Question: 40 On December 31, 2007, Deal Inc.

failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal's 2007 financial statements? Working Capital Cash Flows from Operating Activities a. Overstated No effect b. Overstated Overstated c. No effect Overstated d. No effect No effect Question: 41 The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes: a. debit Cost of Goods Sold, credit Inventory b. debit Accounts Payable, credit Inventory c. debit Accounts Receivable, credit Sales Revenue d. debit Inventory, credit Accounts Payable Question: 42 Where do you record the payment terms for the money that a client owes to a vendor? a. In Sales Orders b. In Checks c. In Purchase Orders d. In Bills Question: 43 The Financial Statement extract of Cris & Co. has reported an interest expense of $85,000 in its Cash Flow Statements. There was no prepaid interest on interest capitalization either in the beginning or at the end of 2007. Accrued interest as on December 31, 2006 was $15,000. What will be the accrued interest as on December 31, 2007? a. $0 b. $15,000 c. $100,000 d. $85,000

Question: 44 What steps are taken before approving an invoice for payment? a. Validating the invoice once it is matched for checking b. If workflow is implemented, initiating approval for the invoice c. Creating accounting after approval of invoice d. Both a and b e. a, b, and c

Question: 45 Who are the parties to a bill of exchange? a. The drawers & the payees b. The payees & the owners c. The drawers, the drawees & the payees d. The owners & the drawers Question: 46 An open credit is __________. a. money owed to the company b. money owed by the company c. money owed to the investors d. None of the above Question: 47 On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet? Accrued liabilities Retained Earnings a. No effect No effect b. No effect Overstated c. Understated No effect d. Understated Overstated Question: 48 What is the Journal Entry for "The Company purchased $6,000 worth of merchandise on credit"? a. Dr Accounts Payable and Cr Merchandise b. Dr Merchandise and Cr Accounts Payable c. Dr Bank and Cr Accounts Payable d. None of the above Question: 49 From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing? a. Missing information on Purchase Orders b. Missing information about discounts c. Delays d. All of the above.

Question: 50 Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims? a. $1000 b. $1500 c. $2000 d. $3000 Question: 51 A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company's balance sheet as a a. deferred charge. b. contra asset account. c. current liability. d. non-current liability. Question: 52 What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called? a. Inventory valuation summary b. Expenses by vendor summary c. Unpaid bills details d. Purchases by vendor summary Question: 53 Which of the following will not result in the recognition of a deferred tax asset? a. An operating loss carry forward. b. Immediate expensing of organizational costs. c. Subscriptions revenue received in advance. d. Receipt of municipal bond interest. Question: 54 Who can use a company's Travel & Entertainment Cards, though the liability lies with the employees? a. Vendors b. Customers c. Employees d. All of the above

Question: 55 What level of detail should invoices contain? a. Summary, only the total due b. Totals by item c. Totals by date d. Specific details - dates, quantities, individual pricing Question: 56 Lime & Co.'s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense? a. $1200 $1400 b. $1900 $1400 c. $1900 $700 d. $2600 $700 Question: 57 How will you track the deposits that clients pay to the vendors? a. Track deposits as negative balances in Accounts Payable b. Record the deposit in the Enter Bills window c. Neither of the above Question: 58 On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year's real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable? a. $4,000 b. $8,000 c. $10,000 d. $12,000 Question: 59 What type of people does the Accounts Payable interface with most often? a. Customers b. Vendors c. Other employees d. IRS

Question: 60 Is a sales tax return required to be filed even if the sales are equal to zero? a. Yes b. No c. Depends on the expenditure made d. Varies from state to state. Question: 61 What are the debit memo & the credit memo in Payables? a. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have positive amounts b. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have negative amounts. c. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts d. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the Company to the supplier and the credit memo is raised by the supplier to the Company stating we are due to him. Both have negative amounts Question: 62 Accompanying the bank statement was a credit memorandum for a short-term, non-interest-bearing note collected by the bank. What entry is required in the depositor's accounts? a. Debit Accounts Receivable: Credit Cash b. Debit Cash: Credit Notes Receivable c. Debit Cash: Credit Miscellaneous Income d. Debit Notes Receivable :Credit Cash