Saudi Electronic University Accounting Solutions Paper

• Which of the following is a good system of internal control:
  A. Urges adherence to prescribed managerial policies
  B. Insures profitable operations
  C. Eliminates the need for an audit
  D. Requires the use of non-computerized systems
  E. Is not necessary if the company uses a computerized system
• When, two clerks share same cash register, which one of the internal control principle is violated?
  A. Establish responsibilities
  B. Maintain adequate records
  C. Insure assets
  D. Bond key employees
  E. Apply technological controls
• At end of the day, the cash register’s record shows $155, but the count of cash in the cash register is $150. The correct entry to record the cash sales for the day is:
  A. 1.
  

  Cash	150
  Sales		150

  B.

  Cash	150
  Cash over and short	5
  Sales		155

  C.

  Cash	155
  Sales		155

  D.

  Cash	155
  Sales		150
  Cash over and short		5

• A company receives a 10%, 60-day note for $2,400. The total interest due upon the maturity date is:
  A. $37.50
  B. $40.00
  C. $60.00
  D. $240
  E. $87.50

• Khaled’s company needs to replenish a $500 petty cash fund. Its petty cash box has $70 cash and petty cash receipts of $420. The journal entry to replenish the fund includes:
• A.A debit to Cash for $70.B.A credit to Cash for $70.C.A debit to Cash Over and Short for$10D.A credit to Cash Over and Shortfor $10.E.A credit to Petty Cash for $420
• A machine that originally had an estimated useful life of 8 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
  A. 2 years
  B. 5 years
  C. 7 years
  D. 12 years
  E. 10 years
• Which of the following is an Amortization:
  A. Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life
  B. Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use
  C. Is the process of allocating the cost of natural resources to periods when they are consumed
  D. Is an accelerated form of expensing an asset’s cost
• Khaled’s company had a machine destroyed by fire. The machine originally cost $120,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize:
  A. A loss of $25,000
  B. A gain of $25,000
  C. A loss of $65,000
  D. A gain of $30,000
  E. A gain of $90,000
• Land improvements are:
  A. Assets that increase the usefulness of land and like land, are not depreciated
  B. Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation
  C. Included in the cost of the land account
  D. Expensed in the period incurred
• ALI purchased merchandise from SAAD on October 17 of the current year. SAAD accepted ALI’S $10,000, 90-day, 10% note as payment. What entry should SAAD make on January 15 of the next year when the note is paid?
  A.

• Notes Receivable	10,000
  Interest Receivable	250
  Sales		10,250

B.

C.

D.