Reference no: EM131607893
1- Which of the following could appear in an adjusting entry, closing entry, and reversing entry?
a- Withdrawals
b- Salary Expense
c- Cash
d- Depreciation Expense, Buildings
2- Reversing entries occur at the beginning of the accounting period and:
a- help to reduce potential errors.
b- simplify the bookkeeping associated with accruals from the prior period.
c- reverse the adjusting entries.
d- All of the above are correct.
3- Which of the following could be recorded as a reversing entry?
a- Accrual of interest expense
b- Allocation of prepaid rent in the current period
c- Cash
d- Depreciation of building
4- Which of the following adjustments may be reversed?
a- The adjustment to Accrue Salaries Payable
b- The adjustment to Record Depreciation Expense
c- The adjustment to Allocate Prepaid Insurance to the current period
d- The adjustment for Petty Cash replenishmen
5- The reversing entry for Salaries is:
a- debit Salaries Expense; credit Salaries Payable.
b- debit Salaries Expense; credit Accounts Payable.
c- debit Salaries Payable; credit Salaries Expense.
d- debit Salaries Payable; credit Income Summary.
6- Reversing entries are done when assets or liabilities are increasing and have no previous balance.
True
False
7- Reversing entries are the opposite of closing entries.
True
False
8- Not all adjusting entries can be reversed.
True
False
9- Reversing entries are recorded on the third day of the new accounting period.
True
False
10- When making a collection, no entry was recorded to reinstate an account previously written off. The allowance method is being used. This error would cause:
a- net income to be understated.
b- total liabilities to be understated.
c- total assets to be overstated.
d- None of these is correct.
11- The journal entry to write off an account judged to be uncollectible under the allowance would include a credit to:
a- Bad Debts Expense.
b- Sales.
c- Allowance for Doubtful Accounts.
d- Accounts Receivable.
12- Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to:
a- debit Bad Debts Expense; credit Accounts Receivable.
b- debit Sales; credit Allowance for Doubtful Accounts.
c- debit Allowance for Doubtful Accounts; credit Accounts Receivable.
d- debit Allowance for Doubtful Accounts; credit Bad Debts Expense
13- What would be the basis for the following journal entry if it appears on Travis Company's records? Travis uses the allowance method.
Allowance for Doubtful Accounts150Accounts Receivable-Tim Morgan150
a- The firm is writing off a specific account.
b- It is a reversing entry.
c- The firm is estimating its uncollectible accounts.
d- The firm is making a collection of a previously written-off account.
14- Myra's balance of Accounts Receivable is $4,000. The balance of the Allowance account is $600 credit. Myra writes off a $150 uncollectible account. The effect on net realizable value of the receivables is that it:
a- reduces net realizable value.
b- is unchanged.
c- increases net realizable value.
d- is undeterminable.
15- The net realizable value of a company's Accounts Receivables is:
a- the guaranteed amount the company will collect from its customers.
b- decreased at the time of a specific write-off.
c- unchanged at the time of a specific write-off.
d- increased at the time of a specific write-off.
16- A company writes off a specific account as uncollectible, but later the customer pays. The journal entry to record the reinstatement under the allowance method includes a(n):
a- decrease to Sales.
b- decrease to Bad Debts Expense.
c- increase to Allowance for Doubtful Accounts.
d- decrease to Cash.
17- Aging Accounts Receivable measures:
a- months a bill has been due but not paid.
b- sales for the year.
c- days a bill has been due but not paid.
d- All of these answers are correct
18- Ohio Company uses the Allowance for Doubtful Accounts Method. When Ohio writes off an uncollectible account, there is:
a- an increase in the Allowance Account.
b- an increase in Accounts Receivable.
c- a decrease in Accounts Receivable.
d- None of these answers is correct.
19- After having written off a customer under the direct write-off method, the account will be reopened when the customer:
a- sends any amount to pay on their account.
b- None of the above
c- pays the collection bureau.
d- sends the full amount to pay off the account.
20- The two methods of accounting for uncollectible receivables are the direct write-off method and the:
a- cash method.
b- allowance method.
c- equity method.
d- interest method.
21- The two methods of accounting for uncollectible receivables are the allowance method and the:
a- equity method.
b- interest method.
c- cost method.
d- direct write-off method.
22- In the direct write-off method, writing off an account causes:
a- an increase in expense.
b- an increase in Accounts Receivable.
c- a decrease in the Allowance account.
d- a decrease in expense.
23- Pittsburgh Tours collected $190 on an account that had been directly written off the previous year. The journal entry to record the transaction would include:
a- a credit to Bad Debts Expense.
b- a debit to Bad Debts Recovered.
c- a credit to Bad Debts Recovered.
d- a debit to Allowance for Doubtful Accounts.
24- A company is not able to reasonably estimate its bad debts expense. The method it may use is:
a- net realizable value method.
b- income statement method.
c- direct write-off method.
d- aging method.
25- If the direct write-off method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
a- Bad Debts Expense
b- Accounts Receivable
c- Interest Expense
d- Bad Debts Recovered
26- What would be the basis for the following entry on a firm's records?
Bad Debt Expense150Allowance for Doubtful Accounts150
a- The firm is using the direct write-off method.
b- The firm is using the allowance method for estimating bad debt.
c- The firm is writing off an uncollectible account.
d- All of these answers are correct.
27- A written promise to pay a certain sum of money to another person or company is a:
a- Promissory Accounts Receivable.
b- Promissory Note Payable.
c- Promissory Note Receivable.
d- Promissory Accounts Payable.
28- Sonny's Service Bureau is able to collect an amount previously written off last year under the direct write-off method. The journal entry will:
a- decrease Bad Debts Expense.
b- decrease Accounts Receivable.
c- increase Bad Debts Recovered.
d- decrease Cash.
29- David borrows $4,000 from Matthew and gives him a promissory note. David is the:
a- payor.
b- payee.
c- drawee.
d- maker.
30- Harvey loaned $450 to Chase and received a promissory note. Harvey is the:
a- maker.
b- drawee.
c- payee.
d- debtor.
31- The interest rate stated on a note for 90 days is:
a- stated on a daily basis.
b- stated on a monthly basis.
c- stated on an annual basis.
d- indeterminable.
32- The due date of a promissory note is known as the:
a- maturity date.
b- issue date.
c- discount date.
d- interest note.
33- The basic formula for calculating the interest on a note is:
a- Interest = (Principal × Time) + Rate.
b- Interest = Principal × Rate × Time.
c- Interest = (Principal × Rate) - Time.
d- Interest = Principal × Rate/ Time.
34- Interest calculated for one year on a $8,000, 6% promissory note is:
a- $48.
b- some other amount.
c- $480.
d- $4.80.
35- Interest on a $5,000, 15% promissory note for six months is:
a- $3.75.
b- $375.
c- $3,750.
d- $37.50.
36- In calculating interest on a note, it is NOT necessary to take which of the following into consideration?
a- The interest
b- The principal
c- The payee
d- The length of the note
37- A $10,000, 7% note is dated June 18 and is due in 45 days. The due date would be:
a- Aug 4.
b- Aug 2.
c- Aug 3.
d- Aug 1.
38- A $12,000, 5% note is dated May 18 and is due in 90 days. Using a 360-day year, the maturity value would be:
a- $12,000.
b- $12,150.
c- $12,175.
d- $12,050.
39- Trust Worthy Bank accepts a promissory note for $6,000 from a customer on November 1, to be repaid in eight months plus 6% interest. The maturity value of the note is:
a- $6,240.
b- $6,140.
c- $6,075.
d- $6,000.
40- The formula for calculating interest on a note is: principal × rate × time.
True
False