Multiple Choice Questions

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SUA Exam

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PART 1: Multiple Choice Questions (30 questions x 2.5 = 75 Points)

1. At Waren Sports Supply, which of the following is the correct order for document preparation and entry recording in the sales and cash receipts cycle?

a. customer order, bill of lading, sales invoice, entry in sales and accounts receivable subsidiary ledgers
b. customer order, sales invoice, entry in sales and accounts receivable subsidiary ledgers, bill of lading
c. customer order, sales invoice, bill of lading, entry in sales and accounts receivable subsidiary ledgers
d. customer order, entry in sales and accounts receivable subsidiary ledgers, sales invoice, bill of lading
e. customer order, bill of lading, entry in sales and accounts receivable subsidiary ledgers, sales invoice

2. What is the first step performed after checks are received in the mail room at Waren Sports Supply?

a. an entry in the sales journal
b. a bank deposit slip is prepared
c. an entry in accounts receivable subsidiary ledger
d. an entry in cash receipts journal
e. an entry in cash receipts prelist

3. In order to maintain controls over cash receipts, cash is typically deposited _____, while a bank reconciliation is performed _____.

a. daily, weekly
b. daily, monthly
c. weekly, monthly
d. monthly, daily
e. weekly, weekly

4. What document does a customer receive when goods are returned?

a. purchase order d. receiving report
b. credit memo e. bill of lading
c. debit memo

5. What are the names of the three documents matched before a check is issued to a vendor for payment on account?

a. approved time card, receiving report and approved purchase order
b. bill of lading, time card and receiving report
c. approved purchase order, bill of lading and vendor invoice
d. validated deposit slip, sales invoice and vendor invoice
e. receiving report, approved purchase order and vendor invoice

6. The general journal is used to:

a. post all accounting entries not posted in other individual journals.
b. post all accounting entries.
c. post all accounting entries not involving cash.
d. post only month end adjusting journal entries.
e. post only year end adjusting journal entries.

7. The sales journal is the only journal that would be used to post a:

a. sale d. cash discount
b. cash sale e. cash transaction
c. credit sale

8. The purchases journal is used to record:

a. inventory purchases only.
b. all vendor invoices on account.
c. inventory and fixed asset purchases only.
d. inventory purchases and general operating expenses only.
e. all cash disbursements.

9. Which of the following is subtracted from an employee’s gross pay:

a. federal unemployment tax
b. state unemployment tax
c. local unemployment tax
d. employer portion of FICA tax
e. federal income tax withholding

10. The total debit to cash for the month in the cash receipts journal must equal which of the following?

a. the total of all cash prelists for the month
b. the total credit for cash sales for the month
c. the total credit for credit sales for the month
d. the total credit for all sales for the month
e. the total credit to accounts receivable for the month

11. At Waren, where is the total net pay from the payroll journal posted?

a. the cash receipts journal
b. the cash disbursements journal
c. the general ledger
d. the general journal
e. the working trial balance

12. Adjusting journal entries are prepared for which of the following?

a. record depreciation expense
b. adjust payroll expense for wages earned but not yet paid
c. record an inventory purchase
d. a and b only
e. all of the above

13. What can the fixed asset subsidiary ledger be used to determine?

a. accumulated depreciation for a particular asset
b. the age of an asset
c. the estimated useful life of an asset
d. a and c only
e. a, b and c 14. Employee earnings subsidiary ledgers would be a logical document to use for all of the following purposes except:

a. determining an employee’s date of hire
b. determining total gross pay for an individual for a certain year
c. determining total net pay for all employees for a particular pay period
d. determining an employee’s hours worked for a certain year
e. determining an employee’s title

15. Closing entries are used to zero-out accounts that appear on which of the following statements:

a. the statement of cash flows d. income statement
b. the statement of retained earnings e. a, b and c
c. the balance sheet

16. To determine how many of a particular inventory item you have on hand at any particular time, you would:

a. examine the periodic inventory record for the item.
b. examine the perpetual inventory record for the item.
c. examine the monthly postings to the purchase account.
d. examine the total in the purchase account for the year.
e. examine the individual vendor’s invoices for the particular item purchased in the current year.

17. An auditor is interested in testing whether a sample of sales to customers in the current year have been recorded. In this case, the auditor would most likely select a sample from which source?

a. customer orders
b. sales invoices
c. entries in sales journal
d. entries in the cash disbursements journal
e. the accounts receivable subsidiary ledger

18. An auditor is interested in testing to see whether all items purchased over $500were properly capitalized. In this case, the auditor would lost likely select a sample from which source?

a. the fixed asset subsidiary ledger
b. the sales journal
c. the general journal
d. the purchases journal
e. the accounts payable subsidiary ledger

19. The overall objective of the Systems Understanding Aid is to:

a. help aid in the understanding and visualization of the entire accounting process.
b. demonstrate a typical manual accounting system.
c. introduce accounting flowcharts.
d. introduce actual accounting documents.
e. demonstrate a typical computerized accounting system.

20. In an accounting system, the separation of duties is an important aspect of the control environment. At Waren Sports Supply, the three employees are separated according to which three responsibilities?

a. accounting/operations (Ford), authorization (Kramer), and custody (Adams)
b. accounting (Adams), custody (Kramer), and operations/authorization (Ford)
c. accounting (Adams), custody/authorization (Kramer), and operations (Ford)
d. accounting/authorization (Kramer), custody (Adams), and operations (Ford)
e. accounting (Ford), custody/operations (Kramer), and authorization (Adams)

21. Interpret the following credit terms: 2/10, Net 30.

a. a 10 percent discount can be taken if the balance is paid within 10 days; otherwise, the balance is due in 30 days.
b. a 2 percent discount can be taken if the balance is paid within 2 days; otherwise, the balance is due in 30 days.
c. 20 percent of the balance is due in 30 days.
d. 20 percent of the balance is due upon receipt, with the remaining balance due in 30 days.
e. a 20 percent discount can be taken if the balance is paid with 30 days.

22. At Waren, how often is the general ledger updated? a. daily d. annually
b. weekly e. never
c. monthly

23. Which of the following statements is true?

a. Original entries are recorded in journals, and journal totals are posted to ledgers.
b. Original entries are recorded in ledgers, and ledger totals are posted to journals.
c. Subsidiary ledgers are required for all general ledger accounts so that details can be provided.
d. Totals from each journal (e.g., sales, cash disbursements, etc.) are posted to the general journal on a monthly basis.
e. Entries from the general journal are used to update subsidiary ledgers on a monthly basis.

25. In a cash receipts system, which of the following controls will best ensure that all receipts received are properly recorded?

a. Mailing monthly statements to customers
b. Requiring accounting personnel to receive checks from customers
c. Independently verifying that all recorded receipts appear on the prelist
d. Footing the prelist
e. Operating an effective accounting system for the underlying sales

26. Which of the following activities would likely be recorded as a month- or year-end adjusting entry?

a. Estimation of uncollectible accounts receivable
b. Recording of sales returns
c. Adjustment of perpetual inventory records
d. Recording of payroll expense for hourly employees
e. Issuance of bonds payable

27. Which of the following is not adjusted as an accrual by a Company at the end of the year?

a. Taxes payable d. Accounts payable
b. Allowance for uncollectible accounts e. Accumulated depreciation
c. Interest payable

28. Which of the following entries are correct for writing off an accounts receivable as uncollectible?

a. Decrease allowance for doubtful accounts; Decrease accounts receivable
b. Increase bad debt expense; Decrease allowance for doubtful accounts
c. Increase bad debt expense; Decrease accounts receivable
d. Increase write-offs of accounts receivable; Increase bad debt expense
e. Increase write-offs of accounts receivable; Decrease accounts receivable

29. Which of the following reconciling items on a bank reconciliation require an adjustment to the balance of the cash account?

a. A monthly service charge fee
b. Outstanding checks
c. Deposits-in-transit
d. Errors by the bank
e. All of the above require adjustment

30. Which of the following sequence of steps in the accounting process is correct?

a. Prepare records, record in journals, post to ledgers, and prepare unadjusted trial balance
b. Prepare records, post to ledgers, record in journals, and prepare unadjusted trial balance
c. Prepare records, prepare unadjusted trial balance, record in journals, and post to ledgers
d. Prepare records, record in journals, prepare unadjusted trial balance, and post to ledgers
e. Record in journals, post to ledgers, prepare records, and prepare unadjusted trial balance

 

PART 11: Problem 1 (25 points)
Jerry’s Convenience Store
Adjusted Trial Balance
December 31, 2022
Dr Cr
Cash……………………………………………………………………………………………………$ 67,500
Accounts receivable………………………………………………………………………… 46,000
Allowance for Doubtful Accounts………………………………………………………… 2,000
Merchandise Inventory………………………………………………………………………… 60,000
Office Supplies……………………………………………………………………………………… 2, 800
Accounts Payable ………………………………………………………………………………… 16,000
Salaries Payable………………………………………………………………………………….. 850
Common Stock ……………………………………………………………………………………….. 20,000
Retained Earnings …………………………………………………………………………………. 60, 630
Sales………………………………………………………………………………………………………… 550,000
Sales returns & allowance……………………………………………………………………….. 4,500
Sales discounts…………………………………………………………………………………………. 4,250
Cost of goods sold……………………………………………………………………………………. 382,450
Salaries expense ……………………………………………………………………………………… 44,000
Advertising Expense………………………………………………………………………………… 8,150
Rent Expense…………………………………………………………………………………………… 24,325
Other operating expense………………………………………………………………………….. 450
Interest expense………………………………………………………………………………………. 5,055 0
TOTALS $649,480 $649, 480
Requirement: Using the Adjusted Trial Balance above answer the following questions (25 points):
What is the amount of net sales? 2 points
What is the amount of total assets? 2 points
What is the amount of total liabilities? 2 points
What is the amount of net assets? 2 points
What is the amount of Retained Earnings after the closing entries have been posted? 3 pts
What is the amount of gross profit? 2 points
What is the amount of total expenses? 2 points
Record the closing entries in the table below. 10 points

Date Account Debit Credit