Question :
131.A voucher system a set of procedures and approvals:
A.Designed to : 1258867
131.A voucher system is a set of procedures and approvals:
A.Designed to eliminate the need for subsidiary ledgers.
B.Designed to determine if the company is operating profitably.
C.Used almost exclusively by small companies.
D.Used to ensure that the company sells on credit only to creditworthy customers.
E.Designed to control cash disbursements and the acceptance of obligations.
132.The gross method of recording purchases refers to recording:
A.Purchases at the invoice price less any cash discounts.
B.Specified amounts and timing of payments that a buyer agrees to in return for being granted credit.
C.Purchases at the full invoice price, without deducting any cash discounts.
D.Inventory at its selling price.
E.Inventory at the lower of cost or market.
133.An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:
A.Sales discounts.
B.Trade discounts.
C.Purchases discounts.
D.Discounts lost.
E.Discounts earned.
134.A company using the net method of recording purchases failed to take advantage of a discount available. When they pay the full (gross) amount of an invoice at the end of the credit period the journal entry will include a debit to:
A.Merchandise Inventory.
B.Sales Discounts.
C.Discounts Lost.
D.Cash.
E.Accounts Receivable.
135.A company that uses the net method of recording purchases made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would be:
A.Debit Merchandise Inventory $392; credit Accounts Payable $392.
B.Debit Merchandise Inventory $400; credit Discounts Lost $8; credit Accounts Payable $392.
C.Debit Merchandise Inventory $392; credit Cash for $392.
D.Debit Merchandise Inventory $392; debit Discounts Lost $8; credit Accounts Payable $400.
E.Debit Accounts Payable $400; credit Discounts Lost $8; credit Cash $392.
$400 * 0.98 = $392
136.Merchandise with an invoice price of $2,000 was purchased on February 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 February 17 is:
A.Debit Accounts Payable $1,960; credit Cash $1,960.
B.Debit Accounts Payable $2,000; credit Cash $2,000.
C.Debit Accounts Payable $1,960; debit Discounts Lost $40; credit Cash $2,000.
D.Debit Accounts Payable $2,000; credit Merchandise Inventory $40; credit Cash $1,960.
E.Debit Accounts Payable $2,000; credit Discounts Lost $40; credit Cash $1,960.
$2,000 * 0.98 = $1,960; the company is paying within the discount period
137.Merchandise with an invoice price of $2,000 was purchased on February 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 February 27 is:
A.Debit Accounts Payable $1,960; credit Cash $1,960.
B.Debit Accounts Payable $2,000; credit Cash $2,000.
C.Debit Accounts Payable $1,960; debit Discounts Lost $40; credit Cash $2,000.
D.Debit Accounts Payable $2,000; credit Merchandise Inventory $40; credit Cash $1,960.
E.Debit Accounts Payable $2,000; credit Discounts Lost $40; credit Cash $1,960.
$2,000 * 0.98 = $1,980; the company is not paying within the discount period, so the discount of $40 is lost
138.A company records purchases using the net method. On February 1, they purchased merchandise inventory on account for $7,300 with terms of 1/10, n/30. The February 1 journal entry to record this transaction would include a:
A.Debit to Merchandise Inventory of $7,300.
B.Debit to Merchandise Inventory of $7,227.
C.Debit to Merchandise Inventory of $73.
D.Credit to Merchandise Inventory of $73.
E.Credit to Accounts Payable of $7,300.
$7,300 * 0.99 = $7,227
139.Internal controls are crucial to companies that convert from U.S. GAAP to IFRS because of all of the following risks except:
A.Possible misstatement of financial information.
B.Possible fraud.
C.Controls are significantly different across the globe.
D.Ineffective communication of the change to investors, creditors, and others.
E.Management’s inability to certify the effectiveness of the controls.
140.All of the following are considered effective cash management principles except:
A.Encouraging collection of receivables by offering discounts for early payments.
B.Keeping only necessary levels of assets.
C.Planning expenditures.
D.Retaining excess cash for unexpected expenditures.
E.Delaying payment of liabilities until the last possible day.
