1) In a system of good internal control, a payment to a supplier requires which
documents for proper approval?
A) a journal entry, a supplier invoice, and a description of the goods being purchased
B) a receiving report, an invoice, and a purchase order
C) a purchase order, a journal entry, and a price catalog
D) a supplier invoice, a bill of lading, and the supplier’s financial statements
2) Table 10-8 Zane Manufacturing
On January 1, 2013, Zane Manufacturing Company purchased a machine for $40,000.
The company expects to use the machine a total of 24,000 hours over the next 6 years.
The estimated sales price of the machine at the end of 6 years is $4,000. The company
used the machine 8,000 hours in 2013 and 12,000 in 2014 .
Refer to Table 10-8. What is the book value of the machine at the end of 2014 if the
company uses straight-line amortization?
A) $10,000
B) $28,000
C) $17,778
D) $20,000
3) A debit balance in the Cash Short and Over account at the end of the accounting
period appears:
A) on the income statement as a miscellaneous expense
B) on the balance sheet as a prepaid expense
C) on the balance sheet as a current liability
D) on the income statement grouped with cost of goods sold
4) The entry to accrue interest on a note payable would include a:
A) debit to Note Payable
B) credit to Interest Receivable
C) credit to Interest Revenue
D) debit to Interest Expense
5) The Candy Place received a bank statement showing a balance of $5,350. What is the
adjusted balance if there was a bookkeeper error of $200 in the depositor’s favour, two
outstanding cheques totalling $720, a service charge of $15, a deposit in transit of $165,
and interest revenue of $21 earned by the depositor?
A) $4,795
B) $4,995
C) $5,016
D) $4,601
6) Table 1-2
Following is a list showing the account balances of various assets, liabilities, revenues,
and expenses for Tim’s Landscaping at December 31, 2014, the end of its first year of
operations.
The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during
the year for personal use.
Refer to Table 1-2. Owner’s equity at December 31, 2014, was:
A) $26,800
B) $45,400
C) $45,200
D) $37,400
7) Which of the following costing methods is not acceptable under the international
financial reporting standards (IFRS)?
A) LIFO
B) FIFO
C) weighted average
D) specific identification
8) The following information is available for Andersen Company for the month ending
June 30, 2014 .
Balance per the bank statement is $10,241.43.
Balance per books is $9,745.06.
Cheque #506 for $1,948.52 and cheque #510 for $1,800.25 were not shown on the June
30 bank statement.
A deposit in transit of $5,113.40 had not been received by the bank when the bank
statement was generated.
A bank debit memo indicated an NSF cheque in the amount of $79 written by Bruce
Garrett to Andersen Company on June 13 .
A bank credit memo indicated a note collected by the bank of $1,900 and interest
revenue of $75 on June 20 .
The bank statement indicated service charges of $35.
What is the adjusted book balance?
A) $7,884.06
B) $11,606.06
C) $11,109.69
D) $7,971.29
9) Collection of an account receivable would:
A) decrease liabilities
B) have no effect on owner’s equity
C) decrease owner’s equity
D) increase total assets
10) Assets and liabilities for Stan’s Garage at the beginning and end of the current
accounting period are as follows:
January 1December 31
Total assets$450,000$690,000
Total liabilities$325,000$440,000
a) Determine net income or net loss for the current year. The owner did not invest any
additional assets during the year and made no withdrawals.
b) Determine net income or net loss for the current year. The owner invested an
additional $100,000 of assets into the business during the year and made no
withdrawals.
11) Given the following transactions in the month of July for Kootenay Outdoor
Adventures, prepare journal entries; and, a trial balance and balance sheet as of July 31,
2013 .
a) Owner, Bill Thompson invested $35,000 cash and equipment with a value of $67,500
into the business.
b) Purchased supplies on account, $250.
c) Rented office space paying one month’s rent, $950.
d) Performed guide service on account, $4,500.
e) Purchased a truck by paying $4,000 cash and signing a promissory note for the
balance of $29,800.
f) Performed guiding service and immediately collected $2,900 cash.
g) Owner, Bill Thompson withdrew $900 for personal use.
12) Referring to Table 10-5, what is the amortization expense in 2014 if Button uses
double-declining balance amortization?
A) $6,875
B) $6,000
C) $9,995
D) $12,000
13) Before any internal control procedure is initiated, a question which should be
addressed by the company is:
A) Will this stop all theft?
B) Is this the best security money can buy?
C) How much benefit will be derived from the cost of the procedure?
D) Will this prevent all accounting errors?
14) If the credit amount of an entry to record the payment of salaries was not posted:
A) assets would be overstated
B) assets would be unaffected
C) liabilities would be understated
D) assets would be understated
15) A petty cash fund, established with a $250 balance, had petty cash tickets totalling
$219 and cash in the amount of $34. The entry to replenish the fund would include a:
A) credit to Cash Short and Over for $3
B) credit to Cash in Bank for $250
C) debit to Petty Cash for $219
D) debit to Cash in Bank for $216
16) A bank service charge appears on a bank reconciliation as a(n):
A) addition to the book balance
B) addition to the bank balance
C) deduction from the book balance
D) deduction from the bank balance
17) Match the following.
A) external auditors
B) control environment
C) internal auditors
D) control procedures
E) an audit
F) electronic funds transfer
1> Employees of a business whose job it is to ensure that all employees are following
company policies and that operations are running efficiently
2> Independent accounting professionals hired to determine that the organization’s
financial statements are prepared in accordance with generally accepted accounting
principles.
3> System that transfers cash by digital communication rather than paper documents
4> An examination of a company’s financial statements and its accounting system
5> Methods designed to ensure that the business’s goals are achieved
18) Table 11-7
Camparound Canada has 24 employees who are paid on a monthly basis. For the most
recent month, gross earnings were $68,000. The income tax withholdings are 15% of
gross earnings. Canada Pension Plan deductions are 4.95% of gross earnings and
Employment Insurance deductions are 1.83% of gross earnings. All employees have
$15 per month withheld for charitable contributions. Ignore the basic Canada Pension
Plan exemption.
Referring to Table 11-7, the entry to record salary expense includes a:
A) credit to Salary Expense for $68,000.00
B) debit to Employment Insurance Payable for $1,742.16
C) debit to Employee Income Tax Payable for $10,200.00
D) credit to Canada Pension Plan Payable for $3,366.00
19) Ruby Company purchased inventory from Diamond Company, and received a
credit memo from Diamond Company. Diamond Company had charged Ruby Company
$3.85 rather than $3.58 for each of the 100 items ordered. What entry will Ruby
Company make assuming they are using a periodic inventory system?
A)
B)
C)
D)
20) Tom and Jerry Company uses special journals along with the general journal to
record its daily transactions. Using the following abbreviations, identify the appropriate
journal in which to record each transaction.
Sales JournalS
Purchases JournalP
Cash Receipts JournalCR
Cash Payments JournalCP
General JournalG
a)Sold merchandise on account, $5,800__________
b)A customer purchased additional inventory on account,
credit terms 2/10 n/30, $3,500__________
c)A customer who had previously purchased merchandise
on account returned defective merchandise for credit__________
d)Purchased inventory on account, $4,680__________
e)Purchased office furniture, no money down, with 60
days to pay, $1,850__________
f)Closed the income summary account to capital, net
income was $65,000__________
g)Collected $3,600 from cash sales__________
h)Purchased a used copy machine paying $3,200 cash__________
i)Received a cheque for $3,210 from a customer who was
paying off his account in full__________
j)Paid the telephone bill for the month, $230__________
21) Sally Lee, a professional accountant, owns a computer used for the company’s
business. The matching objective requires that which of the following accounts appears
on the income statement for the year ended December 31?
A) Amortization expense, computer
B) Accumulated amortization, computer
C) Depreciation receivable, computer
D) Depreciation payable, computer
22) Prepaid rent shows a beginning balance of $500 and an ending balance of $600.
During the year, prepaid rent was debited for $2,200. What is the amount of rent
expense shown on the current year’s income statement?
A) $2,100
B) $1,700
C) $1,600
D) $2,700
23) Table 10-3
Gotcha Company Ltd. acquired equipment on April 1, 2013, for $300,000. The residual
value of the equipment is $30,000 and the estimated life is six years or 120,000 hours.
Referring to Table 10-3, what will the amortization expense be for the year ended
December 31, 2013, if Gotcha Company Ltd. uses double-declining-balance
amortization?
A) $100,000
B) $67,500
C) $75,000
D) $90,000
24) At the end of the period on December 31, 2013, Jack’s Fishing and Tackle shop
accrued interest expense in the amount of $82. On January 15, 2014, the loan payment
was made and included $2,000 principal and $140 interest. What is the journal entry to
record the January 15, 2014, payment if Jack’s accountant used a reversing entry on
January 1, 2014?
A)
B)
C)
D)
25) When prices are rising, the ending inventory balance reported on a
weighted-average basis is generally:
A) lower than on a FIFO basis
B) greater than on a FIFO basis
C) equal to ending inventory reported on a FIFO basis
D) equally likely to be higher or lower on a weighted-average basis as opposed to a
FIFO basis
26) Owner withdrawals for the current period are closed to:
A) the cash account
B) the income summary account
C) the owner’s capital account
D) the revenue accounts
27) Assume the cash was received in the last accounting period. If the adjusting entry to
record revenue earned during the current period is not recorded:
A) assets will be overstated
B) assets will be understated
C) liabilities will be understated
D) liabilities will be overstated
28) Perry Materials Supply uses the aging method to account for uncollectible accounts.
At the end of the year, the balance in Accounts receivable was $146,000 and Perry
prepared the following aging schedule.
Based on past history, Perry uses 2% for current receivables (1-30 days), 10% for 31-60
days, 20% for 61-90 days, and 40% for over 90 days. Please complete the schedule and
calculate the estimated amount of Uncollectible accounts.
29) Table 9-7
The following are the unadjusted balances of Matheson Merchandising for the year
ended December 31, 2014 . Only half of Matheson’s sales are on account as are the
sales returns and allowances.
Accounts receivable$110,500
Allowance for doubtful accounts,
Dec. 31, 2014, prior to adjustment 520Cr.
Sales Revenue for 2014400,400
Sales Returns and Allowances for 2014 10,400
Refer to Table 9-7. Assuming that Matheson estimates bad debts at 2 % of outstanding
accounts receivable, what is the amount of the bad-debt expense for the year.
30) A list of all the ledger accounts with their balances
31) Table 1-2
Following is a list showing the account balances of various assets, liabilities, revenues
and expenses for Tim’s Landscaping at December 31, 2014, the end of its first year of
operations.
The owner, Tim Brown, invested $45,200 during the year and withdrew $10,000 during
the year for personal use.
Refer to Table 1-2. Prepare an income statement for Tim’s Landscaping for the year
ending December 31, 2014, the end of its first year of operations.
32) On April 1st 2013 Grimley Sales purchased inventory for $40,000 by signing a
one-year note payable, due March 31, 2014 . The note bears interest at an annual rate of
8%. Grimley Sales uses the perpetual method for recording inventory.
Prepare the required journal entries from April 1, 2013 through March 31, 2014 .
