Accounting Exam 3

Front 1

what are the limitations of internal control?

Back 1

-human element
-cost/ benefit analysis
-collusion
-size of business

Front 2

type of internal control that involves prenumbering and prompt delivery of documents

Back 2

documentation procedures

Front 3

type of internal control that involves someone outside the system verifying the books periodically

Back 3

independent internal verification

Front 4

type of internal control that insures the business against misappropriation of an asset by dishonest employees

Back 4

bonding of employees

Front 5

type of internal control where the work of 1 employee should provide reliable basis for the work of another employee

Back 5

segregation of duties

Front 6

type of internal control where only 1 person is responsible for a given task

Back 6

establishment of responsibility

Front 7

what are the two ways to fix the bank's statement

Back 7

Add deposits in transit
subtract outstanding checks

Front 8

what are the 3 ways to fix the book's statement

Back 8

add collection of notes receivable
subtract NSF check
subtract bank service charge

Front 9

what is the adjusting entry for collection of Notes Receivable

Back 9

debit cash
credit Notes receivable

Front 10

what is the adjusting entry for NSF check

Back 10

debit Accounts Receivable
credit cash

Front 11

what is the adjusting entry for bank service charge

Back 11

debit miscellaneous expense
credit cash

Front 12

what is the entry for estimating uncollectible accounts

Back 12

debit bad debt expense
credit Allowance for Doubtful Accounts

Front 13

what is the entry for the write off of an uncollectible account

Back 13

debit Allowance Doubtful accounts
credit Accounts Receivable

Front 14

what is the cash realization value before and after write off

Back 14

before = Accounts receivable -allowance DA

after = Accounts receivable + allowance DA

Front 15

what is the entry for a receivable that is deemed uncollectible?

Back 15

2 entries :

debit Accounts Receivable
credit Allowance DA

debit cash
credit Accounts receivable

Front 16

receivable turnover rate =

Back 16

net credit sales / average net receivables

Front 17

Average collection period =

Back 17

365/ receivable turnover ratio

Front 18

what is the entry to convert for Accounts receivable to notes receivable ?

Back 18

debit Notes Receivable
credit Accounts receivable

Front 19

what is the entry for the sale of accounts receivable to a factor

Back 19

debit cash
debit service charge expense
credit accounts receivable

Front 20

what does the cost of land include? (5 things )

Back 20

1. cash purchase price
2. closing costs - title fees, attorney fees
3. brokers commissions
4. accrued property tax
5. all necessary costs in making land ready for use

Front 21

what is involved in the cost of constructing a building? (5)

Back 21

1. contract price
2. architect's fees
3. building permits
4. excavation costs
5. interest costs during construction

Front 22

book value =

Back 22

cost - accumulated depreciation

Front 23

what is the entry for the retirement of an asset?

Back 23

debit depreciation expense
credit accumulated depreciation

Front 24

all favorable attributes that relate to a business enterprise including
-exceptional management
- desirable location
- good customer relations
-skilled employees

only recorded when entire business is purchased
= excess of cost/ fair market value of net assets acquired

Back 24

goodwill

Front 25

what is the entry to record sales tax recorded by retailer

Back 25

debit cash
credit sales
credit sales tax payable