Question Details

ACCOUNTING QUIZ WEEK 7
Question 1 	  	
 	When a company ships product to a customer with the terms FOB (free on board) destination, which of the following is true? 				
	 
a		The seller will pay the shipping charges and title will not be exchanged until goods are received by the customer. 
b		The buyer will pay the shipping charges and title is exchanged at point of shipment. 
c		The seller will pay the shipping and title is exchanged at point of shipment. 
d		The buyer will pay the shipping and title is exchanged when the goods are received by the customer. 
				
   Question 2 
  	   
 	Credit terms of 2/10, n/30 indicate that a 				
	 
a		two percent discount for early payment is available if the invoice is paid before the tenth day of the month following the month to of sale. 
b		two percent discount for early payment is available within ten days of the date of sale. 
c		ten percent discount for early payment is available if the invoice is paid within two days of the date of the invoice. 
d		two percent discount for early payment is available if the invoice is paid after the tenth day, but before the thirtieth day of the invoice date. 
				
   Question 3 
	    

 	When a company ships product to a customer with the terms FOB (free on board) shipping point, which of the following is true?				
	  
a		The seller will pay the shipping charges and title will not be exchanged until goods are received by the customer. 
b		The buyer will pay the shipping charges and title is exchanged at point of shipment. 
c		The seller will pay the shipping and title is exchanged at point of shipment. 
d		The buyer will pay the shipping and title is exchanged when the goods are received by the customer. 
				
   Question 4 
	    

 	Assuming the allowance method for bad debts is used, when a customer's uncollectible account is written off, a credit should be made to 				
	 
a		Bad debt expense. 
b		Allowance for doubtful accounts. 
c		Sales revenue. 
d		Accounts receivable. 
				
   Question 5 
10 points   	    

 	On January 31, 2009, Klein Company wrote off an uncollectible account of $5,000. The allowance method is used. The write-off would cause bad debt expense to 				
	 
a		decrease by $5,000. 
b		increase by $5,000. 
c		increase by $10,000. 
d		not change. 
				
   Question 6 
10 points   	   
 	During 2010, West Comp recorded credit sales of $800,000. Based on prior experience, it estimates a 3% bad debt rate on credit sales. The beginning balance in the Allowance for doubtful accounts is $ 20,000.  During the year accounts were written off for $12,000.   The ending balance in the allowance for doubtful accounts should be: 				
	 
A		$24,000

B		 $32,000

C		 $44,000

D		 $56,000

				
   Question 7 
1 points (Extra credit)   	 
 	LRP Company uses the allowance method to record its bad debt expense. When the account of a particular customer is deemed to be uncollectible and is written off, LRP will prepare a journal entry with a 				
	 
a		debit to bad debt expense. 
b		credit to bad debt expense. 
c		debit to accounts receivable. 
d		debit to allowance for doubtful accounts. 
				
   Question 8 
1 points (Extra credit)   	    

 	If a customer pays her bill after her account has already been written off, the company receiving the payment should record the account reinstatement with 				
	 
a		a credit to bad debt expense. 
b		a credit to allowance for doubtful accounts. 
c		a credit to cash. 
d		a debit to bad debt expense. 
				
   Question 9 
10 points   	    

 	When using the allowance method of accounting for bad debts, bad debt expense should be recorded 				
	 
a		as an adjusting entry at the end of the accounting period. 
b		when a particular account is written off. 
c		whenever the allowance for doubtful accounts has a debit balance. 
d		whenever the allowance for doubtful accounts has a zero balance. 
				
   Question 10 
10 points   	    

 	For accounting purposes, cash includes 				
	 
a		notes receivable from employees. 
b		supplies. 
c		balances on deposit in banks. 
d		a note received from a customer in settlement of an overdue account receivable. 
				
   Question 11 
10 points   	    

 	When a depositor receives a bank statement indicating a "NSF check", he should 				
	 
a		credit the cash account for the amount of the check. 
b		record the amount as an expense of the current period. 
c		credit a special receivable for the amount of the check. 
d		debit sales revenue. 
				
   Question 12 
10 points   	  
 	A deposit in transit on a bank reconciliation should be 				
	 
a	added to the depositor's book cash balance. 
b	subtracted from the depositor's book cash balance. 
c	added to the bank statement balance. 
d	subtracted from the bank statement balance. 
				
   Question 13 
10 points   	   
 	Linetech Company's bank statement showed an ending balance of $8,000. Items appearing in the bank reconciliation included: outstanding checks, $500; deposits in transit, $1,000; bank service charges, $50; and Driver Company's check erroneously deducted from Linetech's bank account by the bank, $250. The correct cash balance at the end of the month should be reported as 				
	 
a	$10,600 
b	$8,750 
c	$8,500 
d	$8,250 
				
   Question 14 
	   

 	Which of the following demonstrates a poor internal control procedure? 				
	 
a		The bookkeeper makes cash deposits and records journal entries related to cash, while the treasurer prepares the bank reconciliation. 
b		The president, who does no bookkeeping, prepares the bank reconciliation each month. 
c		The treasurer signs all checks after the bookkeeper prepares the supporting documents. 
d		One bookkeeper prepares cash deposits and the other bookkeeper enters the collections in the journal and ledger. 
				
   Question 15 
   	 
 	When preparing a bank reconciliation, which of the following would be deducted from the company's cash balance (cash per books)? 				
	 
a		Interest paid by bank. 
b		Deposits in transit. 
c		Outstanding checks. 
d		Bank service charges. 
				
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