ACCT 2001 Study Guide - Quiz Guide: Trial Balance
ACCT 2001 Full Course Notes
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Question 14 pts
The five components to a system of internal controls include all of the following except:
| control procedure |
| risk assessment |
| safeguarding assets |
| monitoring controls |
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Question 24 pts
An automobile company testing brakes on new vehicles is part of:
| control procedure |
| risk assessment |
| information systems |
| monitoring controls |
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Question 34 pts
Which account would we debit to open a new petty cash fund?
| cash |
| petty cash |
| miscellaneous expense |
| petty cash expense |
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Question 44 pts
Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?
| a credit to petty cash for $127 |
| a debit to travel expenses for $125 |
| a credit to cash over and short for $2 |
| a credit to cash for $125 |
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Question 54 pts
On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?
| deposit |
| NSF check (non-sufficient funds) |
| service charge |
| Payments made by EFT (electronic fund transfer) |
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Question 64 pts
Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?
| $7,000 |
| $9,000 |
| $11,000 |
| $13,000 |
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Question 74 pts
Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?
| bad debt expense |
| accounts receivable |
| allowance for doubtful accounts |
| cash |
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Question 84 pts
Where does allowance for doubtful accounts appear on our financial statements?
| on balance sheet as a current liability |
| on income statement as part of cost of goods sold |
| on balance sheet as a contra asset related to accounts receivable |
| on the statement of retained earnings as a deduction from net income |
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Question 94 pts
At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?
| bad debt expense, $30,000 |
| allowance for doubtful accounts, $30,000 |
| bad debt expense, $20,000 |
| accounts receivable, $20,000 |
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Question 104 pts
On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?
| interest revenue, $300 |
| interest revenue, $350 |
| interest receivable, $300 |
| interest receivable, $350 |
| Wallyâs Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows: |
| Cash | $ | 21,620 | Unearned Revenue (30 units) | $ | 5,350 | ||
| Accounts Receivable | $ | 12,650 | Accounts Payable (Jan Rent) | $ | 3,300 | ||
| Allowance for Doubtful Accounts | $ | (1,900) | Notes Payable | $ | 16,000 | ||
| Inventory (35 units) | $ | 2,800 | Contributed Capital | $ | 7,000 | ||
| Retained Earnings â Feb 1, 2012 | $ | 3,520 | |||||
| ⢠| WWC establishes a policy that it will sell inventory at $180 per unit. |
| ⢠| In January, WWC received a $5,350 advance for 30 units, as reflected in Unearned Revenue. |
| ⢠| WWCâs February 1 inventory balance consisted of 35 units at a total cost of $2,800. |
| ⢠| WWCâs note payable accrues interest at a 12% annual rate. |
| ⢠| WWC will use the FIFO inventory method and record COGS on a perpetual basis. |
| February Transactions | |
| 02/01 | Included in WWCâs February 1 Accounts Receivable balance is a $1,400 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1,400 balance to a note, and Kit Kat signs a 6-month note, at 12% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012. |
| 02/02 | WWC paid a $650 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 | An additional 180 units of inventory are purchased on account by WWC for $13,500 â terms 2/15, n30. |
| 02/05 | WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 | Sales of 150 units of inventory occurred during the period of 02/07 â 02/10. The sales terms are 2/10, net 30. |
| 02/15 | The 30 units that were paid for in advance and recorded in January are delivered to the customer. |
| 02/15 | 25 units of the inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resold. Therefore, they are returned to inventory. Assume the units returned are from the 2/05 purchase. |
| 02/16 | WWC pays the first 2 weeks wages to the employees. The total paid is $2,800. |
| 02/17 | Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs. |
| 02/18 | Wrote off a customerâs account in the amount of $2,000. |
| 02/19 | $6,600 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directly to expense. |
| 02/19 | Collected $10,000 of customersâ Accounts Receivable. Of the $10,000, the discount was taken by customers on $8,000 of account balances; therefore WWC received less than $10,000. |
| 02/26 | WWC recovered $600 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 | A $950 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $950 cash dividend. |
| Adjusting Entries: |
| 02/29 | Record the $2,800 employee salary that is owed but will be paid March 1. |
| 02/29 | WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts. |
| 02/29 | Record February interest expense accrued on the note payable. |
| 02/29 | Record one monthâs interest earned Kit Katâs note (see 02/01). |
| 1-a. | Prepare all February journal entries and adjusting entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
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