Question 1 In the balance sheet, financial assets are shown at which value?

1	Historical cost
2	Current value
3	Cash equivalent
4	None of the above

Question 2 How is interest earned on cash equivalents shown in the statement of cash flows?

1	As an operating activity
2	As an investing activity
3	As a financing activity
4	As a noncash investing and financing activity

Question 3 Which of the following would be considered a major step in achieving internal control over cash transactions?

1	Separate the function of handling cash from the maintenance of accounting records.
2	Require that all cash receipts be deposited daily.
3	Make all payments by check (with the exception of the Petty Cash fund).
4	All of the above.

Question 4 The proper treatment of outstanding checks is to report them in the bank reconciliation as which of the following?

1	An addition to the balance per bank statement
2	A deduction from the balance per bank statement
3	An addition to the balance per depositor's records
4	A deduction from the balance per depositor's records

Question 5 A company purchased store supplies with payment by check. The bookkeeper recorded the payment as $1,340.56. The bank recorded the check at its correct amount of $3,140.56. Which of the following will occur, if no adjusting entries are made and the error is not detected through the bank reconciliation?

1	The trial balance will not balance
2	Accounts payable will be understated
3	The book Cash account will be understated
4	The checking account might become overdrawn

Question 6 Recording the purchase 120 shares of June-Girl stock for $53.00 a share, plus a brokerage commission of $120, on October 1 will require a journal entry which will include one of the following.

1	A debit to Marketable Securities for $6,360
2	A debit to Broker Commission Expense for $120
3	A credit to Cash for $6,480
4	Both (A) and (B).

Question 7 When a firm writes off a bad debt under the allowance method of accounting for bad debts, which of the following will occur?

1	The net realizable value of accounts receivable decreases
2	Total net current assets will decrease
3	The cash account will decrease
4	The net realizable value of accounts receivable will not change

Question 8 The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The uncollectible accounts are estimated at 3% of net credit sales of $650,000. After the appropriate adjusting entry to recognize the uncollectible account expense, the Allowance for Doubtful Accounts account should have a credit balance of which amount?

1	$19,950
2	$19,500
3	$19,050
4	$20,400

Question 9 Calculate the interest on a $4,000, 6% note receivable dated April 10 with a maturity date of July 9.

1	$24
2	$60
3	$240
4	$18

Question 10 Gross Sales total $505,000 and Sales Returns and Allowances total $15,000. Average accounts receivable for the period are $42,000. Calculate the accounts receivable turnover rate.

1	11.67
2	12.02
3	12.38
4	12.55