Question

1. The current portion of long-term debt should

be classified as a long-term liability

not be separated from the long-term portion of debt

be paid immediately

be reclassified as a current liability

2. Which of the following would most likely be classified as a current liability?

two-year notes payable

bonds payable

mortgage payable

unearned rent

3. Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900.  Which of the following entries records the proper adjustment for bad debt expense?

debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000

debit Allowance for Doubtful Accounts, $14,000; credit  Bad Debt Expense, $14,000

debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800

debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800

4. The bank reconciliation

should be prepared by an employee who records cash transactions

is part of the internal control system

is for information purposes only

is sent to the bank for verification

5. Current liabilities are reported on the

Income statement

Balance Sheet

Statement of Owner's Equity

Both the income statement and the balance sheet

6. Which of the following should not be considered cash by an accountant?

money orders

bank checking accounts

postage stamps

travelers' checks

7. A bank statement

is a credit reference letter written by the company's bank

shows a company the financial position of the bank as of a certain date

is a bill from the bank for services rendered

shows the activity that increased or decreased the company's account balance

8. EFT

means Efficient Funds Transfer

can process certain cash transactions at less cost than by using the mail

makes it easier to document purchase and sale transactions

means Effective Funds Transfer

9. A debit balance in the Allowance for Doubtful Accounts

is the normal balance for that account

indicates that actual bad debt write-offs have been less than what was estimated

cannot occur if the percentage of receivables method of estimating bad debts is used

indicates that actual bad debt write-offs have exceeded previous provisions for bad debts

Answer 1

1	The current portion of long- term debt should
Correct Answer	be classified as a long term liability - as debt relates to creditors which means liability that will continue for longer duration as per agreed conditions
wrong Answer	not be separated from the long term portion of debt - as even if it get separated the nature would be same
wrong Answer	be paid immediately- cannot pay immediately as then the debt would not be long term debt
wrong Answer	be reclassified as current liability - as current liability relates to creditors which exists only for a year.
2	Which of the following would most likely be classified as current liability?
wrong Answer	Two year notes payable - as the tenure of notes payable exceeds more than a year and any liability that creates a liability more than a year is not a current liability
wrong Answer	bonds payable - generally exceeds more than a year and any liability that creates a liability more than a year is not a current liability
wrong Answer	mortagage payable -generally exceeds more than a year and any liability that creates a liability more than a year is not a current liability
Correct Answer	unearned Rent - as this speaks about the liability of the current year.
3	Allowance for doubtful debts has a debit balance of $1100 at the end of the year, and an analysis of customers account indicates uncollectible receivables of $12900.
	As bad debt is increasing hence debit balance of bad debt will increase by $12900 and total will come to $14000
Correct Answer	debit Bad debt $14000, credit Allowance for Doubtful accounts $14000
wrong Answer	debit Allowance for Doubtful accounts $14000, credit Bad debt $14000
wrong Answer	debit Allowance for Doubtful accounts $11800, credit Bad debt $11800
wrong Answer	debit Bad debt $11800, credit Allowance for Doubtful accounts $11800
4	The Bank Reconcilation statement
	This statement is generally prepared to reconcile the transactions of pass book and cash book.
wrong Answer	should be prepared by employee who record cash transaction
wrong Answer	is part of the internal control system
wrong Answer	is for information purpose only
Correct Answer	is sent to the bank for verification
5	Current liabilities are reported on the
	Current liabilities reflected on the balance sheet that shows how much an organisation has to pay.This is not an expense and hence it will nit appear in income statement.
wrong Answer	Income statement
Correct Answer	Balance Sheet
wrong Answer	Statement of Owner's equity
wrong Answer	Both the income statement and Balance Sheet
6	Which of the following should not be considered cash by an accountant?
	Any item which is easily converted into cash would come under Cash.
wrong Answer	Money order
wrong Answer	bank checking accounts
Correct Answer	postage stamp
wrong Answer	travellers checks
7	A Bank Statement
	is the statement issued by the bank to the company about their performance of the certain period of time.
wrong Answer	is a credit reference letter written by the company's bank
wrong Answer	shows a company the financial position of the bank a sof certain date
wrong Answer	is a bill from the bank for services rendered
Correct Answer	shows the activity that increased or decreased the company's account balance
8	EFT
	This process makes the work easy thereby enhancing transferring of fund to any one at any point of time.
wrong Answer	means Efficient Funds Transfer
wrong Answer	can process certain cash transactions at less cost then by using the mail
wrong Answer	makes it easier to document purchase ans sale transactions
Correct Answer	means Effective Funds Transfer
9	A debit balance in the Allowance for doubtful debts
	when the provision for doubtful debts is estimated then bad debt gets debited and allowance for doubtful debts gets credited and if allowance for doubt ful debts gets credited that means bad debts is getting reduced.
wrong Answer	is the normal balance for that account
Correct Answer	indicates that actual bad debt write -offs have been less then what estimated
wrong Answer	cannot occur if the percentage of receivables method of estimating bad debts is used
wrong Answer	indicates that actual bad debt write -offs have exceeded previous provision for doubtful debts