True or False
Petty cash is debited when a cheque is written to replace the funds
What is TRUE
100
True or False
When an account is written off under the allowance method bad debts expense is debited
What is FALSE
Allowance for doubtful accounts is debited
100
True or False
You are acting as an agent for the federal government when you collect PST
What is FALSE
Provincial Government
100
TRUE or FALSE
Cash control is better if you write cheques than if you use a petty cash fund
What is TRUE
100
The accounting equation
What is A = L + OE
200
Name one item that should be deducted from cash according to bank in a bank reconciliation
What is outstanding cheques
200
What is uncollectible amount under percent of sales method if industry average is 1.75%?
Total sales for year $35,000
Total receivable account balance at year end $15,000
What is 612.50
35,000 x .0175
200
Calculate net pay
Gross pay $5,000
Income tax $1,500
CPP 60
EI 70
What is 3,370
5000 - 1500 - 60 - 70
200
TRUE or FALSE
The company's organizational structure is part of the control environment of internal control
What is TRUE
200
TRUE or FALSE
The trial balance totals match so there are no errors in the accounting records
What is FALSE
The TB balanced means that debits and credits equal, errors such as posting to the wrong account are still possible.
300
Two items that might be deducted from cash according to books in a bank reconciliation
What is
Services Charges
NSF Cheque
Loan payments
Errors
300
What is uncollectible amount under percent of receivables method if industry average is 1.75%?
Total sales for year $35,000
Total receivable account balance at year end $15,000
What is 262.50
15,000 x .0175
300
Total remittance to federal government
Gross pay $5,000
Income tax $1,500
CPP 60
EI 70
What is 1,788
70 x 1.4 + 70 + 60 + 60 + 1500
300
Name one of the warning of signs of control problems with regard to people
What is any two of
living beyond their means
financial difficulties
control issues or unwillingness to share duties
defensiveness, suspiciousness, irritability
not taking annual leave
300
The four steps in closing entries
What is
Close the revenue accounts to Income Summary
Close the expense accounts to Income Summary
Close the Income Summary to Capital
Close the Withdrawals to Capital
400
What is the balance per bank?
Bank balance per statement $500
O/S cheques $200
Deposit in transit $100
What is $400
500 + 100 - 200
400
What is credit side of entry (account plus amount)
Allowance for doubtful accounts debit balance $600
Estimated uncollectible receivables at end of year $700
What is $1,300 Allowance for Doubtful Accounts
Credit of 700 plus bringing account back to credit balance
400
Calculate warranty liability
Repair defects are estimated at 6% of sale price
Sales for year $100,000
Returns for year $2,000
Labour to fix merchandise $1,000
What is 3,000
100,000 x .06 - 2,000 - 1,000
400
Two limitations of internal control
What is the human element
cost-benefit consideration
400
The five types of accounts requiring adjustments
What is
Prepaid expenses
Unearned revenues
Accrued revenues
Accrued expenses
Depreciation of capital assets
500
What is balance per books?
Before bank reconciliation $900
Service charges $50
NSF cheque returned from customer $100
What is 750
900-100-50
500
Calculate days sales in receivables
Net sales $3,040,000
Accounts receivable $475,000