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1) an alternative name for bad debts expense is
a.deadbeat expense
b.uncollectible accounts expense
c.collection expense
d.credit loss expense
2) cannon company is considering purchasing a machine. the machine will produce the
following cash flows:
gannon requires a minimum rate of return of 10%. what is the maximum price cannon
should pay for this machine?
a.$128,925.90
b.$64,462.95
c.$150,000.00
d.$75,000.00
3) most companies use a(n) _________ rather than a retained earnings statement.
a.balance sheet
b.income statement
c.statement of cash flows
d.statement of stockholders equity
4) the trial balance for greenway corporation appears as follows:
if, on december 31, 2011, supplies on hand were $30, the adjusting entry would contain
a:
a.debit to supplies for $30
b.credit to supplies for $30
c.debit to supplies expense for $110
d.credit to supplies expense for $110
5) which of the following statements is true regarding inventory cost flow assumptions?
a.a company may use more than one costing method concurrently
b.a company must comply with the method specified by industry standards
c.a company must use the same method for domestic and foreign operations
d.a company may never change its inventory costing method once it has chosen a
method
6) in the table below the information for four companies is provided.
assuming all four companies are in the same industry, which company appears to have
the greatest likelihood of paying its current obligations?
a.martin
b.lewis
c.danforth
d.garner
7) a deposit made by a company will appear on the bank statement as a
a.debit
b.credit
c.debit memorandum
d.credit memorandum
8) when determining the proceeds received when issuing a bond, the factor applied to
the amount of the bond principal is determined from the table of the
a.present value of 1
b.present value of an annuity 1
c.future value of 1
d.future value of an annuity 1
9) the collection of an $800 account within the 2 percent discount period will result in a
a.debit to sales discounts for $16
b.debit to accounts receivable for $784
c.credit to cash for $784
d.credit to accounts receivable for $784
10) if a company has both an inflow and outflow of cash related to property, plant, and
equipment, the ______________ in the investing activities section.
a.two cash effects must be netted and presented as one item
b.cash inflow and cash outflow must be reported separately
c.cash outflow is only is presented
d.cash inflow and cash outflow can either be reported separately or presented as one
item
11) below are descriptions of internal control problems. in the space to the left of each
item, enter the code letter of the one best internal control principle that is related to the
problem described.
internal control principles
a.establishment of responsibility
b.segregation of duties
c.physical control devices
d.documentation procedures
e.independent internal verification
f.human resource controls
1>the same person opens incoming mail and posts the accounts receivable subsidiary
ledger.
2>three people handle cash sales from the same cash register drawer.
3>a clothing store is experiencing a high level of inventory shortages because people
try on clothing and walk out of the store without paying for the merchandise.
4>the person who is authorized to sign checks approves purchase orders for payment.
5>some cash payments are not recorded because checks are not prenumbered.
6>cash shortages are not discovered because there are no daily cash counts by
supervisors.
7>the treasurer of the company has not taken a vacation for over 20 years.
12) supervisors counting cash receipts daily is an example of
a.human resource controls
b.independent internal verification
c.establishment of responsibility
d.segregation of duties
