Question 2 : MULTIPLE CHOICE.

a. A cash budget does all of the following EXCEPT:

1. controls operations.
2. determines if the company will need to borrow money.
3. helps coordinate business activities.
4. helps a company manage cash by planning receipts and payments.

b. Hints of where fraud, mistakes or financial harm can occur in a company is called:

A) control procedures. B) the tone at the top.

C) the control environment. D) risk assessment.

c. If a bank statement included a bank collection and related interest revenue, the journal entry to record this reconciling item should include a:

A) debit to Note Receivable. B) debit to Note Payable.

C) debit to Cash. D) credit to Cash.

d. The ending bank statement balance for November is $9,845. The bank statement shows a service charge of $95, electronic funds receipts of $500, and a NSF check for $350. Deposits in transit total

$2,050 and outstanding checks are $1,835. What is the adjusted bank balance?

A) $10,060 B) $13,730

C) $8,900 D) $10,115

e. An unrealized gain:

1. is recorded when the fair value of the trading security is more than its cost.
2. is recorded when a trading security is sold for less than its cost.
3. is recorded when the fair value of the trading security is less than its cost.
4. is recorded when a trading security is sold for more than its cost.

f. When a company receives a cash dividend from a trading security, the journal entry includes:

1. a debit to cash and credit to trading investment.
2. a debit to cash and credit to dividend revenue.
3. a debit to dividend revenue and credit to cash.
4. none of the above.

g. A business offers credit terms of 1/15, n/30. These terms indicate that:

1. no discount is offered for early payment.
2. the buyer can take a 1% discount if the bill is paid within 15 or 30 days.
3. the total amount of the invoice must be paid within 15 days.
4. a discount of 1% can be taken if the invoice is paid within 15 days.

h. Under the allowance method, the entry to write off a $2,600 uncollectible account includes a:

1. debit to Allowance for Uncollectible Accounts for $2,600.
2. credit to Uncollectible-Account Expense for $2,600.
3. credit to Allowance for Uncollectible Accounts for $2,600.
4. debit to Accounts Receivable for $2,600.

i. ABC company sells goods to the XYZ Company for $1,000, It offers credit terms of 2/10, n/30. If XYZ Company pays the invoice within the discount period, ABC Company will record a debit to cash in the amount of:

A) $20. B) $980.

C) $200. D) $1,000.

j. The balance in Accounts Receivable was $650,000 at the beginning of the year and $350,000 at the end of the year. Credit sales for the year totaled $4,100,000. During the year, $400,000 in customer accounts were written off. How much cash was collected from customers during the period?

A) $4,400,000 B) $3,750,000

C) $4,000,000 D) $4,800,000

k. Martson and Co. made the following journal entries:

Accounts Receivable	25,000
Sales Revenue	25,000

Cost of Goods Sold	10,000
Inventory	10,000

What is Martson's gross profit from this sale?

A) $15,000

B) $35,000

C) $25,000

D) $10,000

l. Company A purchased inventory for $100,000. In addition they had purchase returns of $7,000 and paid freight-in of $8,000.Company A's net purchases would be:

A) $101,000.

B) $ 85,000.

C) $115,000.

D) $ 99,000.

m. An example of an intangible asset is:

1. goodwill.
2. land.
3. coal mine.
4. equipment.

n. On January 2, 2011, KJ Corporation acquired equipment for $260,000. The estimated life of the equipment is 5 years or 40,000 hours. The estimated residual value is $20,000. What is the balance in Accumulated Depreciation on December 31, 2012, if KJ Corporation uses the double-declining- balance method of depreciation?

A) $166,400

B) $38,400

C) $104,000

D) $208,000

o. Blue Moon Company has the following data for the year:

Beginning inventory	$80,000	Net purchases $115,000
Net sales revenue	$200,000	Normal gross profit percentage	45%

What is the estimated ending inventory? A) $65,000

B) $85,000

C) $80,000

D) $105,000

p. ABC Auto Sales sells new Lexus vehicles. ABC will most likely use the method to cost its ending inventory.

1. Specific-unit-cost
2. Weighted-average
3. First-in, first-out
4. Last-in, first-out