donation to charitable organization $ 50 If, in addition to these receipts, the petty cash fund contains $301 of cash, the journal entry to reimburse the fund on December 31 will include:
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A debit to Cash Over and Short of $10. Opening cash balance of $500. Subtract the $189 of disbursements from the petty cash fund during December (as evidenced by the petty cash receipts). This yields an expected cash balance of $311. Since there is only $301 of cash in the fund, the journal entry to reimburse the fund will include a $10 debit to Cash Over and Short.
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An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n):
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Bank reconciliation.
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On a bank reconciliation, an unrecorded debit memorandum for printing checks is:
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Deducted from the book balance of cash.
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A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period. As a result, in preparing this period's reconciliation, the amount of this check should be:
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Deducted from the bank balance of cash
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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:
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Add the deposit to the bank statement balance.
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In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information: Cash balance per company books on September 30 $6,275 Deposits in transit at month-end $1,300 Outstanding checks at month-end $ 620 Bank charge for printing new checks $ 45 Note receivable and interest collected by bank on Marks' behalf $ 770 A check given to Marks during the month by a customer is returned by the bank as NSF $ 480
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$6,520 Book balance $ 6,275 + note collection & interest revenue $ 770 - bank charge for printing new cheeks $ 45 - NSF check returned by bank $ 480 Adjusted book balance $ 6,520
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The document that is an itemized statement of goods prepared by a vendor listing the customer's name, items sold, sales prices, and terms of the sale is the
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Invoice.
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The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the
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Receiving report.
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A company using the net method of recording purchases failed to take advantage of a discount available. When they pay the full (gross) amount of an invoice at the end of the credit period the journal entry will include a debit to:
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Discounts Lost.
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Reasons that internal controls are crucial to companies that convert from U.S. GAAP to IFRS include all of the following except:
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Controls are significantly different across the globe.
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A company using the net method of recording purchases failed to take advantage of a discount available. When they pay the full (gross) amount of an invoice at the end of the credit period the journal entry will include a debit to:
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Discounts Lost.