After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to _______________. Question 1 options: Bank Service Charge Expense
Quiz
Section 2: Multiple-Choice Questions (25 points)
Question 1 (1 point)
After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to _______________.
Question 1 options:
| Bank Service Charge Expense | |
| Cash | |
| Petty Cash | |
| Cash Short and Over | |
| None of the above |
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Question 2 (1 point)
Malloy Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2015. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year end. The uncollectible accounts expense for 2015 will be _______________.
Question 2 options:
| $7,000 | |
| $10,000 | |
| $13,000 | |
| $9,850 | |
| None of the above |
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Question 3 (1 point)
Malloy Company issued its own $10,000, 90-day, non-interest-bearing note to a bank. The only payment Malloy will ever make to the bank will be for $10,000 at the maturity date of the loan as the bank discounts the note at 10 percent. The proceeds to Malloy are _______________.
Question 3 options:
| $10,000 | |
| $9,000 | |
| $9,750 | |
| $10,250 | |
| None of the above |
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Question 4 (1 point)
Malloy company uses a calendar year. On 2015 July 1, Malloy Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Malloy uses the double-declining-depreciation method, the depreciation expense for 2015 is _______________.
Question 4 options:
| $88,000 | |
| $72,000 | |
| $36,000 | |
| $44,000 | |
| $40,000 |
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Question 5 (1 point)
The result of recording a capital expenditure as a revenue expenditure is an _______________.
Question 5 options:
| overstatement of current year’s expense | |
| understatement of current year’s expense | |
| understatement of subsequent year’s net income | |
| overstatement of current year’s net income | |
| None of the above |
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Question 6 (1 point)
Cole Inc., a new company, purchases a two-year insurance policy for $12,000. Six months later, the correct balance in the prepaid insurance account would be _______________.
Question 6 options:
| $12,000 | |
| $6,000 | |
| $9,000 | |
| None of the above |
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Question 7 (1 point)
Which of the following is not an advantage of the corporate form of organization?
Question 7 options:
| continuous existence of the entity | |
| limited liability of stockholders | |
| government regulation | |
| easy transfer of ownership |
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Question 8 (1 point)
Treasury stock should be shown on the balance sheet as a(n) _______________.
Question 8 options:
| reduction of the corporation’s stockholders’ equity | |
| current asset | |
| current liability | |
| investment asset |
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Question 9 (1 point)
When the stockholders invest cash in the business, what is the effect on the accounting equation?
Question 9 options:
| Liabilities increase and stockholders’ equity increases. | |
| Both assets and liabilities increase. | |
| Both assets and stockholders’ equity increase. | |
| None of the above |
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Question 10 (1 point)
The ending balance in retained earnings is shown in the _______________.
Question 10 options:
| income statement | |
| statement of retained earnings | |
| balance sheet | |
| both (b) and (c) | |
| both (a) and (c) | |
| (a), (b), and (c) |
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Question 11 (1 point)
A cash dividend of $500 was declared and paid to stockholders simultaneously. The correct journal entry to record the declaration and payment simultaneously is _______________.
Question 11 options:
| debit Capital Stock 500 and credit Cash 500 | |
| debit Cash 500 and credit Dividends 500 | |
| debit Dividends 500 and credit Cash 500 | |
| debit Cash 500 and credit Capital Stock 500 |
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Question 12 (1 point)
If $3,000 has been earned but not yet paid to a company’s workers since the last payday within an accounting period, the necessary adjusting entry at the end of that accounting period would be _______________.
Question 12 options:
| debit an expense and credit a liability | |
| debit an expense and credit an asset | |
| debit a liability and credit an asset | |
| debit a liability and credit an expense |
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Question 13 (1 point)
The accrual basis of accounting _______________.
Question 13 options:
| recognizes revenues only when cash is received | |
| is used by almost all companies | |
| recognizes expenses only when cash is paid out | |
| recognizes revenues when sales are made or services are performed, and recognizes expenses only when cash is paid out |
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Question 14 (1 point)
The need for adjusting entries is based on _______________.
Question 14 options:
| the matching principle | |
| source documents | |
| the cash basis of accounting | |
| activity that has already been recorded in the proper accounts |
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Question 15 (1 point)
Which of the following statements is false regarding the closing process?
Question 15 options:
| The Dividends account is closed to Income Summary. | |
| The closing of expense accounts results in a debit to Income Summary. | |
| The closing of revenues results in a credit to Income Summary. | |
| The Income Summary account is closed to the Retained Earnings account. |
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Question 16 (1 point)
Which of the following statements is true regarding the classified balance sheet?
Question 16 options:
| Current assets include cash, accounts receivable, and equipment. | |
| Plant, property, and equipment is one category of long-term assets. | |
| Current liabilities include accounts payable, salaries payable, and notes receivable. | |
| Stockholders’ equity is subdivided into current and long-term categories. |
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Question 17 (1 point)
The underlying assumptions of accounting include all the following except _______________.
Question 17 options:
| business entity | |
| going concern | |
| matching | |
| money measurement and periodicity |
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Question 18 (1 point)
Malloy Company began the accounting period with $60,000 of merchandise, and the net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Malloy Company for the period is _______________.
Question 18 options:
| $300,000 | |
| $228,000 | |
| $252,000 | |
| $168,000 | |
| None of the above |
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Question 19 (1 point)
A classified income statement consists of all of the following major sections except _______________.
Question 19 options:
| Operating revenues | |
| Cost of goods sold | |
| Operating expenses | |
| Non-operating revenues and expenses | |
| Current assets |
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Question 20 (1 point)
A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be _______________.
Question 20 options:
| $240 | |
| $200 | |
| $1,200 | |
| $1,000 | |
| $3,600 |
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Question 21 (1 point)
Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is _______________.
Question 21 options:
| $114,750 | |
| $157,600 | |
| $122,400 | |
| $109,650 | |
| None of the above |
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Question 22 (1 point)
Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is _______________.
Question 22 options:
| $147,200 | |
| $160,350 | |
| $155,250 | |
| $114,000 | |
| None of the above |
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Question 23 (1 point)
During a period of rising prices, which inventory method might be expected to give the highest net income?
Question 23 options:
| Weighted-average | |
| FIFO | |
| LIFO | |
| Specific identification | |
| Cannot determine |
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Question 24 (1 point)
The following information is related to the bank reconciliation of the Acme Company:
| Balance per bank statement | $1,951.20 |
| Balance per ledger | 1,869.60 |
| Deposits in transit | 271.20 |
| Outstanding checks | 427.80 |
| NSF check | 61.20 |
| Service charges | 13.80 |
The adjusted/correct cash balance is _______________.
Question 24 options:
| $1,794.60 | |
| $1,719.60 | |
| $1,638.00 | |
| $1,713.00 | |
| $1,876.20 |
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Question 25 (1 point)
In a bank reconciliation, deposits in transit should be _______________.
Question 25 options:
| deducted from the balance per books | |
| deducted from the balance per bank statement | |
| added to the balance per ledger | |
| added to the balance per bank statement | |
| disregarded in the bank reconciliation |
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Question 26.: 7 points:
Medina Company received its February bank statement on March 6. The statement showed a balance of $316,500. Included on the statement were memoranda showing collections from Medina customers (A/R), totaling $16,000.
The statement also showed a returned check for a customer who paid the balance on his account, for $2,825. The bank charged a returned check fee of $75 for this NSF check. This $75 charge will be added to the customer’s balance. There were other service charges for the monthly service charge and ATM fees, totaling $200. These are bank service charge expenses. Medina’s accountant looked at her accounting records. At the end of February, the cash balance was $312,300. The statement did not reflect a deposit made late on February 28th, for $14,900. There were also some outstanding checks, totaling $6,200.
Required:
a. Determine the adjusted balance in the cash account after completing a bank reconciliation.
b. Prepare three journal entries needed due to the reconciliation.
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