Question

If a company wanted to pay less income taxes, they would choose

FIFO

LIFO

Weighted Average

Specific Identification

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Question 32

2 pts

To reconcile the bank statement, which of the following amounts would be added to the bank statement balance?

service charge

outstanding checks

deposits in transit

amounts collected by the bank for the depositor's account

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Question 33

2 pts

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?

service charge

outstanding checks

deposits in transit

amounts collected by the bank for the depositor's account

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Question 34

2 pts

The check written to establish the petty cash fund is entered in the journal by

debiting Cash and crediting Petty Cash

debiting Petty Cash and crediting Retained Earnings

debiting Retained Earnings and crediting Petty Cash

debiting Petty Cash and crediting Cash

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Question 35

2 pts

An invoice is created by _____________ and received by ________________.

Accounting; Purchasing

the vendor; Purchasing

Purchasing; the vendor

the vendor; Accounting

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Question 36

2 pts

Which of the following is the result of the maker of a promissory note failing to pay the note on the due date?

a dishonored note

a discounted note

an amortized note

a depreciated note

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Question 37

2 pts

When a company is using the direct write-off method, and an account is written off, the journal entry consists of a ________.

debit to the Allowance for Bad Debts and a credit to Accounts Receivable

credit to Accounts Receivable and a debit to Bad Debts Expense

credit to Accounts Receivable and a debit to Interest Expense

debit to Accounts Receivable and a credit to Cash

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Question 38

2 pts

For a promissory note, the entity to whom the promise of future payment is made is the ________.

endorser of the note

payee of the note

banker of the note

maker of the note

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Question 39

2 pts

Which of the following is not a method of estimating the amount of bad debt expense at the end of the accounting period?

direct write-off method

aging-of-receivables method

percent-of-receivables method

percent-of-sales method

Answer 1

31. Answer is LIFO

Under LIFO ,closing inventory is valued at oldest Purchase Prices and hence the Cost of goods sold rise leading to lower profits being reported, thus reducing tax liability.

32. Answer is Service Charge, Deposits in Transit.

These amount would have reduced bank balance in Bank Statement. Hence need to be added back for Reconciliation.

33. Answer is Outstanding Checks and Amount collected by Bank in Depositor's Account.

These would have reduced the Bank Balance in Books hence require deduction from Checkbook Balance.

34. Answer is debiting Petty Cash and crediting Cash

This entry is correct .

35. Answer is the vendor; Purchasing

The seller or vender creates invoice for Sale and gives it to Purchasing Department for their pruchase.

36. Answer is A Dishonored Note

The unpaid note is called dishonored.

37. Answer is credit to Accounts Receivable and a debit to Bad Debts Expense

The entry is correct.

38. Answer is payee of the note.

Maker is the person who promises payment and payee is the one in whose name Promissory Note is issued.