David Haddock/John Price, College Accounting
Chapters 1 - 30, 17th Edition TEST BANK,
A check issued to a creditor in the amount of $26 was recorded in the journal as
$260. In the bank reconciliation, the correction is recorded as
A-a deduction from the bank statement balance
B-an addition to the bank statement balance
C-a deduction from the ledger balance of cash
D-an addition to the ledger balance of cash - ANSWER: D-an addition to the ledger
balance of cash
Accompanying the bank statement is a debit memorandum for an NSF check of
$136. This item is included in the bank reconciliation as
A-an addition to the bank statement balance
B-a deduction from the bank statement balance
C-an addition to the cash ledger balance
D-a deduction from the cash ledger balance - ANSWER: D-a deduction from the cash
ledger balance
At the end of a fiscal period, the debit balance in the change fund is recorded as
A-a revenue on the income statement
B-a liability on the balance sheet
C-an expense on the income statement
D-an asset on the balance sheet - ANSWER: D-an asset on the balance sheet
At the end of the fiscal period, the debit balance in Cash Short and Over is reported
as
A-miscellaneous income on the income statement
B-an asset on the balance sheet
C-a liability on the balance sheet
D-a miscellaneous expense on the income statement - ANSWER: D-a miscellaneous
expense on the income statement
Your most recent bank statement for your checking shows a credit memo [CM] of
$500. Such an item caused
A-an increase in the amount owed to the bank
B-a decrease in your checking account balance
C-an increase in your checking account balance
D-a decrease in the amount owed to the bank - ANSWER: C-an increase in your
checking account balance
If a firm wishes to replenish its petty cash fund, then the entry is
A-debit each expense/asset account and credit cash
B-debit each expense/asset account and credit petty cash
C-debit petty cash and credit cash
, D-debit cash and credit petty cash - ANSWER: A-debit each expense/asset account
and credit cash
If the cash register tape reads "$1,002," the change fund is $150 and the cash count
is $1,150, this means
A-there is a shortage of $2 cash
B-there is an overage of $2 cash
C-the income recorded by the business should be $1,300
D-the income recorded by the business should be $1,152 - ANSWER: A-there is a
shortage of $2 cash
Tara Medical Services bank statement shows that a note receivable of $12,000 and
interest of $600 were collected by the bank on behalf of the company. The entry
required by Tara Medical Services is
A-debit cash, credit interest income, credit note receivable
B-debit cash, debit interest expense, credit note payable
C-debit cash, debit interest income, credit note receivable
D-debit cash, credit note receivable - ANSWER: A-debit cash, credit interest income,
credit note receivable
The bank balance of cash may differ from the book balance of cash because of
everything EXCEPT
A-NSF checks
B-outstanding checks
C-service charges
D-sales on credit - ANSWER: D-sales on credit
Two bank reconciliation items that require journal entries are
A-collection of a note receivable and deposit in transit
B-outstanding checks and an error in recording a check
C-deposit in transit and bank service charges
D-bank service charges and a NSF check - ANSWER: D-bank service charges and a NSF
check
All of the following statements about workers' compensation insurance are true,
EXCEPT
A-more than one premium rate for workers' compensation insurance may be
required of a company
B-most states require employers to provide workers' compensation insurance
C-the employer usually has to pay all the premiums
D-the exact insurance premium for workers' compensation insurance is calculated
from the previous year's actual payroll - ANSWER: D-the exact insurance premium
for workers' compensation insurance is calculated from the previous year's actual
payroll
Ara Medical Services Company had the following balances among its payroll-related
accounts for November:
Chapters 1 - 30, 17th Edition TEST BANK,
A check issued to a creditor in the amount of $26 was recorded in the journal as
$260. In the bank reconciliation, the correction is recorded as
A-a deduction from the bank statement balance
B-an addition to the bank statement balance
C-a deduction from the ledger balance of cash
D-an addition to the ledger balance of cash - ANSWER: D-an addition to the ledger
balance of cash
Accompanying the bank statement is a debit memorandum for an NSF check of
$136. This item is included in the bank reconciliation as
A-an addition to the bank statement balance
B-a deduction from the bank statement balance
C-an addition to the cash ledger balance
D-a deduction from the cash ledger balance - ANSWER: D-a deduction from the cash
ledger balance
At the end of a fiscal period, the debit balance in the change fund is recorded as
A-a revenue on the income statement
B-a liability on the balance sheet
C-an expense on the income statement
D-an asset on the balance sheet - ANSWER: D-an asset on the balance sheet
At the end of the fiscal period, the debit balance in Cash Short and Over is reported
as
A-miscellaneous income on the income statement
B-an asset on the balance sheet
C-a liability on the balance sheet
D-a miscellaneous expense on the income statement - ANSWER: D-a miscellaneous
expense on the income statement
Your most recent bank statement for your checking shows a credit memo [CM] of
$500. Such an item caused
A-an increase in the amount owed to the bank
B-a decrease in your checking account balance
C-an increase in your checking account balance
D-a decrease in the amount owed to the bank - ANSWER: C-an increase in your
checking account balance
If a firm wishes to replenish its petty cash fund, then the entry is
A-debit each expense/asset account and credit cash
B-debit each expense/asset account and credit petty cash
C-debit petty cash and credit cash
, D-debit cash and credit petty cash - ANSWER: A-debit each expense/asset account
and credit cash
If the cash register tape reads "$1,002," the change fund is $150 and the cash count
is $1,150, this means
A-there is a shortage of $2 cash
B-there is an overage of $2 cash
C-the income recorded by the business should be $1,300
D-the income recorded by the business should be $1,152 - ANSWER: A-there is a
shortage of $2 cash
Tara Medical Services bank statement shows that a note receivable of $12,000 and
interest of $600 were collected by the bank on behalf of the company. The entry
required by Tara Medical Services is
A-debit cash, credit interest income, credit note receivable
B-debit cash, debit interest expense, credit note payable
C-debit cash, debit interest income, credit note receivable
D-debit cash, credit note receivable - ANSWER: A-debit cash, credit interest income,
credit note receivable
The bank balance of cash may differ from the book balance of cash because of
everything EXCEPT
A-NSF checks
B-outstanding checks
C-service charges
D-sales on credit - ANSWER: D-sales on credit
Two bank reconciliation items that require journal entries are
A-collection of a note receivable and deposit in transit
B-outstanding checks and an error in recording a check
C-deposit in transit and bank service charges
D-bank service charges and a NSF check - ANSWER: D-bank service charges and a NSF
check
All of the following statements about workers' compensation insurance are true,
EXCEPT
A-more than one premium rate for workers' compensation insurance may be
required of a company
B-most states require employers to provide workers' compensation insurance
C-the employer usually has to pay all the premiums
D-the exact insurance premium for workers' compensation insurance is calculated
from the previous year's actual payroll - ANSWER: D-the exact insurance premium
for workers' compensation insurance is calculated from the previous year's actual
payroll
Ara Medical Services Company had the following balances among its payroll-related
accounts for November:
