The acid-test ratio is also called the quick ratio.

Internal control policies and procedures have limitations not including:

A company borrowed $10,000 by signing a six-month promissory note at 5% interest. The amount of interest to be paid at maturity is $25.

Sales discounts has a normal debit balance because it decreases Sales, which has a normal credit balance.

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan’s June bank statement shows $18,361 on deposit in the bank. Ryan’s comparison of the bank statement to its cash account revealed the following:       Deposit in transit 1,450 Outstanding checks 837 Additionally, a $29 check written and recorded by the company correctly was recorded by the bank as a $92 deduction. The adjusted cash balance per the bank records should be:

Gideon Company uses the direct write-off method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited to close the accounts during the closing process.

Morgan, Inc. uses a perpetual inventory system and the net method of recording purchases. On May 12, a merchandise purchase of $15,000 was made on credit, 2/10, n/30. The journal entry to record this purchase is:

A retailer buys products from manufacturers and sells them to wholesalers.

Most large thefts occur from payment of fictitious invoices, which makes control of cash disbursements especially important for companies.