Question : 21) A payment packet of documents: A) reports the arrival of : 1230141

Accounting

21) A payment packet of documents:

A) reports the arrival of items purchased.

B) is sent by the purchasing department to the vendor selling the item.

C) identifies the need for merchandise and begins the purchasing process.

D) includes the invoice, receiving report and purchase order.

22) When approving an invoice for payment:

A) the receiving department should examine the payment packet to make sure all the documents agree.

B) after payment, the payment packet should be stamped “paid”.

C) checks should be returned to the department who prepared them for mailing.

D) the person who ordered the goods should examine the payment package to make sure all the documents agree.

23) Which of the following indicates the order by which documents are prepared in the purchasing process?

A) purchase order, payment packet, invoice

B) invoice, receiving report, purchase order

C) purchase order, receiving report, invoice, payment packet

D) purchase order, receiving report, payment packet

24) The following duties should always be segregated:

A) purchasing of goods and receiving of goods.

B) purchasing of goods and payment of the invoice.

C) purchasing of goods, receiving of goods, and approving and paying for goods.

D) all of the above.

25) The entry to establish the petty cash fund is:

A) a debit to Miscellaneous Expense and a credit to Cash.

B) a debit to Miscellaneous Expense and a credit to Petty Cash.

C) a debit to Petty Cash and a credit to Cash.

D) a debit to Cash and a credit to Petty Cash.

26) A petty cash fund:

A) is established to pay large nonrecurring expenses.

B) is established to pay on-the-spot minor purchases.

C) should have a least two custodians.

D) should issue checks for certain purchases.

27) Which of the following is a correct statement about the petty cash fund?

A) To set up the petty cash fund, a check is issued to the chief financial officer.

B) The custodian of the fund has sole responsibility for accounting for the fund.

C) The sum of the cash in the fund must always equal the opening balance of the fund.

D) The petty cash fund must be maintained at a bank.

28) Payments by check is an important internal control for all of the following reasons EXCEPT for:

A) the checks provided a record of the payment.

B) the check must be signed by an authorized official.

C) all payments are made via a lock-box system.

D) before signing the check, the authorized official should study the evidence supporting the payment.

29) ABC Store sells expensive watches. An inventory at the beginning of the day showed 40 watches in the store. 10 new watches were added to the inventory during the day. The point-of-sale terminal recorded 3 watches sold. An inventory taken at the end of the day should show how many watches still in the store?

A) 27

B) 47

C) 53

D) Cannot be determined from the data

30) An imprest petty cash fund of $600 was established for minor disbursements. At the end of the month, the fund included petty cash tickets for the purchase of $207 in supplies, $82 for meals, $86 for fuel, and $76 for taxi fare. How much cash should be left in the fund?

A) $108

B) $149

C) $451

D) $600

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July 1, 2023

21. The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business. The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms. Default rates generally fall within the range of .01% to .02% of credit sales.

22. The percentage-of-completion method measures the proportion of total work carried out during the accounting period either from engineers' estimates of the degree of completion or from the ratio of costs incurred to date to the total costs expected for the entire contract.

23. A common-size income statement expresses each expense and net income as a percentage of
A. assets.
B. revenues.
C. liabilities.
D. expenses.
E. shareholders’ equity.

24. If the firm has received a promise of payment but cannot measure this promise with reasonable reliability,
A. U.S. GAAP would permit revenue to be recognized, but IFRS would not permit revenue to be recognized.
B. U.S. GAAP would not permit revenue to be recognized, but IFRS would permit revenue to be recognized.
C. neither U.S. GAAP nor IFRS would permit revenue to be recognized.
D. U.S. GAAP and IFRS would permit revenue to be recognized.
E. none of the above

25. Which section includes income derived from a firm’s primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital

26. Operating risks
A. include variability in sales from changing economic conditions (cyclicality risk).
B. include variability in sales from short product life cycles (because of technological change or changes in consumer taste).
C. include variability of earnings that arises when the firm has a high proportion of fixed costs that do not change as sales change.
D. Answers a, b, and c are correct.
E. None of these answer choices is correct.

27. Ulrich Co. sells an asset to a buyer for a total sales price of $6,000 with a payment schedule of $2,000 in year 1, $2,000 in year 2, and $2,000 in year 3. The cost of the asset is $5,000. Under the cost-recovery-first method, what amount of net profit is recognized in year 3?
A. $2,000
B. $1,000
C. $666.67
D. $333.33
E. $0

28. Which of the following is true regarding income recognition?
A. The seller must have substantially performed its obligations to the customer (for example, by transferring ownership of goods to the customer).
B. The seller must have obtained an asset from the customer that it can reliably measure. If the asset is not cash, the seller must be reasonably certain of converting it into cash.
C. The firm recognizes expenses when it consumes assets.
D. If an event or transaction leads to the recognition of revenue, the firm matches the consumption of any assets (the expense), in time, with the revenue recognized.
E. all of the above

29. Cowden Properties

Cowden Properties sold a condominium to Ms. Roberts for $90,000. Cowden originally acquired the condo at a cost of $40,000 and made improvements to the unit totaling $20,000. The contract for sale required Ms. Roberts to pay the $90,000 as follows: