Reference no: EM132224454
Questions -
Q1. At month-end, Edwards Inc. has outstanding checks of $779, deposits in transit of $367, service charges from the bank of $55, interest income of $18, a check returned to the bank in the amount of $338 and an error on its books that, when corrected, decreases cash by $19. What is the net adjustment to the general ledger as a result of the bank reconciliation?
A. A credit to cash of $394
B. A debit to cash of $282
C. A credit to cash of $412
D. A credit to cash of $375
Q2. An accounting error is the incorrect recording and reporting of facts about the business that existed at the time an event or transaction was recorded. TRUE OR FALSE?
Q3. Goodwin Worldwide prepays a one-year insurance policy in the amount of $240,000 and records the payment to Insurance Expense. On December 31, there are four months remaining on the policy and, since the initial recording of the payment, only one journal entry has been made debiting Prepaid Expense for $25,000 and crediting Insurance Expense for the same amount. What is the correcting entry on December 31?
DR Prepaid Expense $215,000, CR Insurance Expense $215,000
DR Insurance Expense $215,000, CR Cash $215,000
DR Prepaid Expense $80,000, CR Insurance Expense $80,000
DR Prepaid Expense $55,000, CR Insurance Expense $55,000
Q4. The adjustment to correct an error is the same whether it is discovered in the period in which it occurs or in a subsequent period (i.e., after the books are closed). TRUE OR FALSE.
Q5. A difference between debits and credits of $1,800 on the trial balance could be the result of which of the following:
A. A posting error of $900
B. A slide error where a balance of $100 is accidentally recorded as $1,000
C. A transposition error where a balance of $8,943 is accidentally recorded as $9,843
D. All of the other answers
Q6. If a company accrues too little revenue, what is the effect on revenue, assets and net income?
A. Understated revenue, understated assets, understated net income
B. Understated revenue, overstated assets, overstated net income
C. Understated revenue, understated assets, overstated net income
D. Understated revenue, overstated assets, understated net income
Q7. Solid Company has a reconciled cash balance of $7,320. The bank reconciliation reflects $554 in outstanding checks, debit memoranda of $57, credit memoranda of $97 and a bank error that, when corrected, increases the bank cash balance by $52. What is the cash balance per the bank statement before taking into account any reconciling items?
A. $7268
B. $7360
C. $7280
D. $7822