Sophia Learning Accounting
UNIT 4 MILESTONE -4
You passed this Milestone
1
__________________ includes policies, procedures and mindset of top
... [Show More] management. A tangible representation can be found in the employee handbook or annual statement.
•
Risk assessment
•
Monitoring process
•
Control environment
•
Control activity
CONCEPT
Internal Controls and Reconciliations
2
Examine the partial balance sheet vertical analysis below.
ASSETS
Cash $97,500 15%
Accounts Receivable $552,500 85%
Total Assets $650,000 100%
LIABILITIES
Accounts Payable $78,000 12%
Notes Payable _______ ____
Total Liabilities 50%
EQUITY
Total Equity $325,000 50%
Based on the information shown, what is the correct amount and percentage of notes payable?
•
$403,000; 62%
•
$247,000; 38%
•
$325,000; 50%
•
$572,000; 88%
CONCEPT
Vertical Analysis and Horizontal Analysis
3
Don's Landscaping Service purchased a backhoe for $12,000. It has a useful life of five years and a residual value of $1,750.
Based on this information, what is the straight-line depreciation for one year for this asset?
•
$1,025
•
$10,250
•
$2,400
•
$2,050
CONCEPT
Straight Line Depreciation
4
Using the information shown here, which of the following is the asset turnover ratio?
•
0.51
•
0.43
•
0.86
•
0.56
CONCEPT
Ratio Analysis
5
Which of the following internal controls has Jim implemented at his company if he hires an outside auditing firm to review the company's financial records?
•
Risk assessment
•
Control environment
•
Monitoring processes
•
Information and communication systems
CONCEPT
Internal Controls and Reconciliations
6
Which of the following is NOT a true statement regarding residual value?
•
Residual value is found below the referenced asset with a credit balance.
•
An asset cannot be depreciated beyond its residual value.
•
The asset's owner determines what the residual value will be.
•
It is an estimate of an asset's book value when fully depreciated.
CONCEPT
Depreciation
7
Nancy received $5,000 cash from her credit union to fund the remodeling of her store.
Which kind of activity on a statement of cash flows does this exemplify?
•
Financing activity
•
Operating activity
•
Capital activity
•
Investing activity
CONCEPT
Statement of Cash Flows
8
Which of the amounts below is the total interest Scott will pay when he is approved for a 9-month loan at an interest rate of 2.9% for a new, $12,500 company car?
•
$264.63
•
$282.54
•
$271.88
•
$259.89
CONCEPT
Short Term Notes Payable
9
Which asset below is a current asset?
•
Delivery truck
•
Prepaid insurance premium
•
Commercial kitchen
•
Office building
CONCEPT
Long Term Assets
10
As Ned reviewed the credit accounts, he noticed that a customer who recently filed bankruptcy had an accounts receivable balance of $4,890. Ned instructed the accountant to make a journal entry to write off the customer's entire balance.
Which of the following journal entries would be listed as debit?
•
Accounts Receivable
•
Cash
•
Allowance for Bad Debts
•
Bad Debt Expense
CONCEPT
Uncollectible Accounts
11
Based on the information from the last six months (shown here), which of the following is the current ratio?
•
9.08
•
7.31
•
6.46
•
9.24
CONCEPT
Ratio Analysis
12
Unearned revenue is a(n) __________ account and carries a normal __________ balance.
•
equity; debit
•
asset; debit
•
revenue; credit
•
liability; credit
CONCEPT
Current Liabilities
13
What is the formula for the rate of return on sales?
•
Net Income / Net Sales
•
Gross Income / Gross Sales
•
Net Income / Gross Sales
•
Gross Income / Net Sales
CONCEPT
Ratio Analysis
14
Which of the following is NOT depreciated because it does not get used up?
•
Land fixtures
•
Buildings
•
Land
•
Automobiles
CONCEPT
Depreciation
15
A business purchased a machine for $750,000. The expected life of the machine is five years and the straight line depreciation rate is 20%. The machine is expected to have a residual value of $10,000.
Using the double-declining balance method of depreciation, what is the correct book value for the machine at the end of the first year?
•
$450,000
•
$602,000
•
$440,000
•
$590,000
CONCEPT
Accelerated Depreciation
16
Using these end of period figures, which of the following is the rate of return on sales?
•
1.20
•
1.42
•
1.70
•
2.59
CONCEPT
Ratio Analysis
17
Based on the above information, what amount would be recorded in accounts receivable at 1-30 days?
•
$50,000
•
$25,000
•
$15,000
•
$75,000
CONCEPT
Allowance Method: Aging Receivables
18
Considering the information in the general journal shown here, which of the following is the correct percent of credit sales that are uncollectible?
•
9%
•
2%
•
7%
•
5%
CONCEPT
Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables
19
Which of the following allowances for bad debt should the company enter into their financials for an Accounts Receivable account with a balance of $1,500,000 if the company estimates that 3.3% of receivables will be uncollectible?
•
$49,500
•
$37,500
•
$60,000
•
$90,000
CONCEPT
Allowance Method: Percentage of Net Credit Sales and Percentage of Receivables
20
Which of the following examples can be classified as an accounts receivable?
•
Terry sent a specialty cage supplier a payment on account.
•
Terry took a $500 deposit for the upcoming stay of the boa constrictor.
•
Terry placed an order for food for the spotted genet. The terms of sale were cash in advance.
•
Terry issued a paycheck to his receptionist.
CONCEPT
Accounts Receivable Subsidiary Ledgers
Accounts Payable Subsidiary Ledgers
21
Which group of assets contains ONLY personal property?
•
Landscaping, supplies and factory equipment
•
Vehicle, landscaping and office equipment
•
Vehicle, supplies and factory equipment
•
Land, supplies and vehicle
CONCEPT
Long Term Assets
22
Using the aging schedule above, which of the following is the total uncollectible amount?
•
$302
•
$500
•
$365
•
$284.35
CONCEPT
Allowance Method: Aging Receivables
23
LONG TERM ASSET
ASSET: ASSEMBLY EQUIPMENT
COST $15,000
ACCUMULATED DEPRECIATION $2,500
PREPAID INSURANCE $500
MAINTENANCE COSTS $1,500
BOOK VALUE ______
Based on the information shown here, which of the following is the book value of the assembly equipment?
•
$12,500
•
$12,000
•
$10,500
•
$13,500
CONCEPT
Financial Reporting of Long Term Assets
© 2020 SOPHIA Learning, LLC. SOPHIA is a registered trademark of SOPHIA Learning, LLC. [Show Less]