Multiple Choice Answers

Question 1
A cash sale of merchandise would be recorded in the __________ journal.
A. sales
B. general
C. cash receipts
D. cash payments
Question 2
Upon collection of the amount due on an interest-bearing promissory note from a customer, the accountant would debit Cash, credit Notes Receivable, and:
A. debit Interest Expense.
B. credit Interest Income.
C. credit Interest Expense.
D. debit Interest Income.
Question 3
The entry to record an additional cash investment by the owner is recorded in the __________ journal.
A. cash payments
B. cash receipts
C. general
D. purchases
Question 4
To record the payment of a purchase invoice when a cash discount is taken, the accountant would debit __________ and credit __________.
A. Accounts Payable; Purchases Discounts and Cash
B. Accounts Payable and Purchases Discounts; Cash
C. Accounts Payable; Cash
D. Purchases; Purchases Discounts and Cash
Question 5
The entry to replenish a petty cash fund includes:
A. a debit to Cash and a credit to Petty Cash.
B. a debit to Petty Cash Fund and a credit to Cash.
C. debits to various expense accounts and a credit to Petty Cash Fund.
D. debits to various expense accounts and a credit to Cash.
Question 6
A firm’s bank reconciliation statement shows a book balance of $31,640, an NSF check of $800, and a service charge of $40. Its adjusted book balance is:
A. $32,480.
B. $30,800.
C. $30,880.
D. $32,400.
Question 7
To arrive at an accurate balance on a bank reconciliation statement, outstanding checks should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 8
To arrive at an accurate balance on a bank reconciliation statement, a credit memorandum from the bank for the collection of a note and interest should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 9
To arrive at an accurate balance on a bank reconciliation statement, a service charge should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 10
To arrive at an accurate balance on a bank reconciliation statement, a debit memorandum for a customer check marked NSF should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 11
To arrive at an accurate balance on a bank reconciliation statement, an error made by the bank in which the bank deducted a check issued by another business from the balance of the company’s bank account should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 12
A check issued for $1,980 to pay a vendor on account was recorded in the firm’s records as $1,890; the canceled check was properly listed on the bank statement at $1,980. To arrive at an accurate balance on a bank reconciliation statement, the error should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 13
To arrive at an accurate balance on a bank reconciliation statement, deposits in transit should be:
A. added to the bank statement balance.
B. added to the book balance.
C. deducted from the bank statement balance.
D. deducted from the book balance.
Question 14
Included with its bank statement a firm may receive a credit memorandum, which could indicate:
A. a bank service charge deducted from the firm’s account balance.
B. the bank’s return of a dishonored (NSF) check that was issued by a credit customer of the firm.
C. a fee for printing new business checks.
D. an addition to the firm’s account balance because the bank collected the amount due on a promissory note from a customer of the firm.
Question 15
The entry in a firm’s accounting records for a credit customer’s check that was returned by the bank marked “NSF” would include a debit to __________ and a credit to __________.
A. Miscellaneous Expense; Cash
B. Accounts Receivable; Accounts Payable
C. Accounts Receivable; Cash
D. Cash; Accounts Receivable
Question 16
Which of the following would NOT require an adjustment to the firm’s financial records?
A. Bank service charges
B. NSF checks
C. Deposits in transit
D. A charge for printing new checks
Question 17
Which of the following statements is correct?
A. The entry to record the payment of an invoice within the cash discount period would include a debit to the Purchases Discounts account.
B. To record a cash purchase of merchandise, the accountant would debit Purchases and credit Cash.
C. A transaction that is properly recorded in the cash payments journal will always include the recording of an amount in the Cash Debit column.
D. Purchase discounts is a contra revenue account.
Question 18
If the actual cash in the drawer is greater than the cash received from cash sales customers per the cash register tape, the entry in the cash receipts journal includes a:
A. debit to Accounts Payable.
B. credit to Accounts Payable.
C. debit to Cash Short or Over.
D. credit to Cash Short or Over.
Question 19
If a company offers customers cash discounts on sales and the customer takes advantage of the discount, the entry in the cash receipts journal for the seller involves a:
A. debit to Purchases Discounts.
B. credit to Purchases Discounts.
C. debit to Sales Discounts.
D. credit to Sales Discounts.
Question 20
Which of the following accounts is classified as a contra cost of goods sold account?
A. Purchases
B. Purchases discounts
C. Sales
D. Sales Discounts