Question : 109.A company issues a check for $362 but records it : 1244430

109.A company issues a check for $362 but records it as $326. On the bank reconciliation, the $36 error should be

 

a.

added to the balance per books.

b.

deducted from the balance per bank.

c.

added to the balance per bank.

d.

deducted from the balance per books.

 

 

 

110.All of the following bank reconciliation items would result in an entry on the company’s books except

 

a.

fee for collection of note by bank.

b.

interest income.

c.

NSF check of customer.

d.

deposits in transit.

 

 

 

111.For which of the following errors should the appropriate amount be added to the balance per bank on a bank reconciliation?

 

a.

Deposit of $400 recorded by bank as $100

b.

Check issued for $52 recorded by company as $25

c.

A returned $300 check recorded by bank as $200

d.

Check issued for $37 recorded by company as $73

 

 

 

112.Which of the following bank reconciliation items would result in an entry on the company’s books?

 

a.

Outstanding checks

b.

Bank error

c.

Deposit in transit

d.

Interest income

 

 

 

113.The goal of a successful credit policy is to maximize the potential profit on total credit sales while

 

a.

selling only to customers who will not pay.

b.

minimizing the number of credit customers.

c.

limiting credit losses to an acceptable level.

d.

keeping credit sales as low as possible.

 

 

 

 

 

114.The account Allowance for Uncollectible Accounts is necessary because

 

a.

management should know how many credit losses have been sustained over the years.

b.

when recording uncollectible accounts expense, it is not possible to predict specifically which accounts will not be collected.

c.

uncollected accounts that are written off must be accumulated in a separate account.

d.

a liability results when a credit sale is made.

 

 

 

115.The account Allowance for Uncollectible Accounts is classified as a(n)

 

a.

contra account to Uncollectible Accounts Expense.

b.

expense.

c.

liability.

d.

contra account to Accounts Receivable.

 

 

 

116.Under the allowance method, Uncollectible Accounts Expense is recorded

 

a.

several times during the accounting period.

b.

when an individual account is written off.

c.

for an estimated amount.

d.

for a known amount.

 

 

 

117.The matching rule

 

a.

is violated when the allowance method is used.

b.

requires that all bad-debt losses be recorded when an individual customer defaults.

c.

necessitates the recording of an estimated amount for bad debts.

d.

results in the recording of a known amount for bad-debt losses.

 

 

 

118.If the amount of uncollectible accounts expense is overstated at year end,

 

a.

net income will be overstated.

b.

total liabilities and stockholders’ equity will be overstated.

c.

net Accounts Receivable will be understated.

d.

Allowance for Uncollectible Accounts will be understated.