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accounting 2 exam 1

Terms in this set (20)

The objectives of internal control are to
provide reasonable assurance that assets are safeguarded and used for business purposes, financial reports are accurate, and laws and regulations are complied with
An element of internal control is
risk assessment
Which of the following should not be considered cash by an accountant?
postage stamps
The cash account in the company's ledger is a(n)
asset with a normal debit balance
The debit balance in Cash Short and Over at the end of an accounting period is reported as
an expense on the income statement
A bank statement
shows the activity that increased or decreased the company's account balance
A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is
collection of a note receivable for the company
Journal entries based on the bank reconciliation are required in the company's accounts for
book errors
Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is a(n)
deduction from the balance per company's records
The amount of deposits in transit is included on the bank reconciliation as a(n)
addition to the balance per bank statement
A note receivable due in 18 months is listed on the balance sheet under the caption
Investments
The receivable that is usually evidenced by a formal, written instrument of credit is a(n)
note receivable
An account becomes uncollectible
There is no general rule for when an account becomes uncollectible.
The two methods of accounting for uncollectible receivables are the allowance method and the
direct write-off method
The direct write-off method of accounting for uncollectible accounts
is often used by small companies and companies with few receivables
Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be
debit Bad Debt Expense; credit Accounts Receivable
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
Allowance for Doubtful Accounts
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable?
$289,000
What is the type of account and normal balance of Allowance for Doubtful Accounts?
contra asset; credit
A debit balance in Allowance for Doubtful Accounts
indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
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