Accounting 115112 Week 5 exam with correct answers 2024

What is the purpose of a petty cash fund? Select one: a. To provide small cash bonuses to employees. b. To set money aside to avoid income taxation. c. To try to catch dishonest employees. d. To make small cash payments for the company. - answer-d p. 247 (249) The correct answer is: To make small cash payments for the company. Which of the following is not an example of a control over cash sales? Select one: a. Employees ring up all sales in the cash register. b. All payments are made by cheque. c. Employees ask for identification on all cheques from customers. d. Large bills are slid through a slot into a locked safe. - answer-b p.240-1 (241) The correct answer is: All payments are made by cheque. Which of the following is not a component of working capital? Select one: a. Furniture. b. Petty cash fund. c. Accounts payable. d. Inventory. - answer-a Working capital p.236-7 (235-6). The correct answer is: Furniture. How can managers control cash receipts in a small company? Select one: a. Separating the duties of receiving and processing collections of accounts receivable. b. Depositing receipts daily. c. Proper use of a cash register. d. All options given. - answer-d p.240 (239) The correct answer is: All options given. The most likely asset to be stolen in a business is: Select one: a. Cash. b. Accounts receivable. c. Vehicles. d. Land. - answer-a Cash p.240 (239 ) The correct answer is: Cash. The term cash refers to: Select one: a. Both cash on hand and cheques. b. Cash on hand. c. Cash on hand and credit card receipts. d. Cash on hand , cheques, and credit card receipts. - answer-d p.239 (239) The correct answer is: Cash on hand , cheques, and credit card receipts. A business' working capital is: Select one: a. The total owners' equity minus retained earnings. b. Its gross profit. c. The difference between total assets and total liabilities. d. The excess of its current assets over its current liabilities. - answer-d p.236 (236) The correct answer is: The excess of its current assets over its current liabilities. Cash is the asset most likely to be stolen because: Select one: a. It is difficult to prove that it has been stolen. b. All of the options given. c. It has no recorded identification marks. d. It is difficult to prove who stole it. - answer-b p.239 (239) The correct answer is: All of the options given. Which of the following events/transactions would not represent cash or a cash equivalent? Select one: a. A cheque received from a debtor in payment of an outstanding account. b. Deposit of funds on 48 hour deposit with the bank. c. Recognising depreciation for the current period. d. Payment of a creditor which increases the bank overdraft facility. - answer-c p.239 (239) The correct answer is: Recognising depreciation for the current period. Credit sales are the same as: Select one: a. Sales settled with a cheque. b. Cash sales. c. Credit card sales. d. Sales that result in increases in accounts receivable. - answer-d p.250 (252) The correct answer is: Sales that result in increases in accounts receivable. The reporting of each current asset and current liability on a company's balance sheet provides external users with information about: Select one: a. The company's ability to keep an appropriate mix of working capital. b. None of the options given. c. The company's ability to keep an appropriate mix and an appropriate level of working capital. d. The company's ability to keep an appropriate level of working capital. - answer-c p.236 (235) The correct answer is: The company's ability to keep an appropriate mix and an appropriate level of working capital. What is the name of the inventory method that assigns to each item of inventory the cost of purchasing that unit? Select one: a. Specific identification method. b. Specific assignment method. c. Assignment method. d. Identification method. - answer-a p.257 (256) The correct answer is: Specific identification method. The number of goods sold is computed by: Select one: a. None of the options given. b. Adding purchases to beginning inventory and subtracting ending inventory. c. Adding purchases to ending inventory and subtracting beginning inventory. d. Adding beginning inventory to ending inventory and subtracting purchases. - answer-b p.255 (255) The correct answer is: Adding purchases to beginning inventory and subtracting ending inventory. When does a company recognize expenses related to the petty cash fund? Select one: a. When it opens a bank account. b. When it replenishes the petty cash fund. c. When it establishes the petty cash account. d. None of the options given. - answer-b p.250 (249) The correct answer is: When it replenishes the petty cash fund. Where is the amount of accounts payable that a company owes reported? Select one: a. None of the options given. b. In the current liabilities section of the balance sheet. c. On the statement of cash flows. d. In the classified income statement. - answer-b p.237 (236) The correct answer is: In the current liabilities section of the balance sheet. The ending inventory is computed by: Select one: a. None of the options given. b. Adding beginning inventory to cost of goods sold and subtracting purchases. c. Adding purchases to cost of goods sold and subtracting beginning inventory. d. Adding purchases to beginning inventory and subtracting cost of goods sold. - answer-d p.255 (255) The correct answer is: Adding purchases to beginning inventory and subtracting cost of goods sold. The most likely asset to be stolen in a business is: Select one: a. Accounts receivable. b. Land. c. Vehicles. d. Cash. - answer-d Cash p.240 (239 ) The correct answer is: Cash. Why would a company purchase goods or services on credit? Select one: a. None of the options given. b. It is more convenient than purchasing for cash. c. It is more convenient than purchasing for cash and It delays cash payment. d. It delays cash payment. - answer-c p.251 (251) The correct answer is: It is more convenient than purchasing for cash and It delays cash payment. An internal control over accounts payable is: Select one: a. Keeping a large accounts payable balance ensures that there will always be cash coming in from collections. b. For efficiency, all employees are authorized to issue purchase orders. c. Only one employee is authorized to issue a purchase order. d. If the credit terms of 2/10, n/30 appear on the invoice, the firm should wait 30 days to pay the bill, thus keeping their cash invested. - answer-c p.259 (259) The correct answer is: Only one employee is authorized to issue a purchase order. which of the following is not true? Select one: a. Credit card receipts are essentially cash. b. Cash is essentially anything a bank will accept as a deposit. c. The amount of cash on the balance sheet will always be equal to the amount shown on the bank statement. d. Cash is the asset most likely to be stolen. - answer-c p.242 (241) The correct answer is: The amount of cash on the balance sheet will always be equal to the amount shown on the bank statement. Which of the following are simple controls over accounts payable? Select one: a. Make sure the total amount does not get too large. b. Make sure that payments are made on time and that the company gets proper credit. c. Limit the number of people who can obligate the company to pay for goods or services. d. All of the options given. - answer-d p.259 (259) The correct answer is: All of the options given. Which of the following is an advantage of extending credit: Select one: a. Administration costs will increase. b. The customer will never pay. c. The customer will pay later than agreed. d. Revenue may increase. - answer-d Accounts Receivable p.251 (250 ) The correct answer is: Revenue may increase. Which of the following is not a procedure designed to control collections of accounts receivable? Select one: a. Restrictively endorsing cheques when the mail is opened. b. Listing all cheques received. c. Separating the duties of receiving and processing collections of accounts receivable. d. Proper use of a cash register. - answer-d p.252 (251-2) The correct answer is: Proper use of a cash register. Which of the following is not an example of a control over cash sales? Select one: a. Employees ask for identification on all cheques from customers. b. All payments are made by cheque. c. Large bills are slid through a slot into a locked safe. d. Employees ring up all sales in the cash register. - answer-b p.240-1 (241) The correct answer is: All payments are made by cheque.