Author: Anonymous

Internal control systems are subject to limitations that usually arise from either (1) human error or human fraud, or (2) the cost-benefit principle.

The expense recognition (matching) principle requires that accrued interest on outstanding notes receivable be recorded at the end of each accounting period. rev: 10_27_2017_QC_CS-107064

The accounts receivable turnover indicates how often accounts receivable are received and collected during the period.

Winkler Company borrows $85,000 and pledges its receivables as security. The journal entry to record this transaction would be:

A company had net sales of $600,000, total sales of $750,000, and an average accounts receivable of $75,000. Its accounts receivable turnover equals:

The acid-test ratio differs from the current ratio in that:

A bank reconciliation explains any differences between the balance of a checking account on the depositor’s records and the balance reported on the bank statement.

On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. On March 15, Babson returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Babson pays the invoice on March 20, and takes the appropriate discount. The journal entry that Klein makes on March 20 is:

Multiple-step income statements:

Great Falls Co.’s bank reconciliation as of February 28 is shown below.           Bank balance $ 37,643 Book balance $ 38,153 + Deposit in transit   2,950 Note collection   +745 – Outstanding checks   -1,730 Check printing   -35 Adjusted bank balance $ 38,863 Adjusted book balance $ 38,863 One of the adjusting journal entries that Great Falls must record as a result of the bank reconciliation includes: