ACG 2023- FINAL EXAM REVIEW QUESTIONS WITH CORRECT ANSWERS, Exams of Business Accounting

Download ACG 2023- FINAL EXAM REVIEW QUESTIONS WITH CORRECT ANSWERS and more Exams Business Accounting in PDF only on Docsity! ACG 2023- FINAL EXAM REVIEW QUESTIONS WITH CORRECT ANSWERS Under which of the following do computer programs that limit unauthorized access to certain files fall? CORRECT ANSWER physical controls Which of the following is an effective internal control over cash disbursements? CORRECT ANSWER -The use of pre- numbered checks -The storage of blank checks in a secure place -The separation of authorization of checks and the actual writing of the checks When preparing a bank reconciliation, how are deposits in transit handled? CORRECT ANSWER added to the bank balance Handy Inc. permits only designated personnel such as cashiers to handle cash receipts. What principle is being applied? CORRECT ANSWER establishment of responsibility During a given year, several parties examine the financial records of ABC Company. These parties include internal auditors, independent auditors, and Internal Revenue Service agents. Which of these parties are considered employees of ABC Company? CORRECT ANSWER internal auditors Which of the following will not require an adjusting entry as a result of a bank reconciliation? CORRECT ANSWER deposits in transit Which of the following is not a reason why an organization establishes a system for internal control? CORRECT ANSWER to eliminate the need for an independent auditor Which one of the following is not a physical control? CORRECT ANSWER independent bank reconciliation Which of the following is not a principle of internal control? CORRECT ANSWER collusion between employees For which item below might a bank issue a credit memorandum to a depositor's account? CORRECT ANSWER interest earned Which of the following was not a result of the Sarbanes-Oxley Act? CORRECT ANSWER Companies must file financial statements with the Internal Revenue Service. Which of the following is not an element of the fraud triangle? CORRECT ANSWER collusion Which one of the following is a primary component of an internal control system? CORRECT ANSWER monitoring Which one of the statements below is true? CORRECT ANSWER The deposits in transit are added to the balance per the bank statement, and outstanding checks are deducted from the balance per the bank statement during the bank reconciliation process. Which one of the following is not one of the five basic issues in accounting for notes receivable? CORRECT ANSWER - determining the recipient -filing notes receivable Which of the following is the correct sequence to report receivables on the balance sheet? CORRECT ANSWER Accounts receivable, a 6-month note receivable, other receivables A promissory note will likely be used in all of the following settings except CORRECT ANSWER when the party making the note is a high risk creditor. What is often the most critical part of managing receivables? CORRECT ANSWER Determining who gets credit and who does not get credit If a company is concerned about lending money to a risky customer, which one of the following would it not want to do? CORRECT ANSWER Provide the customer a lengthy payment period Which one of the following statements is true? CORRECT ANSWER Bad Debts Expense is a temporary account and is closed at the end of the fiscal period, while Allowance for Doubtful Accounts is a permanent account and remains open at the end of the fiscal period. At what value are accounts receivable reported on the balance sheet? CORRECT ANSWER net/cash realizable value Which of the following are used to compute cash realizable value? CORRECT ANSWER Accounts Receivable and Allowance for Doubtful Accounts Which one of the following is not a method used by companies to accelerate cash receipts? CORRECT ANSWER writing off receivables At what amount is a short-term note receivable recorded on the issue date? CORRECT ANSWER face value When a note receivable is paid on time and no interest has been previously accrued, what will the journal entry to record the transaction contain? CORRECT ANSWER Two credits and one debit When is a receivable recorded by a merchandiser? CORRECT ANSWER At the point of sale of the merchandise on account. The ending balance of the Retained Earnings account appears on CORRECT ANSWER both the retained earnings statement and the balance sheet Which forms of business organization have owners called stockholders? CORRECT ANSWER corporations What type of account or account classification is Cost of Goods Sold? CORRECT ANSWER expense A company can change to a new method of accounting if management can justify that the new method results in CORRECT ANSWER more meaningful financial information Which financial statement is used by most corporations instead of the retained earnings statement? CORRECT ANSWER Statement of stockholders' equity What is the primary accounting standard-setting body in the United States? CORRECT ANSWER Financial Accounting Standards Board Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? CORRECT ANSWER Going concern assumption Which of the following is not an accounting assumption? CORRECT ANSWER Integrity Dividing net income minus preferred stock dividends by the average of common shares outstanding produces the following: CORRECT ANSWER earnings per share A company using the same accounting principles and the same accounting methods from one year to the next year is an application or example of CORRECT ANSWER consistency How does a company compute its free cash flow? CORRECT ANSWER Net cash provided by its operating activities- What journal entry is recorded as a result of issuing stock to investors for cash? CORRECT ANSWER A debit to Cash and a credit to Common Stock An account is a part of a company's financial information system and is described by all except which one of the following? CORRECT ANSWER an account is a source document Paying for a one-year insurance policy that will expire next year CORRECT ANSWER increases assets and decreases assets ending retained earnings CORRECT ANSWER beginning retained earnings net income-expenses-dividends=ending retained earnings If a company buys supplies on account, then CORRECT ANSWER assets increase and liabilities increase If a company borrows money from a bank, then CORRECT ANSWER assets increase and liabilities increase If a company records wages when it pays them, then recording the payment of wages CORRECT ANSWER decreases assets and decreases stockholders' equity Which of the following events is not recorded in a company's accounting records? CORRECT ANSWER An employee is terminated posting transfers CORRECT ANSWER journal entry amounts to ledger accounts What does a general ledger of a company contain? CORRECT ANSWER All the asset, liability, stockholders' equity, revenue, expense, and dividend accounts Which of the following is evidence that a transaction has occurred that needs to be recording in a company's accounting records? CORRECT ANSWER source document If cash is received in advance from a customer CORRECT ANSWER liabilities will increase and assets will increase. The effects of a receipt of cash in advance from a customer on the basic accounting equation are to CORRECT ANSWER increase assets and increase liabilities Accounts with normal credit balances include CORRECT ANSWER liabilities and stockholders' equity Although steps are missing, which of the following lists steps of the accounting cycle in their correct order? CORRECT ANSWER Journalize the transactions, journalize the adjusting entries, journalize the closing entries. Financial statements can be prepared directly from the CORRECT ANSWER adjusted trial balance Payments from customers received before performing services for the customers are recorded as CORRECT ANSWER liabilities Which of the following is not a typical example of a prepaid expense? CORRECT ANSWER wages Companies prepare various types of trial balances. Which trial balance lists all of a company's permanent and temporary accounts? CORRECT ANSWER the adjusted trial balance Which one of these statements about the accrual-basis of accounting is false? CORRECT ANSWER Companies record revenue only when they receive cash, and record expense only when they pay out cash. The generally accepted accounting principle which dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied is the CORRECT ANSWER revenue recognition principle At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true? CORRECT ANSWER Liabilities at the end of the year are understated. If the year-end adjusting entry to record salaries owed to employees were omitted, then CORRECT ANSWER total liabilities would be understated.