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Basic Accounts Payable MCQ

1. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?

Dr A/P account and Cr Supplies account

Dr Purchase account and Cr A/P account

Dr Supplies account and Cr A/P account

Dr A/P account and Cr Purchase account

Answer

Correct Answer: Dr Supplies account and Cr A/P account

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2. What type of people does the Accounts Payable interface with most often?

Customers

Vendors

Other employees

IRS

Answer

Correct Answer: Vendors

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3. Why would a company choose to invoice weekly rather than monthly?

It increases cash flow

It creates constant work for the accounts receivable staff

It is legally required

Customers enjoy receiving invoices

Answer

Correct Answer: It increases cash flow

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4. What is Accounts Payable aging report?

Sorting of a company's Accounts Payable by the bill date.

Sorting of a company's Accounts Payable by the due date.

Sorting of a company's Accounts Payable by the posted date.

None of the above.

Answer

Correct Answer: Sorting of a company's Accounts Payable by the due date.

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5. What is the difference between Accounts Payable and Accounts Receivable?

Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.

Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.

Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the bankers on account.

None of the above

Answer

Correct Answer: Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.

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6. A Trial Balance is a list of all accounts and their ending balances. Place the following accounts in the order they would appear on a properly prepared Trial Balance: Sales Revenue, Accounts Payable, Land and Rent Expense.

Land, Accounts Payable, Sales Revenue, Rent Expense

Land, Sales Revenue, Accounts Payable, Rent Expense

Land, Accounts Payable, Rent Expense, Sales revenue

Account Payable, Land, Rent Expense, Sales Revenue

Answer

Correct Answer: Land, Accounts Payable, Sales Revenue, Rent Expense

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7. How will you track the deposits that clients pay to the vendors?

Track deposits as negative balances in Accounts Payable

Record the deposit in the Enter Bills window

Neither of the above

Answer

Correct Answer: Track deposits as negative balances in Accounts Payable

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8. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?

Use the QuickBooks trade-off feature

Create a bank account through which you can clear the Payables and the Receivables

Use a single journal entry

Use multiple journal entries

Answer

Correct Answer: Create a bank account through which you can clear the Payables and the Receivables

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9. Where do you record the payment terms for the money that a client owes to a vendor?

In Sales Orders

In Checks

In Purchase Orders

In Bills

Answer

Correct Answer: In Bills

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10. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?

Missing information on Purchase Orders

Missing information about discounts

Delays

All of the above.

Answer

Correct Answer: All of the above.

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11. Accounts Payable is _________.

a file or an account that contains details of money that a person or company owes to its suppliers.

details of money or money's worth that a person or company owns.

an expense account

a file or an account that contains details of money that a person or company owes to its customers

Answer

Correct Answer: a file or an account that contains details of money that a person or company owes to its suppliers.

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12. An Invoice statement is provided __________________

for payment purposes

to ensure that the IRS department has received all the invoices sent

to check for outstanding credits.

to know the expenditure of the company for the particular month

Answer

Correct Answer: to check for outstanding credits.

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13. Why are per diem's used in lieu of having employees detail all actual spending for meals?

Companys like to treat their employees while they travel for the company

Reasonable amounts are fixed and it limits the amount the company will have to spend

Employees always lose receipts and that makes the process of reimbursement tough

It saves on paperwork

Answer

Correct Answer: Reasonable amounts are fixed and it limits the amount the company will have to spend

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14. Which of the following is not an important step before approving a payment?

Refer to the terms and conditions for making the payment (any credit period)

Check the bank balance before approving the invoice for payment.

Refer to the Sales Order issued.

Refer to the Goods / Services Received Note for having received goods / services as mentioned in the purchase order

Answer

Correct Answer: Refer to the Sales Order issued.

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15. What is the last date for filing claims for VAT refunds in all countries?

December 31st of every year

January 31st of every year

There is no deadline for filing claims for VAT refunds

June 30th of every year

Answer

Correct Answer: There is no deadline for filing claims for VAT refunds

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16. Using the following information, compute total liabilities. Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.

$20,000

$28,000

$68,000

$98,000

Answer

Correct Answer: $28,000

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17. Recording expenditure made, but not yet paid, to a vendor is an example of:

a prepaid income transaction

an unearned expense transaction

an accrued liability transaction

an accrued payable transaction

Answer

Correct Answer: a prepaid income transaction

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18. Excess payment made to the supplier will appear as a _____..

debit balance in the supplier's account.

credit balance in the supplier's account.

debit balance in the customer's account

credit balance in the customer's account.

Answer

Correct Answer: credit balance in the supplier's account.

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19. What is Accounts Payable Turnover Ratio?

Net profit / Accounts Receivable

Cost of Goods Sold / Accounts Payable

365 days / Accounts Payable Turnover

Total sales / Networth

Answer

Correct Answer: Cost of Goods Sold / Accounts Payable

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20. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:

Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year

Do not book the monthly expense and assume your company is no longer in business with the company

Send an email to the CFO

Delete the line from Excel and assume no further expense

Answer

Correct Answer: Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year

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21. Under which head does VAT reflect in the Balance Sheet?

Equity

Creditors

Fixed Asset

Current Asset

Answer

Correct Answer: Creditors

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22. Under which head does VAT reflect in the Balance Sheet?

Equity

Creditors

Fixed Asset

Current Asset

Answer

Correct Answer: Creditors

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23. What is the standard sales tax rate used?

10%

There is no standard rate; it varies from state to state

Answer

Correct Answer: There is no standard rate; it varies from state to state

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24. What should be submitted to the VAT authorities to obtain a refund of VAT?

The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.

The original purchase order together with an application form and other supporting documents relating to the expenditure incurred must be submitted.

The original Receipt together with an application form and other supporting documents relating to the expenditure incurred must be submitted

Both the original purchase order and the invoice should be submitted

Answer

Correct Answer: The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.

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25. 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

Overstated No effect

Overstated Overstated

No effect Overstated

No effect No effect

Answer

Correct Answer: Overstated No effect

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26. When are sales & use taxes due?

The date varies from State to State

On the15th of every month

Annually, on the same date as federal taxes

Quarterly, on the 15th of the following month

Answer

Correct Answer: The date varies from State to State

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27. How often should Payables be entered in the accounting system?

Once a week

As soon as the invoices are brought to the AP department

Daily

As and when they are due

Answer

Correct Answer: Daily

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28. Who typically calculates the tax liability to be paid?

The State government, which informs the company what is owed

The Accounts Payable staff

The CFO

The General or Tax Accountant within the company

Answer

Correct Answer: The General or Tax Accountant within the company

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29. Who is to be covered by VAT (Value Added Tax)?

All business transactions carried on within a State by individuals

All business transactions carried on within a State by partnerships

All business transactions carried on within a State by Companies

All of the above

Answer

Correct Answer: All of the above

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30. Which of the following will not result in the recognition of a deferred tax asset?

An operating loss carry forward.

Immediate expensing of organizational costs.

Subscriptions revenue received in advance.

Receipt of municipal bond interest.

Answer

Correct Answer: Receipt of municipal bond interest.

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31. Which of the following accounts has a debit balance?

Accounts Payable account

Accrued taxes account

Accumulated depreciation account

Bad debt expense account

Answer

Correct Answer: Bad debt expense account

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32.
Among the items reported on Cord, Inc.'s income statement for the year ended December 31, 2007 were the following:

Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:

$5,000

$10,000

$15,000

Answer

Correct Answer: $0

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33. What steps are taken before approving an invoice for payment?

Validating the invoice once it is matched for checking

If workflow is implemented, initiating approval for the invoice

Creating accounting after approval of invoice

Both a and b

a , b and c

Answer

Correct Answer: Both a and b

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34. What is VAT?

VAT is a tax calculated on the income earned

VAT is a consumer-oriented tax imposed on goods and services sold.

VAT is an item

VAT is a Credit card fee

Answer

Correct Answer: VAT is a consumer-oriented tax imposed on goods and services sold.

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35. What are the debit memo & the credit memo in Payables?

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

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

Answer

Correct Answer: 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

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36. 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?

$1000

$1500

$2000

$3000

Answer

Correct Answer: $1000

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37. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for

the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.

the method of accounting for the US Federal investment tax credit.

the discounting of income taxes.

the accounting for income taxes in general in interim periods.

Answer

Correct Answer: the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.

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38. What level of detail should invoices contain?

Summary, only the total due

Totals by item

Totals by date

Specific details - dates, quantities, individual pricing

Answer

Correct Answer: Specific details - dates, quantities, individual pricing

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39. When a deposit is used as payment, what is the journal entry from the customer's (the person who made the deposit) perspective?

Debit Cash, credit Service Expense

Debit Accounts Payable, credit Cash

Debit Service Expense, credit Cash

Debit Service Expense, credit Other Advances

Answer

Correct Answer: Debit Service Expense, credit Other Advances

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40. A good example of a typical prepaid expense is:

Rent

Dividends

Insurance

Wages

Answer

Correct Answer: Insurance

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41. 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

deferred charge.

contra asset account.

current liability.

non-current liability.

Answer

Correct Answer: current liability.

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42. A bill is a form on which you record details of _________ .

the sales made

the expenses incurred

a purchase made by a vendor to whom the Company owe money

the income accrued

Answer

Correct Answer: a purchase made by a vendor to whom the Company owe money

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43. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?

It is cheaper than paying people for gas

It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle

It is required by the tax law

It limits the company's liability if the person is involved in an accident while driving for work purposes

Answer

Correct Answer: It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle

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44.
Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans's deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?

I.An increase in prepaid insurance premium
II.An increase in rent receivable
III.An increase in warranty obligations

I only

I and II only

II and III only

III only

Answer

Correct Answer: I and II only

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45. Which form is used to reimburse an individual for Travel and Entertainment expenses?

Form W4

Expense Voucher

Form 1099Misc

Form 941

Answer

Correct Answer: Expense Voucher

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46. Which of the following methods can be used to value inventory in QuickBooks?

Double declining balance

Last in, first out (LIFO)

First in, first out (FIFO)

Average cost

Answer

Correct Answer: Average cost

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47. Companies accrue expenses in order to comply with which accounting principle?

Timeliness

Matching

Conservatism

Magnitude

Answer

Correct Answer: Matching

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48. Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month's rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?

$1,400

4500

$350

$320

Answer

Correct Answer: $320

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49. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?

The reimbursement should be included in the normal paycheck.

The reimbursement should be ignored

The reimbursement should be made by cash

All of the above

Answer

Correct Answer: The reimbursement should be included in the normal paycheck.

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50. In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?

$34,000

$50,000

$84,000

$90,000

Answer

Correct Answer: $84,000

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51. Of the following, which is a typical situation involving a deposit?

The company uses a recruiting firm to find key employees

In order to buy office supplies, the company has to put a deposit down

The business has leased a new location and is required to put a deposit for the last month's rent

Federal taxes for the upcoming year

Answer

Correct Answer: The business has leased a new location and is required to put a deposit for the last month's rent

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52. 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?

$4,000

$8,000

$10,000

$12,000

Answer

Correct Answer: $8,000

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53. Accounts Payable affect net income.

True

False

Answer

Correct Answer: False

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54. Can you collect and remit tax for a state even if not required to do so?

Yes, the State Government will send you the amount without your getting registered with the state prior to collecting the tax.

Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.

Answer

Correct Answer: Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.

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55. Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?

$64000

$69000

$84000

$89000

Answer

Correct Answer: $89000

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56. At what stage in the Accounts Payable process is cash affected?

When an invoice is entered into the accounting system

When a credit memo is generated

When checks are printed

Accounts Payable never handles cash

Answer

Correct Answer: When checks are printed

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57. Why is it important for companies to manage their Accounts Payable?

Bills won't be paid otherwise

Vendors will call if bills aren't paid immediately

Accounts Payable staff needs to be constantly busy or they will become disinterested

Extending Accounts Payable keeps cash in the company for a longer period

Answer

Correct Answer: Extending Accounts Payable keeps cash in the company for a longer period

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58. When are invoices treated as having been paid short?

If any discount for early payment is allowed

If there are any damaged goods

If there are any prior credits

All of the above.

Answer

Correct Answer: All of the above.

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59. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:

debit Cost of Goods Sold, credit Inventory

debit Accounts Payable, credit Inventory

debit Accounts Receivable, credit Sales Revenue

debit Inventory, credit Accounts Payable

Answer

Correct Answer: debit Inventory, credit Accounts Payable

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60. A firm makes all its purchases on credit basis. Cash payment on trade credit is required in the month following the purchase on 70% of all the purchases. The firm takes a 2?sh discount and makes payment for the remaining 30% of all the purchases in the month of purchase.The forecasted purchases for January through April are worth $300,000, $375,000, $450,000, and $300,000 respectively. What will be the total cash disbursement for purchases in the month of March?

$132,300

$394,800

$403,200

$450,000

Answer

Correct Answer: $394,800

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61. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as ---------------- .

the two-way match

the three-way match

invoice cleared

invoice paid

Answer

Correct Answer: the three-way match

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62. Under generally accepted accounting principles, which approach is used to determine income tax expense?

Asset and liability approach.

"With and Without" approach.

Net-of-tax approach.

Deferred approach.

Answer

Correct Answer: Asset and liability approach.

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63. 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?

$15,000

$100,000

$85,000

Answer

Correct Answer: $85,000

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64. Streamlined Sales Tax is a national effort by which of the following?

The State Government

The Local Government

The private sector to simplify and modernize sales and use tax collection

All of the above

Answer

Correct Answer: All of the above

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65. What is the difference between billable and non-billable expenses?

Billable expenses are the expenses incurred by you in carrying out your own business / performing your own duties and responsibilities and Non-billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goods

Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.

Neither of the above

Answer

Correct Answer: Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.

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66. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:

all foreign, state, and local taxes.

domestic Federal income taxes.

an enterprise's foreign operations accounted for by the cost method.

financial statements of foreign enterprises required to pay US. Federal income taxes.

Answer

Correct Answer: domestic Federal income taxes.

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67. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:

debit Inventory, credit Accounts Payable

debit Cost of Goods Sold, credit Inventory

debit Accounts Receivable, credit Sales Revenue

debit Accounts Payable, credit Inventory

Answer

Correct Answer: debit Accounts Payable, credit Inventory

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68. What does the acronym EFT stand for?

Electronic File Transfer

Electronic Funds Transfer

Both a and b

Electronic Fund Tour

Answer

Correct Answer: Electronic Funds Transfer

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69. An open credit is __________.

money owed to the company

money owed by the company

money owed to the investors

None of the above

Answer

Correct Answer: money owed to the company

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70. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.

Cash

Accounts Payable

Service Revenue

Accounts Receivable

Answer

Correct Answer: Accounts Payable

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71. 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

No effect No effect

No effect Overstated

Understated No effect

Understated Overstated

Answer

Correct Answer: Understated Overstated

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72. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?

They needn't as they are given a company credit card for the purpose

They have to submit a written and signed letter stating the total expenses to be reimbursed

They submit an envelope containing the receipts of the expenses incurred

They have to submit a report of the expenses approved by the employees' supervisor

Answer

Correct Answer: They have to submit a report of the expenses approved by the employees' supervisor

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73. Who are the parties to a bill of exchange?

The drawers & the payees

The payees & the owners

The drawers, the drawees & the payees

The owners & the drawers

Answer

Correct Answer: The drawers, the drawees & the payees

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74. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor's accounts?

Debit Cash: Credit Accounts Receivable

Debit Sales: Credit Cash

Debit Accounts Receivable: Credit Cash

Debit Cash: Credit Cash Sales

Answer

Correct Answer: Debit Cash: Credit Cash Sales

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75. Who can use a company's Travel & Entertainment Cards, though the liability lies with the employees?

Vendors

Customers

Employees

All of the above

Answer

Correct Answer: Employees

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76. On January 1, 2007, Al's Cleaning Services received an advance payment of $3000 for three months of cleaning services. The $3000 was recorded as Unearned Cleaning Revenue because the services had not yet been provided. Which of the following will include the January 31, 2007 adjustment entry?

A debit to Cleaning Expenses for $1000

A credit to Cleaning Revenue for $2000

A debit to Unearned Cleaning Revenue for $1000

A credit to Unearned Cleaning Revenue for $2000

Answer

Correct Answer: A debit to Unearned Cleaning Revenue for $1000

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77. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?

Debit Purchases a/c... $2,000 and credit Account Payable a/c... $2,000

Debit Accounts Payable a/c... $1960 and credit Cash a/c... $1,960

Debit Accounts Payable a/c... $2,000 and credit Cash a/c... $2,000

Debit Accounts Payable & Purchase Discount a/c for $1,960 & $40 and credit Cash a/c for $2,000

Answer

Correct Answer: Debit Accounts Payable a/c... $2,000 and credit Cash a/c... $2,000

Note: This Question is unanswered, help us to find answer for this one

78. Accrual Basis means __________.

the most commonly used accounting method which reports income when earned and expenses when incurred,

the accounting method which reports income when received and expenses when paid.

the accounting method which reports income when earned and expenses when incurred.

All of the above

Answer

Correct Answer: the most commonly used accounting method which reports income when earned and expenses when incurred,

Note: This Question is unanswered, help us to find answer for this one

79. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:

Accounts Payable.

Supplies

Cash

Retained Earnings.

Answer

Correct Answer: Supplies

Note: This Question is unanswered, help us to find answer for this one

80. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?

Check

Automated Clearing House (ACH)

Direct deposit

All of the above

Answer

Correct Answer: All of the above

Note: This Question is unanswered, help us to find answer for this one

81. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as

a liability

revenue

a deferred credit deducted from Accounts Receivable.

a contra account.

Answer

Correct Answer: a liability

Note: This Question is unanswered, help us to find answer for this one

82. 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?

Debit Cash: Credit Notes Receivable

Debit Cash: Credit Miscellaneous Income

Debit Notes Receivable:Credit Cash

Answer

Correct Answer: Debit Cash: Credit Notes Receivable

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83. What is the Journal Entry for "The Company purchased $6,000 worth of merchandise on credit"?

Dr Accounts Payable and Cr Merchandise

Dr Merchandise and Cr Accounts Payable

Dr Bank and Cr Accounts Payable

None of the above

Answer

Correct Answer: Dr Merchandise and Cr Accounts Payable

Note: This Question is unanswered, help us to find answer for this one

84.
Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson's operations is as follows:
2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800
What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?
Sales Tax Occupancy Taxes

$39,000 $6,000

$39,000 $8,200

$54,000 $6,000

$54,000 $8,200

Answer

Correct Answer: $39,000 $8,200

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85. How are prepaid expenses typically tracked?

In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses

The procedure is fully automated in the accounting system; no one needs to do anything from month to month

The CFO will tell the accountant what needs to be booked

The auditors of the company do it

Answer

Correct Answer: In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses

Note: This Question is unanswered, help us to find answer for this one

86. Debit memos are required for_______.

the payment deductions taken on invoices.

the payments made on Purchase Orders

the payments received on Sales Orders

Both b and c

Answer

Correct Answer: the payment deductions taken on invoices.

Note: This Question is unanswered, help us to find answer for this one

87. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.

the Current Ratio

the Quick Ratio

the Networth Ratio

the Accounts Payable Turnover Ratio

Answer

Correct Answer: the Accounts Payable Turnover Ratio

Note: This Question is unanswered, help us to find answer for this one

88. How are the A/P journal entries typically created?

Hand written by the A/P staff and entered into the system by the accountant

The A/P staff is responsible for making journal entries

Entries are created and entered by a CPA

A/P software will generate journal entries based on preset coding

Answer

Correct Answer: A/P software will generate journal entries based on preset coding

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89. What are the steps involved in setting up QuickBooks to track 1099 information?

Turn on the Tax: 1099 preference

Link 1099 categories to QuickBooks accounts

Designate which vendors should receive 1099s

All of the above

Answer

Correct Answer: All of the above

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90. Rush checks may also be called _____

emergency checks

ASAP checks

quick checks

All of the above.

Answer

Correct Answer: All of the above.

Note: This Question is unanswered, help us to find answer for this one

91. On what sales is it important to note that the Sales and Use Tax should be paid?

Property tax

Sales receipts

Retail sales

Corporate sales

Answer

Correct Answer: Retail sales

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92. Why do companies require deposits & advances?

They don't trust the customers to pay

It improves cash flow, especially for long duration projects

They want to make sure customers have money to pay

Answer

Correct Answer: It improves cash flow, especially for long duration projects

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93. Making insurance payments in advance is an example of:

an accrued receivable transaction.

an accrued liability transaction.

an unearned revenue transaction.

a prepaid expense transaction

Answer

Correct Answer: a prepaid expense transaction

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94. What is nexus?

Nexus is the sales tax collected from Hotels

Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.

Nexus is the sales tax collected on the traveling expenditure incurred in the same state

Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state

Answer

Correct Answer: Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.

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95. Accounts payable refer to the current _________.

income of a business or an organization

assets of a business or an organization

expenses of a business or an organization

liabilities of a business or an organization

Answer

Correct Answer: liabilities of a business or an organization

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96. Payments for expenses incurred on corporate cards should be made directly to_____.

the EFT

the IRS

the state Taxes

the credit card company

Answer

Correct Answer: the credit card company

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97. What is the use of an Accounts Payable ledger?

An Accounts Payable ledger helps you to control your expenditures and payables

An Accounts Payable ledger helps you to know the income earned

An Accounts Payable ledger shows the amount to be paid to the employees

None of the above

Answer

Correct Answer: An Accounts Payable ledger helps you to control your expenditures and payables

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98. Is a sales tax return required to be filed even if the sales are equal to zero?

Yes

Depends on the expenditure made

Varies from state to state.

Answer

Correct Answer: Yes

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99. True or False? A three-way match is a good way to protect a companies liabilites.

False

True

Answer

Correct Answer: False

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100. What is an exceptionally beneficial tool that nearly eliminates the need for AP approvals?

EDI

Escalating approvals

Sales contracts

Blocked approvals

Answer

Correct Answer: Escalating approvals

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101. What design security measure does a check printer use to print the word, “void” on a check?

A pantograph

A hologram

A stenciling

A lithograph

Answer

Correct Answer: A pantograph

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102. True or false? Another name for accounts payable is notes payable liabilities.

True

False

Answer

Correct Answer: False

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103. In an irrevocable letter of credit, who is known as the beneficiary?

Seller

The buyer's bank

The seller's bank

Buyer

Answer

Correct Answer: Seller

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104. Which automatic clearing house code refers to a consumer's cross border payments?

IAT

XCK

SEC

BOC

Answer

Correct Answer: IAT

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105. When is the best time to enact fraud detection measures?

During lunch

During employee vacation

After employees are terminated

When employees are hired

Answer

Correct Answer: During employee vacation

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106. What types of checks do corporations typically use?

Corporate, or personal.

Continuous-format, or individual.

Formal, or informal.

Answer

Correct Answer: Continuous-format, or individual.

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107. When a rush check request comes in, what happens to the accounts payable department?

It keeps on working and deals with it after the important work is completed.

It has to stop entirely and attend to the rushed check.

They rush the check back to the sender.

A blank check is sent to the recipient with the knowledge that they will be honest.

Answer

Correct Answer: It has to stop entirely and attend to the rushed check.

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108. If the three-way-match is off by a negligible dollar amount, what happens in Accounts Payable?

The discrepancy is forgone and the invoice is simply paid to save time

Accounts payable consults with accounts receivable

Accounts payable sends an extra charge to the vender

Accounts payable stops all function to find every missing dollar

Answer

Correct Answer: The discrepancy is forgone and the invoice is simply paid to save time

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109. True or False? Entertainment and travel is generally a part of accounts payable.

False

True

Answer

Correct Answer: True

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110. Accounts payable can usually be broken down into which two categories?

Expense payables and trade payables

Trade Payables and liabilites

Expense payables and credit payables

Answer

Correct Answer: Expense payables and trade payables

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111. Your company accidentally sent a duplicate payment. Where is this money sent?

The vendor will keep the difference

To a 3rd party company, which will settle the dispute

To the accounts receivable account

To a miscellaneous income account, which will be attended to when it is reconciled

Answer

Correct Answer: To a miscellaneous income account, which will be attended to when it is reconciled

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112. When there is an over-shipment of a product to the receiver, what can happen to the invoice?

It can be paid on time

It can be long-paid

It can be short-paid

It can be discarded

Answer

Correct Answer: It can be short-paid

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113. What is an example of an issue with evaluated receipt settlement?

The packing slip could be fraudulent

The receipt could be evaluated improperly

There are systematic failures because the technology is new

There can be too many rejections and disputes, making ERI more tedious than it should be

Answer

Correct Answer: There can be too many rejections and disputes, making ERI more tedious than it should be

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114. Do the rebates procurement card vendors offer exceed discount offers for prompt payment?

No. Procurement card vendors have to pay a tax so the competition is equal.

No. Because payment is made manually.

No. Electronic payment takes longer than traditional payment.

Yes. Because payment is made electronically.

Answer

Correct Answer: Yes. Because payment is made electronically.

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115. What is an assumed receipt?

A receipt assuming that you have received all your goods

An assumption that a receipt is unspoken when goods are delivered

It is an assumption that goods have been received when an invoice appears in AP

An assumption by vendors that you have received the receipt

Answer

Correct Answer: It is an assumption that goods have been received when an invoice appears in AP

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116. True or false? It is always advantageous to pay an invoice as quickly as possible.

True

False

Answer

Correct Answer: False

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117. What is it called when a vendor ships out a product, then an invoice and then finally collects a payment at a later time?

Working Capital

Sales to Cash flow ratio

Cash discount

Cash Conversion Cycle

Answer

Correct Answer: Cash Conversion Cycle

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118. What is one of the advantages of drop shipping?

Allows a company to avoid selling goods to unreliable buyers

(None of these)

Allows a company to avoid extra costs by decreasing some non-value activites

Answer

Correct Answer: Allows a company to avoid extra costs by decreasing some non-value activites

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119. If a company charges 0.8 percent interest monthy on a monthly balance what is the interest per annum?

9.6%

10%

Answer

Correct Answer: 9.6%

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120. What financial calculation is used to determine a discount's ROI?

Discount/Discounted Price x Days in a year/Days paid early = ROI

Weeks in a year/Months x Discount paid early = ROI

Days in a year/Years x Discount paid monthly = ROI

Days in a year/Weeks x Discount paid early = ROI

Answer

Correct Answer: Discount/Discounted Price x Days in a year/Days paid early = ROI

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121. True of False? An irrevocable letter of credit can be changed as long as one of the parties involved agree to a change.

False

True

Answer

Correct Answer: False

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122. True or False? When a bill is paid, the accounts payable is increased with a debit entry.

False

True

Answer

Correct Answer: False

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123. If accounts payable set up an in-house web page for their daily functions, where would it be hosted?

Their computer

An external server

Their intranet

The internet

Answer

Correct Answer: Their intranet

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124. A common rule for companies to avoid a duplicate payment is the following.

Pay from both a vendor's statements and invoices

Don't pay from vendor statements but only from vendor invoices.

Don't pay from vendor invoices but only from vendor statements

Answer

Correct Answer: Don't pay from vendor statements but only from vendor invoices.

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125. What is a risk of the purchasing department not granting a rush check?

They risk being put on credit hold by valued suppliers

They risk government intervention

They risk being granted excessive credit by valued suppliers

They risk being sued by valued suppliers

Answer

Correct Answer: They risk being put on credit hold by valued suppliers

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126. What is the definition of a company's current ratio?

Current assets divided by current liablities

Current assets minus current liablities

Current liabilities minus current assets

Current liabilities divided by current assets

Answer

Correct Answer: Current assets divided by current liablities

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127. What is a benefit of using a procurement card?

Procurement cards are used to identify those working in procurement

Procurement cards are a means to obtain free items

Procurement cards allow businesses to buy more than they can afford

Procurement cards reduce the amount of time and paperwork in procurement

Answer

Correct Answer: Procurement cards reduce the amount of time and paperwork in procurement

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128. If a requester insists on a rushed check to cover a mishap, what is the best method to handle this situation?

Honor the rushed check and forget about it

Put the rushed check aside with hopes that the requester will forget about it

With managerial support, deny the rushed check

Hide the check somewhere in the building

Answer

Correct Answer: With managerial support, deny the rushed check

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129. What is a secured creditor?

(None of these)

A creditor that has a legal right to the company's assets

A creditor that has a legal right to the company's liabilities

Answer

Correct Answer: A creditor that has a legal right to the company's assets

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130. The balance in Accounts Payable is decreased with a __________ entry.

credit

debit

Answer

Correct Answer: debit

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131. What three documents are included in a three-way match?

Expense Report, Invoice, and Balance Sheet

Balance sheet, Income Statement, and Cash flows

1099, W4, and Inventory report

Seller's invoice, Total Bill, and Contracting agreement

Vendor's invoice, Purchase order, and Receiving order

Answer

Correct Answer: Vendor's invoice, Purchase order, and Receiving order

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132. Why is the purchasing department critical to accounts payable?

The purchasing department is not important to accounts payable

The purchasing department is responsible for paying accounts payables salaries

The purchasing department sets the agreements made with a companies vendors

The purchasing department handles the accounting in accounts payable

Answer

Correct Answer: The purchasing department sets the agreements made with a companies vendors

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133. What does the acronym, “EDI” mean?

Experimental Data Interface

Executive Data Interface

External Data Interface

Electronic Data Interchange

Answer

Correct Answer: Electronic Data Interchange

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134. How should AP deal with check kiting?

Only accept checks for more than the amount of the transaction

Only accept checks for the exact amount of the transaction

Accept blank checks

Don't accept any checks

Answer

Correct Answer: Only accept checks for the exact amount of the transaction

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135. Which of the following is an example of a creditor?

A vendor

A person

A Supplier

(All of these)

Answer

Correct Answer: (All of these)

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136. What is the definition of working capital?

Current assets divided by current liabilities

Current liabilities divided by current assets

Current liabilities minus current assets

Current assets minus current liablities

Answer

Correct Answer: Current assets minus current liablities

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137. If a paycheck was automatically deposited, what was used to make said transaction?

An Automated Teller Machine

A mail carrying service

An Automated Clearing House (ACH)

The IRS

Answer

Correct Answer: An Automated Clearing House (ACH)

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138. What is another term for a supplier?

(None of these)

Vendor

Distributor

Answer

Correct Answer: Vendor

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139. If AP pays from a statement, what potential result could occur?

Theft

A duplicate payment

Embezzlement

Fraud

Answer

Correct Answer: A duplicate payment

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140. A company that pays 10% less by paying back what it is owed in a shorter time frame is called what?

Liability discount

Early payment discount

Credit savings

blank check discount

Answer

Correct Answer: Early payment discount

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141. If your company is offering your customers a 2/10 net 30 discount, what does this mean?

It means that if the bill is paid in 10 weeks, the company receives a 2 percent discount for life

It means that if the bill is paid in 10 hours, a 2 percent discount is given

It means that if the bill is paid in 10 days, a 2 percent discount is given

It means that if the bill is paid in 100 days, a 20 percent discount is given

Answer

Correct Answer: It means that if the bill is paid in 10 days, a 2 percent discount is given

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142. Why is automation of accounts payables a significant technological landmark?

Automation means that no employees are needed for accounts payable.

It can significantly reduce the amount of paper invoices.

Automation means that there is no need for an accounting department.

Answer

Correct Answer: It can significantly reduce the amount of paper invoices.

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143. What role does technology serve in the auditing of accounts payable?

Because invoices, expense reports, checks, and other supporting documents are digitized, the auditing process is simpler and more concise.

It makes the auditing process easier because all forms can be sent directly to the government.

Technology allows accounts payable work to be shifted to managers.

Technology allows a company to outsource its accounts payable to competitors.

Answer

Correct Answer: Because invoices, expense reports, checks, and other supporting documents are digitized, the auditing process is simpler and more concise.

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144. Suppliers are also referred to as __________.

vendors

debtors

Answer

Correct Answer: vendors

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145. True or False? A receiving report is essentially a document from a company that lists the goods it has received.

True

False

Answer

Correct Answer: True

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146. In the context of accounts payable, what is Net 30?

The amount of days buyers are given to try an item

Net 30 is trade credit specifying 30 days to be paid

The amount of days on an item warranty

A 30-day money back guarantee

Answer

Correct Answer: Net 30 is trade credit specifying 30 days to be paid

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147. What is an invoice?

A sale

An invoice is a bill

An order

A note

Answer

Correct Answer: An invoice is a bill

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148. Which of the following is true about a voucher used in accounts payable?

Can be used for travel

Can be used housing

(All of these)

Can be used for food

Answer

Correct Answer: (All of these)

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149. Which of the following are accounts payable in a household?

(All of these)

Magazine subscription

Cable bill

Power bill

Answer

Correct Answer: (All of these)

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150. True or False? The account payable for one company corresponds to another company's account receivable.

True

False

Answer

Correct Answer: True

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151. What is the definition of accounts payable?

The money from a business that it owed and is shown on the balance sheet as an asset.

(None of these)

The money from a business that it owes and is shown on the balance sheet as a liability.

Answer

Correct Answer: The money from a business that it owes and is shown on the balance sheet as a liability.

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152. What is the definition of a purchase order?

(None of these)

A document prepared by a company to show what exactly the company is selling to a supplier

A document prepared by a company to show what exactly the company is ordering from a supplier

Answer

Correct Answer: A document prepared by a company to show what exactly the company is ordering from a supplier

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153. True or False? A vendor invoice is sent from a vendor to a company for some services or goods rendered.

False

True

Answer

Correct Answer: True

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154. A reduced price for a certain product is called which of the following?

product slash

trade discount

cost of a good

Answer

Correct Answer: trade discount

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155. When are long term liabilites typically due?

More than 1 year

More than 1 month

More than 2 years

More than 6 months

Answer

Correct Answer: More than 1 year

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156. What are procurement cards used for?

They are used to take record of late payments

They are cards that purchasers can trade in lieu of cash

They are used for the purposes of smooth tax payment

They are similar to credit cards, issued only for the purpose of procurement

Answer

Correct Answer: They are similar to credit cards, issued only for the purpose of procurement

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157. Current liablities are usually due within what period of time?

Depends of the agreement

2 years

1 year

6 months

Answer

Correct Answer: 1 year

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158. What would be considered a rushed check?

A check that is produced quickly

A check that is cashed quickly

A check produced outside the normal production cycle

A check that is produced at a normal rate

Answer

Correct Answer: A check produced outside the normal production cycle

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159. Per annum means which of the following?

Per year

Per decade

Per month

Per day

Answer

Correct Answer: Per year

Note: This Question is unanswered, help us to find answer for this one

Accounts Payable MCQs | Topic-wise

MCQ on Basic Accounts Payable

General Accounts Payable MCQs

Accounts Payable Subjects

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Basic Accounts Payable MCQ

1. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?

2. What type of people does the Accounts Payable interface with most often?

3. Why would a company choose to invoice weekly rather than monthly?

4. What is Accounts Payable aging report?

5. What is the difference between Accounts Payable and Accounts Receivable?

6. A Trial Balance is a list of all accounts and their ending balances. Place the following accounts in the order they would appear on a properly prepared Trial Balance: Sales Revenue, Accounts Payable, Land and Rent Expense.

7. How will you track the deposits that clients pay to the vendors?

8. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?

9. Where do you record the payment terms for the money that a client owes to a vendor?

10. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?

11. Accounts Payable is _________.

12. An Invoice statement is provided __________________

13. Why are per diem's used in lieu of having employees detail all actual spending for meals?

14. Which of the following is not an important step before approving a payment?

15. What is the last date for filing claims for VAT refunds in all countries?

16. Using the following information, compute total liabilities. Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.

17. Recording expenditure made, but not yet paid, to a vendor is an example of:

18. Excess payment made to the supplier will appear as a _____..

19. What is Accounts Payable Turnover Ratio?

20. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:

21. Under which head does VAT reflect in the Balance Sheet?

22. Under which head does VAT reflect in the Balance Sheet?

23. What is the standard sales tax rate used?

24. What should be submitted to the VAT authorities to obtain a refund of VAT?

26. When are sales & use taxes due?

27. How often should Payables be entered in the accounting system?

28. Who typically calculates the tax liability to be paid?

29. Who is to be covered by VAT (Value Added Tax)?

30. Which of the following will not result in the recognition of a deferred tax asset?

31. Which of the following accounts has a debit balance?

32. Among the items reported on Cord, Inc.'s income statement for the year ended December 31, 2007 were the following:Amortization of goodwill acquired in 1992 $10,000 Insurance premium on the life of an officer. $5,000Cord is the owner and beneficiary.Temporary differences amount to:

33. What steps are taken before approving an invoice for payment?

34. What is VAT?

35. What are the debit memo & the credit memo in Payables?

37. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for

38. What level of detail should invoices contain?

39. When a deposit is used as payment, what is the journal entry from the customer's (the person who made the deposit) perspective?

40. A good example of a typical prepaid expense is:

41. 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

42. A bill is a form on which you record details of _________ .

43. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?

45. Which form is used to reimburse an individual for Travel and Entertainment expenses?

46. Which of the following methods can be used to value inventory in QuickBooks?

47. Companies accrue expenses in order to comply with which accounting principle?

49. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?

51. Of the following, which is a typical situation involving a deposit?

53. Accounts Payable affect net income.

54. Can you collect and remit tax for a state even if not required to do so?

56. At what stage in the Accounts Payable process is cash affected?

57. Why is it important for companies to manage their Accounts Payable?

58. When are invoices treated as having been paid short?

59. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:

61. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as ---------------- .

62. Under generally accepted accounting principles, which approach is used to determine income tax expense?

64. Streamlined Sales Tax is a national effort by which of the following?

65. What is the difference between billable and non-billable expenses?

66. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:

67. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:

68. What does the acronym EFT stand for?

69. An open credit is __________.

70. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.

72. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?

73. Who are the parties to a bill of exchange?

74. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor's accounts?

75. Who can use a company's Travel & Entertainment Cards, though the liability lies with the employees?

76. On January 1, 2007, Al's Cleaning Services received an advance payment of $3000 for three months of cleaning services. The $3000 was recorded as Unearned Cleaning Revenue because the services had not yet been provided. Which of the following will include the January 31, 2007 adjustment entry?

77. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?

78. Accrual Basis means __________.

79. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:

80. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?

81. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as

82. 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?

83. What is the Journal Entry for "The Company purchased $6,000 worth of merchandise on credit"?

85. How are prepaid expenses typically tracked?

86. Debit memos are required for_______.

87. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.

88. How are the A/P journal entries typically created?

89. What are the steps involved in setting up QuickBooks to track 1099 information?

90. Rush checks may also be called _____

32.
Among the items reported on Cord, Inc.'s income statement for the year ended December 31, 2007 were the following:

Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to: