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Exam 2 ACCT 5312| Complete Exam
Questions With Correct Answers
1. The current assets of most companies are usually made up of:
A. assets that are currently used in the operations of the company.
B. cash and assets expected to be converted to cash within a year.
C. a very small proportion (less than 10%) of the total assets of the entity.
D. cash, marketable securities, and accounts and notes receivable. - correct-
answer -cash and assets expected to be converted to cash within a year.
2. Which of the following is the correct balance sheet presentation for current
assets?
A. Cash, inventories, account receivables, prepaid expenses.
B. Cash equivalents, cash, other current assets, accounts receivable.
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C. Accounts receivable, inventories, prepaid expenses, other current assets.
D. Marketable securities, cash, notes receivable, prepaid expenses. - correct-
answer -Accounts receivable, inventories, prepaid expenses, other current assets.
3. The principal reason for reconciling the cash balance per books with the
balance shown on the bank statement is to:
A. determine the amount of cash in the account actually available to the entity.
B. satisfy generally accepted accounting principles.
C. verify the amount of petty cash on hand.
D. determine whether or not the entity has issued an NSF check. - correct-answer
-determine the amount of cash in the account actually available to the entity.
4. For which of the following reconciling items would an adjusting entry be
necessary on the company's book?
A. A deposit in transit.
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B. An error by the bank.
C. Outstanding checks.
D. A bank service charge. - correct-answer -A bank service charge.
When a manufacturer invests in short-term marketable securities:
A. the return on investment is more important than the risk involved.
B. the securities are likely to have a maturity date more than a year in the future.
C. the market value of the securities is likely to fluctuate significantly.
D. risk avoidance is of great importance. - correct-answer -risk avoidance is of
great importance.
6. A cash equivalent is a current asset that:
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A. will be converted to cash within one year.
B. will be converted to cash within one month.
C. is readily convertible into cash with a minimal risk.
D. is readily convertible into cash with a substantial risk.
E. none of these. - correct-answer -is readily convertible into cash with a minimal
risk.
7. The accounting concept or principle applied when the cost of short-term
marketable securities is adjusted to market value is:
A. objectivity.
B. matching revenue and expense.
C. original cost.
D. consistency. - correct-answer -matching revenue and expense.
Exam 2 ACCT 5312| Complete Exam
Questions With Correct Answers
1. The current assets of most companies are usually made up of:
A. assets that are currently used in the operations of the company.
B. cash and assets expected to be converted to cash within a year.
C. a very small proportion (less than 10%) of the total assets of the entity.
D. cash, marketable securities, and accounts and notes receivable. - correct-
answer -cash and assets expected to be converted to cash within a year.
2. Which of the following is the correct balance sheet presentation for current
assets?
A. Cash, inventories, account receivables, prepaid expenses.
B. Cash equivalents, cash, other current assets, accounts receivable.
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C. Accounts receivable, inventories, prepaid expenses, other current assets.
D. Marketable securities, cash, notes receivable, prepaid expenses. - correct-
answer -Accounts receivable, inventories, prepaid expenses, other current assets.
3. The principal reason for reconciling the cash balance per books with the
balance shown on the bank statement is to:
A. determine the amount of cash in the account actually available to the entity.
B. satisfy generally accepted accounting principles.
C. verify the amount of petty cash on hand.
D. determine whether or not the entity has issued an NSF check. - correct-answer
-determine the amount of cash in the account actually available to the entity.
4. For which of the following reconciling items would an adjusting entry be
necessary on the company's book?
A. A deposit in transit.
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B. An error by the bank.
C. Outstanding checks.
D. A bank service charge. - correct-answer -A bank service charge.
When a manufacturer invests in short-term marketable securities:
A. the return on investment is more important than the risk involved.
B. the securities are likely to have a maturity date more than a year in the future.
C. the market value of the securities is likely to fluctuate significantly.
D. risk avoidance is of great importance. - correct-answer -risk avoidance is of
great importance.
6. A cash equivalent is a current asset that:
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A. will be converted to cash within one year.
B. will be converted to cash within one month.
C. is readily convertible into cash with a minimal risk.
D. is readily convertible into cash with a substantial risk.
E. none of these. - correct-answer -is readily convertible into cash with a minimal
risk.
7. The accounting concept or principle applied when the cost of short-term
marketable securities is adjusted to market value is:
A. objectivity.
B. matching revenue and expense.
C. original cost.
D. consistency. - correct-answer -matching revenue and expense.
