accounting MCQS

During the month of September, Norris Industries issued a check in the amount of $859 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $878. The journal entry to correct this mistake when discovered will include:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

a debit to Accounts Payable for $878.

a credit to Cash for $19.

a credit to Accounts Payable for $19.

a credit to Cash for $878.

a debit to Cash for $59.

  

2. A company that uses the net method of recording invoices made a purchase of $1,200 with terms of 3/10, n/30. The entry to record the purchase would include:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

a credit to Cash for $1,164.

a debit to Merchandise Inventory for $1,164.

a debit to Discounts Lost for $36.

a credit to Discounts Lost for $36.

a debit to Cash for $1,164

  

3. In the process of reconciling Marks Enterprises’ bank statement for September, Mr. Marks compiles the following information:

  Cash balance per company books on September 30

$6,430  

  Deposits in transit at month-end

$1,050  

  Outstanding checks at month-end

$610  

  Bank charge for printing new checks

$50  

  Note receivable and interest collected by bank on Marks’ behalf

$710  

  A check given to Marks during the month by a customer is returned by the bank as NSF

$530  

The adjusted cash balance per the books on September 30 is:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

$6,560

$6,960

$7,140

$7,720

$6,480

  

4. The following information is taken from Hogan Company’s December 31 balance sheet:

  Cash and cash equivalents

$8,400  

  Accounts receivable

71,900  

  Merchandise inventories

60,700  

  Prepaid expenses

4,400  

  Accounts payable

$15,600  

  Notes payable

86,900  

  Other current liabilities

10,000  

If net credit sales and cost of goods sold for the current year were $690,000 and $367,000, respectively, the firm’s days’ sales uncollected for the year is: (rounded)

[removed]

[removed]

[removed]8 days [removed]

[removed]

[removed]

3

8 days

32 days

10 days

72 days

  

5. Battel had net sales of $5,000 million and ending accounts receivable of $950 million. Its days’ sales uncollected was (rounded):

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[removed]

[removed]

[removed]

[removed]

[removed]25 days.

7

1 days.

14 days.

25 days.

69 days.

  

6. At the end of the day, the cash register’s tape shows $995 but the count of cash in the register is $1,095. The proper entry to account for this excess includes a:

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credit to Cash Over and Short for $100.

credit to Cash for $100.

debit to Petty Cash for $100.

debit to Cash for $100.

debit to Cash Over and Short for $100.

  

7. Nattel had net sales of $4,300 million and ending accounts receivable of $500 million. Its days’ sales uncollected was (rounded):

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[removed]

[removed]

[removed]

[removed]

[removed]

42 days.

12 days.

29 days.

44 days.

45 days.

  

8. During the month of September, Norris Industries issued a check in the amount of $856 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $882. The journal entry to correct this mistake when discovered will include:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

a debit to Cash for $66.

a credit to Cash for $882.

a credit to Cash for $26.

a credit to Accounts Payable for $26.

a debit to Accounts Payable for $882.

  

9. Assume that the custodian of a $460 petty cash fund has $68 in coins and currency plus $386 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

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[removed]

[removed]

[removed]

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[removed]

a credit to Cash for $392.

a debit to Cash for $392.

a credit to Cash Over and Short for $5.

a debit to Petty Cash for $386.

a debit to Cash for $318.

  

10. Martha Company has an established petty cash fund in the amount of $520. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:

  December 4

  Freight charge for merchandise purchased

$38  

  December 7

  Freight charge for delivery to customer

$65  

  December 12

  Purchase of office supplies

$32  

  December 18

  Donation to charitable organization

$49  

If, in addition to these receipts, the petty cash fund contains $320 of cash, the journal entry to reimburse the fund on December 31 will include:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

a debit to Transportation-In of $33.

a credit to Office Supplies of $81.

a credit to Cash Over and Short of $16.

a debit to Cash Over and Short of $16.

a debit to Transportation-Out of $33.

  

11. A company that uses the net method of recording invoices made a purchase of $600 with terms of 4/10, n/30. The entry to record the purchase would include:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

a credit to Cash for $576.

a debit to Merchandise Inventory for $576.

a debit to Discounts Lost for $24.

a credit to Discounts Lost for $24.

a debit to Cash for $576.

  

12. At the end of the day, the cash register’s record shows $1,350, but the count of cash in the cash register is $1,000. The correct entry to record the cash sales is

[removed]

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[removed]

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[removed]

  Cash over and short350          Sales 350   
  Cash1,350            Sales 1,350   
  Cash1,000     Cash over and short350          Sales 1,350   
  Cash1,000          Sales 1,000   
  Cash1,350          Sales 1,000         Cash over and short        350   

  

13. The following information is available for Holland Company at December 31:

  Money market fund balance

$2,860  

  Certificate of deposit maturing June 30 of next year

$22,000  

  Postdated checks from customers

$1,490  

  Cash in bank account

$22,800  

  NSF checks from customers returned by bank

$650  

  Cash in petty cash fund

$210  

  Inventory of postage stamps

$25  

  U.S. Treasury bill purchased on December 15 and maturing on           February 28 of following year

$14,000  

Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

$49,825

$49,800

$38,315

$39,870

$39,095

  

14. The following information is taken from Hogan Company’s December 31 balance sheet:

  Cash and cash equivalents

  Accounts receivable

  Merchandise inventories

  Prepaid expenses

  Accounts payable$15,600  

  Notes payable

  Other current liabilities

$8,500  

70,600  

60,300  

4,300  

87,000  

9,300  

If net credit sales and cost of goods sold for the current year were $620,000 and $368,000, respectively, the firm’s days’ sales uncollected for the year is: (rounded)

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]10 days

9 days

42 days

70 days

35 days

  

15. A company had net sales of $34,000 and ending accounts receivable of $2,900 for the current period. Its days’ sales uncollected equals (rounded):

[removed]

[removed]

[removed]

[removed]1 days. [removed]

[removed]

31 days.

8 days.

93 days.

32 days.

  

16. A company plans to decrease a $210 petty cash fund to $75. The current balance in the account includes $40 petty cash payment in receipts and $160 in currency. The entry to reduce the fund will include a:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

debit to Miscellaneous Expenses for $170.

credit to Cash for $85.

debit to Cash Short and Over for $35.

credit to Petty Cash for $160.

debit to Cash for $85.

  

17. A company records purchases using the net method. On February 1, they purchased merchandise inventory on account for $9,200 with terms of 2/10, n/30. The February 1 journal entry to record this transaction would include a:

[removed]

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[removed]

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[removed]

debit to Merchandise Inventory of $184.

credit to Accounts Payable of $9,200.

credit to Merchandise Inventory of $184.

debit to Merchandise Inventory of $9,200.

debit to Merchandise Inventory of $9,016.

  

18. The following information is available for Holland Company at December 31:

  Money market fund balance

  Certificate of deposit maturing June 30 of next year

  Postdated checks from customers

  Cash in bank account

  NSF checks from customers returned by bank

  Cash in petty cash fund$210    Inventory of postage stamps$25  

  U.S. Treasury bill purchased on December 15 and maturing on           February 28 of following year

$2,890  

$24,000  

$1,440  

$23,250  

$630  

$16,000  

Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of: [removed]

[removed]

[removed]

[removed]

[removed]

[removed]

$42,350

$40,715

$52,210

$43,125

$52,235

  

19. The following information is available for Johnson Manufacturing Company at June 30:

  Cash in bank account

  Inventory of postage stamps

  Money market fund balance

  NSF checks from customers returned by bank

$8,400  

$8,430  

$72  

$12,600  

  Petty cash balance

$420  

$886  

  Postdated checks received from customers

$396  

  Money orders

$260  

  A nine-month certificate of deposit maturing on December 31 of current year

Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

$29,762

$21,522

$21,710

$21,450

$21,102

  

20. Merchandise with an invoice price of $2,200 was purchased on October 3, terms 2/15, n/60. The company uses the net method to record purchases. The entry to record the cash payment of this purchase obligation on October 17 is:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

  Accounts Payable……………………….2,156           Cash………………………………… 2,156   
  Accounts Payable……………………….2,200           Discounts Lost……………………… 44          Cash………………………………….. 2,156   
  Accounts Payable……………………….2,200           Cash………………………………….. 2,200   
  Accounts Payable……………………….2,200           Merchandise Inventory…………….      44          Cash………………………………….. 2,156   
  Accounts Payable………………………2,200           Merchandise Inventory…………… 88          Cash…………………………………. 2,112   

  

21. If a check correctly written and paid by the bank for $806 is incorrectly recorded in the company’s books for $759, how should this error be treated on the bank reconciliation?

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

Subtract $47 from the book balance.

Add $47 to the bank’s balance.

Subtract $47 from the bank’s balance and add $47 to the book’s balance.

Subtract $47 from the bank’s balance.

Add $47 to the book balance.

  

22. A company plans to decrease a $230 petty cash fund to $80. The current balance in the account includes $50 petty cash payment in receipts and $170 in currency. The entry to reduce the fund will include a:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

credit to Cash for $90.

debit to Cash Short and Over for $30.

debit to Cash for $90.

debit to Miscellaneous Expenses for $180.

credit to Petty Cash for $170.

  

23. A company had $60 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

credit Petty Cash for $60.

credit Cash for $60.

debit Cash Over and Short for $60.

credit Cash Over and Short for $60.

debit Petty Cash for $

  

24. A company had net sales of $31,000 and ending accounts receivable of $2,300 for the current period. Its days’ sales uncollected equals (rounded):

[removed]

[removed]1 days.

[removed]

[removed]

[removed]

[removed]

6 days.

85 days.

28 days.

27 days.

  

25. A company had $56 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

[removed]

[removed]

[removed]

[removed]

[removed]

[removed]

credit Petty Cash for $56.

credit Cash Over and Short for $56.

debit Petty Cash for $56.

credit Cash for $56.

debit Cash Over and Short for $56.

 

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