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- 1. Multiple ChoiceInternal Controls are:the ways employees are trained to not get angry with each otherthe ways managers are taught not to get angry with employeesprocedures put in place by a business to safeguard its assets
- 2. Multiple ChoiceA business may choose to offer credit to customers to:increase sales and keep up with competitorsshow customers how double entry accounting is usedreduce the risk of not getting paid by customers
- 3. Multiple ChoiceAccounts Receivable is an account that records:all cash sales to customersall sales to customers on creditBoth A and B
- 4. Multiple ChoiceOffering credit to customers means:they can buy now and pay laterthey can buy using a credit card such as Visathey pay for the goods immediately
- 5. Multiple ChoiceA business should give credit to customers if:they look like nice peoplethey can demonstrate the ability to pay with documented evidencethey are friends of an employee
- 6. Multiple ChoiceThe Provision for Doubtful Debts account is a:negative asset that shows the amount of Accounts Receivable that may not be collectedan expense account showing debts that will never be paidan account recorded in the liability section of the Statement of Financial Position
- 7. Multiple ChoiceAccounts Receivable and Accounts Payable are referred to as subsidiary ledgers because:they are less important than other accountsthey are accounts that show the totals of the individual accounts of those we owe money to and those who owe us monetyJames Subsidiary first recorded them in his records
- 8. Multiple ChoiceAccounts Payable is an account that records:all cash purchases from suppliersall credit sales to customersall credit purchases from suppliers
- 9. Multiple ChoiceCowan Ltd sells $352 of stock to K Jensen on credit. The correct GJ entry is:DR Accounts Payable - K Jensen 352 CR GST Clearing 32 CR Sales 320DR Accounts Receivable - K Jensen 352 CR GST Clearing 32 CR Sales 320DR Accounts Receivable - K Jensen 352 CR Sales 352
- 10. Multiple ChoiceOn the 30 June Sophie Ltd estimates that $1095 of its Accounts Receivable accounts may not be collected. The correct GJ entry is:DR Accounts Receivable 1095 CR Doubtful Debts Expense 1095DR Provision for Doubtful Debts 1095 CR Accounts Receivable 1095DR Doubtful Debts Expense 1095 CR Provision for Doubtful Debts
- 11. Multiple ChoiceOn 3 April, J Whiting is declared bankrupt and will not be paying his Accounts Receivable account for $330. The correct GJ entry is:DR Provision for Doubtful Debts 330 CR Accounts Receivable 330DR Bad Debts Expense 300 DR GST Clearing 30 CR Accounts Receivable - J Whiting 330No entry is made as the business made a provision for this
- 12. Multiple ChoiceIf a bad debt is recovered, there are two steps to recording the transaction. Reverse the original entry to write off the debt AND record receipt of the payment.truefalse
- 13. Multiple ChoiceThe first entry for recording a bad debt recovered from J Jackson of $4400 is:DR Accounts Receivable - J Jackson 4400 CR Bad Debts Recovered 4400DR Accounts Receivable - J Jackson 4400 CR GST Clearing 400 CR Bad Debts Recovered 4000No entry is made as the debt was written offs
- 14. Multiple ChoiceDuran Ltd estimates the balance of its Provision for Doubtful Debts should be $4000 on 30 June. The current balance of the provision account is $3000. The correct GJ entry is:DR Doubtful Debts Expense 4000 CR Provision for Doubtful Debts 4000DR Doubtful Debts Expense 1000 CR Provision for Doubtful Debts 1000DR Provision for Doubtful Debts 1000 CR Doubtful Debts Expense 1000
- 15. Multiple ChoiceAt the end of the financial year the Bad Debts Expense account is closed to the Provision for Doubtful Debts account.truefalse
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