multiple choies question and one solving

SHORT EXAM #1

Deadline: 26/3/2020 @ 23:

5

9

For Instructor’s Use only

Instructions – PLEASE READ THEM CAREFULLY

· The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

· Assignments submitted through email will not be accepted.

· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. Do not forget highlighting the answers.

· Students must mention question number clearly in their answer.

· Late submission will NOT be accepted.

· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.

· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

· You will have 24 hours to complete the short exam (contains 20 MCQ)

1. A check: 
A. Involves the writer, the signers, the cashier and the bank
B. Involves the maker, the payee and the bank
C. Involves the maker and the payee
D. Involves the bookkeeper, the payee and the bank

2. The maturity date of a note receivable: 
A. Is the day of the credit sale
B. Is the day the note was signed
C. Is the day the note is due to be paid
D. Is the date of the first payment
E. Is the last day of the month

3. A company receives a 7.5%, six-month note for $6,000. The total interest due on the maturity date is 
A. 450.00
B. 2

25

.00
C. 220.50
D. 112.50
E. 333.75

4. Which one of the following is the most serious limitation of internal controls? 
A. Computer error
B. Human fraud or human error
C. Cost-benefit principle
D. Cybercrime
E. Management fraud

5. At the end of the day, the cash register’s record shows $

250

, but the count of cash in the cash register is $

245

. The correct entry to record the cash sales for the day is:
A

245

B.

Cash

245

C.

250

Sales

250

D.

Cash

250

Sales

245

5

6. The entry that is necessary to establish a petty cash fund should include which of the following: 
A. A debit to Cash and a credit to Petty Cash
B. A debit to Cash and a credit to Cash Over and Short
C. A debit to Petty Cash and a credit to Cash
D. A debit to Petty Cash and a credit to Accounts Receivable
E. A debit to Cash and a credit to Petty Cash Over and Short

7. An amount of bad debt expense can be estimated by: 
A. The percent of sales method
B. The percent of accounts receivable method
C. The aging of accounts receivable method
D. Only b and c
E. Bad debt expense can be estimated by any of the three methods listed above

8. Which one of the following is a promissory note: 
A. Is a short-term investment for the maker
B. Is a written promise to pay a specified amount of money at a certain date
C. Is a liability to the payee
D. Is another name for an installment receivable
E. Cannot be used in payment of an account receivable.

9. ALI purchased merchandise from SAAD on October 17 of the current year. SAAD accepted ALI’S $6,000, 90-day, 10% note as payment. What entry should SAAD make on January 15 of the next year when the note is paid?
A. 

B. 

6150

6150

C.

Cash

6150

6000

D.

Cash

6150

25

125

Notes Receivable

6000

10. Cash, not including cash equivalents, includes: 
A. Postage stamps
B. Coins, currency and checking accounts
C. IOUs
D. Two-year certificates of deposit

11. A document that is an itemized statement of goods prepared by a vendor listing, the customer’s name, sold items, sales prices and terms of the sale is the: 
A. Purchase requisition
B. Purchase order
C. Invoice
D. Receiving report
E. Invoice approval

12.

Which of the following is a good system of internal control: 
A. Urges adherence to prescribed managerial policies
B. Insures profitable operations
C. Eliminates the need for an audit
D. Requires the use of non-computerized systems
E. Is not necessary if the company uses a computerized system

13. When, two clerks share same cash register, which one of the internal control principle is violated?
A. Establish responsibilities
B. Maintain adequate records
C. Insure assets
D. Bond key employees
E. Apply technological controls

14. The materiality principle means: 
A. States that an amount can be ignored if its effect on financial statements is unimportant to the user’s business decisions
B. Requires use of the allowance method for bad debts
C. Requires use of the direct write-off method
D. States that bad debts not be written off
E. Requires that expenses be reported in the same period as the sales they helped produce

15. Khaled’s company needs to replenish a $500 petty cash fund. Its petty cash box has $70 cash and petty cash receipts of $420. The journal entry to replenish the fund includes:

A. A debit to Cash for $70.

B. A credit to Cash for $70.

C. A debit to Cash Over and Short for $10

D. A credit to Cash Over and Short for $10.

E. A credit to Petty Cash for $420

16. Fahad’s company had net sales of $50,000 and accounts receivable of $5,500. Its days’ sales uncollected is:

A. 3.2 days.

B. 38.4 days.

C. 40.15 days.

D. 29.2 days.

E. 12.5 days.

17. Total interest to be earned on a $7,500, 9%, 120-day note is:

A. $93.75

B. $375.00

C. $570.25

D. $750.00

18. Ahmad’s receives a $14,000, 12%, 60-day note. The maturity value of the note is:

A. $280

B. $14,000

C. $14,280

D. $13,780

19. Saud’s company has net sales of $650,000 and average accounts receivable of $25,000. What is its account receivable turnover?

A. 20.18

B. 30.41

C. 26.00

D. 12.00

20. When reimbursing the petty cash fund: 
A. Cash is debited
B. Petty Cash is credited
C. Petty Cash is debited
D. Appropriate expense accounts are debited
E. No expenses are recorded