Kuni Automotive Controller/Office Manager Certification Test

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Amclean

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Quizzes Created: 1 | Total Attempts: 93

Questions: 65 | Attempts: 93 | Updated: Mar 20, 2023

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Questions and Answers

1.

Which of the following is appropriately capitalized as a fixed asset?
- A.
  
  HVAC component repair (major component of the unit that affects functionality)
- B.
  
  Re-roofing of the dealership facility
- C.
  
  I-Phones (bulk purchase of 4 at $595 each)
- D.
  
  Special model-year tools for the shop
Correct Answer
D. Special model-year tools for the shop

Explanation
Special model-year tools for the shop is appropriately capitalized as a fixed asset because it is a long-term asset that is used in the operations of the business and is expected to provide economic benefits over a period of time. These tools are not consumed or sold in the normal course of business, but rather they are used repeatedly in the shop to generate revenue. Therefore, they meet the criteria for being classified as a fixed asset.

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2.

Which of the following statements regarding fixed assets is most accurate?
- A.
  
  The Internal Book is the only book that needs to be reviewed for accuracy and completeness against the current Depreciation Guidelines because it is what gets used for posting in the general ledger.
- B.
  
  All books (Internal, Tax, AMT, State (when applicable) and State AMT (when applicable)) are equally important and must all receive thorough review.
- C.
  
  Estimated useful lives are always consistent between the Internal Book and the Tax Book in FAS.
- D.
  
  Regarding depreciation methods, MF200 is the same as MA200 so it doesn’t matter which one you pick when you set up a new asset.
Correct Answer
B. All books (Internal, Tax, AMT, State (when applicable) and State AMT (when applicable)) are equally important and must all receive thorough review.

Explanation
The correct answer is that all books (Internal, Tax, AMT, State, and State AMT) are equally important and must all receive thorough review. This means that all books need to be reviewed for accuracy and completeness against the current Depreciation Guidelines, not just the Internal Book. This ensures that all financial statements and reporting are accurate and comply with relevant regulations and guidelines.

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3.

Customer deposits on vehicles are most appropriately recorded in which of the following accounts?
- A.
  
  Contracts-in-Transit or Vehicle Receivables, depending on the nature of the deposit
- B.
  
  In a separate general ledger account that appropriately relates to a current liability line on the financial statement
- C.
  
  Combined in Accounts Payable, set up under separate control numbers
- D.
  
  Prepaid vehicles, as a credit
Correct Answer
B. In a separate general ledger account that appropriately relates to a current liability line on the financial statement

Explanation
Customer deposits on vehicles should be recorded in a separate general ledger account that appropriately relates to a current liability line on the financial statement. This ensures that the deposit is properly accounted for as a liability until it is either refunded or applied towards the purchase of the vehicle. By recording it separately, it is easier to track and reconcile the deposit amounts.

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4.

Which of the following best describes the number of days outstanding at which CIT and Vehicle Receivables must be reserved as bad debts, assuming there is no event which would cause immediate write-off?
- A.
  
  5 days
- B.
  
  10 days
- C.
  
  30 days
- D.
  
  45 days
Correct Answer
C. 30 days

Explanation
The correct answer is 30 days. This means that after a customer's payment is due, the company waits for 30 days before considering the debt as bad and reserving it as a bad debt. This allows for a reasonable amount of time for the customer to make the payment before it is considered uncollectible.

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5.

Which of the following responsibilities would not be appropriate for the warranty administrator to handle from a segregation of duties standpoint?
- A.
  
  Posting of the credits as received from the manufacturer
- B.
  
  Corresponding with the factory for collection of any differences between claims submitted and claims paid
- C.
  
  Warranty schedule review and journal entry voucher preparation for any differences between claims submitted and claims paid
- D.
  
  Posting of any necessary journal entries to write off rejected claims
- E.
  
  Both a and d above are not appropriate duties for the warranty administrator
Correct Answer
E. Both a and d above are not appropriate duties for the warranty administrator

Explanation
The warranty administrator should not be responsible for both posting credits received from the manufacturer and posting journal entries to write off rejected claims. This is because these two tasks involve handling financial transactions and making adjustments to the company's financial records, which should be segregated to prevent errors or fraud.

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6.

Who is primarily responsible for submission of RDR’s?
- A.
  
  Finance Managers
- B.
  
  Sales Managers
- C.
  
  Accounting Department
Correct Answer
C. Accounting Department

Explanation
The accounting department is primarily responsible for the submission of RDR's. This is because RDR's (Revenue Deduction Reports) are financial documents that track and report revenue deductions. The accounting department is responsible for maintaining accurate financial records and ensuring that all necessary reports are submitted in a timely manner. Finance managers may oversee the overall financial operations of a company, but the specific task of submitting RDR's falls under the purview of the accounting department. Sales managers, on the other hand, are typically responsible for managing sales teams and achieving sales targets, and would not typically be directly responsible for submitting RDR's.

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7.

A factory incentive should be appropriately recorded as a reduction of cost of sales if it is (choose one):
- A.
  
  Dependent on customer satisfaction
- B.
  
  Tied to facility compliance
- C.
  
  Solely tied to hitting vehicle volume targets
- D.
  
  Dependent on other non-volume performance-related items
Correct Answer
C. Solely tied to hitting vehicle volume targets

Explanation
A factory incentive should be appropriately recorded as a reduction of cost of sales if it is solely tied to hitting vehicle volume targets. This means that the incentive is directly linked to the number of vehicles sold by the factory. It is not dependent on customer satisfaction, facility compliance, or other non-volume performance-related items. Only when the incentive is solely based on achieving vehicle volume targets can it be recorded as a reduction of cost of sales.

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8.

True or False: Flooring interest credits should be set up as deferred credits when a vehicle is purchased into inventory and should be recognized into income upon sale of the vehicle to the end customer.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When a vehicle is purchased into inventory, flooring interest credits are set up as deferred credits because they represent an expense that has been paid in advance. These credits are recognized as income upon the sale of the vehicle to the end customer because at that point, the expense has been incurred and it is appropriate to recognize the corresponding revenue. Therefore, the statement that flooring interest credits should be set up as deferred credits when a vehicle is purchased into inventory and recognized into income upon sale of the vehicle to the end customer is true.

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9.

True or False: Differences between factory incentive credit received and the corresponding factory incentive receivable balance per the factory incentive schedule should be written off to delivery expense if the write off occurs in a month subsequent to the corresponding vehicle sale.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Differences between factory incentive credit received and the corresponding factory incentive receivable balance per the factory incentive schedule should be written off to delivery expense if the write off occurs in a month subsequent to the corresponding vehicle sale. This means that if there is a difference between the credit received from the factory for incentives and the balance recorded in the factory incentive schedule, and this difference is identified after the vehicle sale has occurred, it should be written off as a delivery expense.

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10.

On June 20, the dealership sells $1200 of parts to an approved customer on credit. On July 28, it becomes evident that collection of this receivable is unlikely. As of July 31, the receivable is aged 41 days. Which of the following statements is true?
- A.
  
  The receivable should not be reserved as a bad debt as of July month-end because it has not yet reached the 90-day aging guideline.
- B.
  
  The receivable should be partially reserved as of July month-end.
- C.
  
  The receivable should be reserved in total as of July month-end.
Correct Answer
C. The receivable should be reserved in total as of July month-end.

Explanation
Based on the information provided, the receivable has aged 41 days as of July 31. Typically, a receivable is considered uncollectible and should be reserved as a bad debt if it has not been paid within 90 days. Since the receivable has already aged 41 days and it is unlikely to be collected, it should be reserved in total as of July month-end.

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11.

Which of the following best describes when a new vehicle should be stocked into inventory?
- A.
  
  We should always record new vehicles into inventory as they physically arrive at the dealership, so the stock-in date should always match the bill of lading.
- B.
  
  We should always record new vehicles into inventory 10 days in advance of the invoice date, as this is an acceptable estimation of when the vehicle will leave the manufacturer in an FOB shipping point situation.
- C.
  
  We should record new vehicles into inventory when ownership transfers to the dealership, which may differ by manufacturer.
Correct Answer
C. We should record new vehicles into inventory when ownership transfers to the dealership, which may differ by manufacturer.

Explanation
The correct answer is "We should record new vehicles into inventory when ownership transfers to the dealership, which may differ by manufacturer." This is because the timing of when ownership transfers from the manufacturer to the dealership can vary depending on the specific manufacturer's policies and procedures. It is important to accurately record the inventory when ownership has officially transferred to ensure proper tracking and accounting of the vehicles.

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12.

The dealership conducts a new vehicle dealer trade with a nearby dealer. The transportation cost to get the incoming vehicle to our lot was $225. In addition, the vehicle we are receiving on the dealer trade has pinstripes whereas the vehicle we’re trading out does not. How should the transportation cost and the dealer trade difference related to the pinstriping be accounted for on our books?
- A.
  
  Record the transportation cost to the inventory cost of the incoming vehicle; record the pinstriping cost difference to delivery expense.
- B.
  
  Record both items to delivery expense.
- C.
  
  Record both items as additions to the inventory cost of the incoming vehicle.
Correct Answer
A. Record the transportation cost to the inventory cost of the incoming vehicle; record the pinstriping cost difference to delivery expense.

Explanation
The transportation cost to get the incoming vehicle to our lot should be recorded as part of the inventory cost of the incoming vehicle. This is because the cost of transportation is directly related to acquiring the vehicle and getting it ready for sale. On the other hand, the pinstriping cost difference should be recorded as a delivery expense. This is because it is a cost associated with making the necessary changes to the vehicle being traded out, and it does not directly contribute to the inventory cost of the incoming vehicle.

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13.

Which of the following is true with regard to chrome wheels?
- A.
  
  Chrome wheels installed on a showroom unit that never leave the showroom must be added to the cost of the vehicle on which they were installed.
- B.
  
  Chrome wheels installed on a vehicle inventory unit while in inventory must always be added to the vehicle cost.
- C.
  
  Chrome wheels installed and driven around off the dealership premises on a demo vehicle must be added to the cost of the vehicle on which they were installed.
Correct Answer
C. Chrome wheels installed and driven around off the dealership premises on a demo vehicle must be added to the cost of the vehicle on which they were installed.

Explanation
Chrome wheels that are installed and driven around off the dealership premises on a demo vehicle must be added to the cost of the vehicle on which they were installed. This means that the cost of the chrome wheels should be included in the total cost of the vehicle when calculating its value.

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14.

Which of the following are not appropriate additions to the cost of a new vehicle in inventory?
- A.
  
  Gas
- B.
  
  Gift bags
- C.
  
  Removable accessories (i.e. bike racks)
- D.
  
  Advertising photos
- E.
  
  None of the above would be appropriate additions to vehicle cost
Correct Answer
E. None of the above would be appropriate additions to vehicle cost

Explanation
Gas, gift bags, removable accessories (i.e. bike racks), and advertising photos are not appropriate additions to the cost of a new vehicle in inventory. These items are not directly related to the cost of the vehicle itself and should not be included when calculating the inventory value. The cost of a new vehicle in inventory should only include the purchase price of the vehicle and any necessary fees or expenses directly related to acquiring the vehicle.

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15.

True or False: The New Vehicle Inventory schedule must be reconciled to the final physical inventory before calculation of new vehicle LIFO is started.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The New Vehicle Inventory schedule must be reconciled to the final physical inventory before calculation of new vehicle LIFO is started. This is because the LIFO (Last In, First Out) method assumes that the most recently acquired inventory is the first to be sold. Therefore, it is important to ensure that the inventory schedule accurately reflects the actual physical inventory to calculate the LIFO accurately.

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16.

True or False: In dealer trade transactions, ownership transfer is deemed to occur on the date of the buyer's order, regardless of the vehicle's physical location.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
In dealer trade transactions, ownership transfer is deemed to occur on the date of the buyer's order, regardless of the vehicle's physical location. This means that even if the vehicle is not physically present at the buyer's location, the ownership is still transferred to the buyer on the date of the order.

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17.

True or False: Vehicle sales to employees should be recorded as regular retail sales.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Vehicle sales to employees should be recorded as regular retail sales because they involve the purchase of a vehicle by an individual, regardless of whether they are an employee or not. The transaction is still considered a retail sale because it involves the sale of a product to an end consumer. Therefore, it should be recorded in the same way as any other retail sale.

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18.

True or False: Approved wholesalers may be allowed to take delivery of a vehicle as long as they have good credit history and agree to pay within 5 business days.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Approved wholesalers may not be allowed to take delivery of a vehicle solely based on their credit history and agreement to pay within 5 business days. There may be additional criteria or requirements that need to be met in order for wholesalers to be eligible for vehicle delivery.

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19.

Which of the following items must be confirmed before a vehicle RDR can be submitted?
- A.
  
  Customer name must match between the RDR and the car deal
- B.
  
  The vehicle must have been delivered to the customer
- C.
  
  The date of the RDR must be within the same month the vehicle was sold
- D.
  
  All of the above must be confirmed prior to RDR submission
Correct Answer
D. All of the above must be confirmed prior to RDR submission

Explanation
Before a vehicle RDR (Retail Delivery Report) can be submitted, the following items must be confirmed: the customer name must match between the RDR and the car deal, the vehicle must have been delivered to the customer, and the date of the RDR must be within the same month the vehicle was sold. All of these conditions must be met before the RDR can be submitted.

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20.

As of October 31, the dealership has one pre-owned unit aged 63 days with a cost of $14,500, one pre-owned unit aged 95 days with a cost of $24,000, and one pre-owned unit aged 125 days with a cost of $23,000. All of these units are brands "other" than the franchise of the dealership and all of these units remain in used vehicle inventory on October 31^st. Under the revised “Used Vehicle Write-Down Policy”, what would be the month-to-date income statement impact for the write-down of these units on the October financial statement? NOTE: Assume none of these vehicles were purchased at auction.
- A.
  
  $9,400
- B.
  
  $28,300
- C.
  
  $22,350
- D.
  
  $29,250
Correct Answer
C. $22,350
21.

Which of the following are true with regard to credit and debit card purchases on vehicle sales transactions? (select all that apply)
- A.
  
  Limits may not be imposed on how much a customer can charge
- B.
  
  Credit card payments on vehicle purchases must be disclosed on the sales contract if the contract allows for such disclosure
- C.
  
  The credit card does not need to be presented and swiped, phone-in credit card information is acceptable
- D.
  
  Fees associated with credit card transactions on vehicle purchases may not be charged to the customer and must instead be recorded to cost of sales as the car deal is posted.
Correct Answer(s)
A. Limits may not be imposed on how much a customer can charge
B. Credit card payments on vehicle purchases must be disclosed on the sales contract if the contract allows for such disclosure
D. Fees associated with credit card transactions on vehicle purchases may not be charged to the customer and must instead be recorded to cost of sales as the car deal is posted.

Explanation
The first statement is true because there are no limits on how much a customer can charge on a credit or debit card for vehicle sales transactions. The second statement is also true because if the sales contract allows for it, credit card payments must be disclosed. The fourth statement is true because fees associated with credit card transactions cannot be charged to the customer and must be recorded as part of the cost of sales.

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22.

Which of the following is NOT true with regard to the company’s Intercompany Vehicle Sales policy?
- A.
  
  Selling dealerships have until a used vehicle is 90 days aged to determine whether it will be sold to another Kuni dealership and to complete the sale.
- B.
  
  Intercompany vehicle sales must be valued at MMR (Manheim Market Report) value, as obtained using V-Auto, at the selling dealership’s location.
- C.
  
  A printout supporting the V-Auto MMR value must be attached to the buyer’s order and must be maintained in both the deal jacket of the selling dealership and the inventory jacket of the purchasing dealership.
- D.
  
  For accounting purposes, the transaction is considered a sale on the date indicated on the buyer's order which is signed and dated by both dealerships.
Correct Answer
B. Intercompany vehicle sales must be valued at MMR (Manheim Market Report) value, as obtained using V-Auto, at the selling dealership’s location.

Explanation
The statement "Intercompany vehicle sales must be valued at MMR (Manheim Market Report) value, as obtained using V-Auto, at the selling dealership’s location" is NOT true with regard to the company's Intercompany Vehicle Sales policy.

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23.

True or False: On intercompany vehicle sales, vehicle aging starts over for the purchasing dealership as of the date of the signed buyer’s order.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
On intercompany vehicle sales, vehicle aging starts over for the purchasing dealership as of the date of the signed buyer's order. This means that the purchasing dealership considers the vehicle as new inventory and the age of the vehicle is calculated from the date of the signed buyer's order, not from the original date of the vehicle's production or registration.

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24.

True or False: If a deferred down payment is disclosed as a cash down payment on the sales contract, the dealership must have the cash before the contract can be submitted for funding.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
If a deferred down payment is disclosed as a cash down payment on the sales contract, it means that the dealership must have the cash in hand before the contract can be submitted for funding. This is because a deferred down payment refers to a payment that is not made immediately, but rather at a later date. Therefore, if it is disclosed as a cash down payment on the sales contract, it implies that the dealership must have the cash before the contract can proceed.

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25.

In a situation where the dealership purchases a factory part from a competing dealer (instead of directly from the manufacturer) and the price of that part is $210 when purchased from the competitor whereas it would have cost $200 if purchased directly from the manufacturer, how should the $10 price difference be accounted for?
- A.
  
  The part should be added into parts inventory at the actual price of $210, regardless of the factory cost
- B.
  
  The part should be added into parts inventory at $200 (the factory cost), with the additional $10 being recorded to the Parts Inventory Adjustment account
- C.
  
  Either way is fine, there is no consequential effect
Correct Answer
B. The part should be added into parts inventory at $200 (the factory cost), with the additional $10 being recorded to the Parts Inventory Adjustment account

Explanation
The correct answer is that the part should be added into parts inventory at $200 (the factory cost), with the additional $10 being recorded to the Parts Inventory Adjustment account. This is because the dealership should account for the actual cost of the part, which is $200, in their inventory. The $10 difference should be recorded separately to accurately reflect the cost discrepancy and allow for proper tracking and analysis of inventory adjustments.

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26.

True or False: If bin cycle counts are completed on a regular basis by the parts department throughout the year, the accounting department doesn’t need to perform independent bin cycle counts.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement is false because even if bin cycle counts are completed by the parts department, it is still necessary for the accounting department to perform independent bin cycle counts. This is because the accounting department needs to ensure the accuracy and reliability of the inventory records and financial statements. Independent bin cycle counts provide an additional level of verification and help detect any discrepancies or errors in the inventory records.

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27.

True or False: As parts are returned to the manufacturer, a receivable must be set up in accounting and should remain on the books until the associated parts return credit is received.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
When parts are returned to the manufacturer, a receivable must be set up in accounting because the manufacturer owes the customer a credit for the returned parts. This receivable should remain on the books until the associated parts return credit is received, indicating that the manufacturer has fulfilled their obligation to the customer. Therefore, the statement is true.

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28.

True or False: On a monthly basis, the Service Manager must take a work-in-process physical inventory and must submit a signed copy of the Open RO report to the Controller/Office Manager. The Controller/Office Manager should physically observe and verify any items aged over 10 days on the Open RO Report.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true. The Service Manager is responsible for conducting a monthly physical inventory of work-in-process and submitting a signed copy of the Open RO report to the Controller/Office Manager. In addition, the Controller/Office Manager should physically observe and verify any items that have been aged over 10 days on the Open RO report.

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29.

Which one of the following should NOT be classified as a prepaid expense?
- A.
  
  Payment of February’s rent in January
- B.
  
  Deposits for leases (i.e. final month’s rent)
- C.
  
  Payment of insurance in December for coverage over the following calendar year
- D.
  
  Purchase of forms
Correct Answer
D. Purchase of forms

Explanation
The purchase of forms should not be classified as a prepaid expense because it is not an expense that is paid in advance for future use. Prepaid expenses are typically expenses that are paid in advance and then gradually used or consumed over a specific period of time. Examples of prepaid expenses include rent paid in advance, deposits for leases, and insurance payments made in advance for coverage in the future. However, the purchase of forms is a one-time expense and does not fit the criteria of a prepaid expense.

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30.

Which of the following must be completed in establishing business with a new vendor?
- A.
  
  Vendor Approval Application
- B.
  
  Completed Form W-9
- C.
  
  Certificate of Liability Insurance
- D.
  
  Current Workers’ Compensation Certificate
- E.
  
  Completed Customer Safeguarding Acknowledgment
- F.
  
  Reseller’s Permit
- G.
  
  All of the above, when applicable to the vendor being established
Correct Answer
G. All of the above, when applicable to the vendor being established

Explanation
In order to establish business with a new vendor, all of the above mentioned requirements must be completed, when applicable to the vendor being established. This includes submitting a Vendor Approval Application, providing a Completed Form W-9, obtaining a Certificate of Liability Insurance, providing a Current Workers' Compensation Certificate, completing a Customer Safeguarding Acknowledgment, and obtaining a Reseller's Permit, if applicable. These requirements ensure that the vendor is approved, has the necessary insurance coverage, and is compliant with legal and regulatory obligations.

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31.

True or False: All department managers must submit open invoices to the Accounting Department by the end of the 2^nd working day following the end of the month.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
All department managers are required to submit their open invoices to the Accounting Department by the end of the 2nd working day following the end of the month. This implies that there is a set deadline for the submission of open invoices, and it is mandatory for all department managers to adhere to this deadline.

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32.

True or False: Because we outsource our payroll processing to ADP, we no longer need to reconcile our payroll tax accounts and quarterly tax filings.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Outsourcing payroll processing to ADP does not eliminate the need to reconcile payroll tax accounts and file quarterly tax filings. While ADP may handle the payroll processing, it is still the responsibility of the company to ensure that payroll taxes are accurately calculated, withheld, and reported to the appropriate tax authorities. Reconciliation and filing of tax accounts are necessary to ensure compliance with tax laws and regulations. Therefore, the statement that outsourcing payroll processing eliminates the need for reconciliation and tax filings is false.

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33.

True or False: Business customer’s wishing to establish charge accounts with our parts and/or service departments must complete the Preferred Customer Credit Application and Contract, which must be signed by both the Dealership Controller/Office Manager and the General Manager.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Business customers who want to establish charge accounts with the parts and/or service departments must complete the Preferred Customer Credit Application and Contract. This application and contract need to be signed by both the Dealership Controller/Office Manager and the General Manager. This indicates that the statement is true.

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34.

Which of the following individuals should NOT have access to make credit limit changes in the DMS system for parts and service credit customers?
- A.
  
  The A/R Administrator
- B.
  
  The Dealership Controller
- C.
  
  The Parts Manager
Correct Answer
C. The Parts Manager

Explanation
The Parts Manager should not have access to make credit limit changes in the DMS system for parts and service credit customers because their role primarily focuses on managing the inventory and ensuring efficient operations in the parts department. Granting them access to make credit limit changes could potentially lead to conflicts of interest or misuse of customer credit information.

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35.

Which of the following cash disbursement methods require dual signature?
- A.
  
  Wire transfer
- B.
  
  Electronic funds transfer (EFT)
- C.
  
  Dealership check
- D.
  
  All of the above
Correct Answer
D. All of the above

Explanation
All of the above cash disbursement methods require dual signature. Dual signature is a security measure that ensures two authorized individuals must sign off on a transaction before it can be completed. This helps prevent fraud and unauthorized disbursements. Wire transfer, electronic funds transfer (EFT), and dealership checks are all forms of cash disbursement methods that involve the transfer of funds, and therefore, require dual signature for added security.

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36.

True/False: If the dealership issues paper gift certificates, they must be consistently formatted, must clearly state an expiration date of one year, and must be reclassified to unclaimed property after one year.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
According to the statement, if the dealership issues paper gift certificates, they must be consistently formatted, clearly state an expiration date of one year, and be reclassified to unclaimed property after one year. This implies that the statement is true.

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37.

To be considered a properly completed parts inventory reconciliation, there must be how many signatures documented on the reconciliation and these signatures must be from which employees?
- A.
  
  One; Controller/Office Manager
- B.
  
  Two; Controller/Office Manager, Parts Manager
- C.
  
  Two; Parts Manager, General Manager
- D.
  
  Three; Controller/Office Manager, Service Manager, Parts Manager
- E.
  
  Three; Parts Manager, General Manager, Controller/Office Manager
Correct Answer
E. Three; Parts Manager, General Manager, Controller/Office Manager

Explanation
A properly completed parts inventory reconciliation requires three signatures from the Parts Manager, General Manager, and Controller/Office Manager. These signatures ensure that the inventory reconciliation is verified and approved by key employees in different roles within the organization.

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38.

True or False: As long as the Controller/Office Manager and General Manager signatures are documented on the Kuni Book Table of Contents, there is no need to duplicate them on the enclosed bank reconciliation(s).
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The correct answer is False. The explanation is that even if the Controller/Office Manager and General Manager signatures are documented on the Kuni Book Table of Contents, it is still necessary to duplicate them on the enclosed bank reconciliation(s). This ensures that there is a clear record of their approval and verification of the bank reconciliation(s).

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39.

True or False: It's ok to allow a vendor to work on the dealership lot as long they promise to obtain a certificate of liability of insurance listing the dealership as an Additional Named Insured.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Allowing a vendor to work on the dealership lot solely based on their promise to obtain a certificate of liability insurance listing the dealership as an Additional Named Insured is not enough. It is important to actually obtain the certificate of insurance and review it to ensure that the vendor has adequate coverage and that the dealership is properly protected. Simply relying on a promise without verifying the insurance coverage can expose the dealership to potential risks and liabilities. Therefore, the statement is false.

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40.

Which of the following vendors are required to have a certificate of liability insurance on file?
- A.
  
  Landscaping Service
- B.
  
  Hazardous Waste Removal Service
- C.
  
  Janitorial Service
- D.
  
  All of the Above
Correct Answer
D. All of the Above

Explanation
All of the above vendors are required to have a certificate of liability insurance on file. This is because all three types of services mentioned - landscaping, hazardous waste removal, and janitorial services - involve potential risks and liabilities. Having liability insurance helps protect both the vendor and the client in case of any accidents, damages, or injuries that may occur during the provision of these services. Therefore, it is necessary for these vendors to have a certificate of liability insurance on file.

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41.

The Total Investment value from Line 1 of your parts inventory reconciliation should agree to which Reynolds generated report?
- A.
  
  3313
- B.
  
  2248
- C.
  
  2213
- D.
  
  2257
- E.
  
  None of the Above
Correct Answer
C. 2213

Explanation
The Total Investment value from Line 1 of the parts inventory reconciliation should agree to the Reynolds generated report with the code 2213.

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42.

Returned checks should be included in the Allowance for Doubtful Accounts balance when aged how many days?
- A.
  
  5 business days
- B.
  
  30 days
- C.
  
  15 days
- D.
  
  Immediately
Correct Answer
D. Immediately

Explanation
Returned checks should be included in the Allowance for Doubtful Accounts balance immediately because they indicate that the customer's payment has been rejected or cannot be processed. Including them in the allowance balance ensures that the company is accounting for potential bad debts and reflecting the true value of accounts receivable. Delaying the inclusion of returned checks in the allowance balance could result in an inaccurate representation of the company's financial position.

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43.

True or False: A contract in transit balance is aged 33 days on the last day of the current month. You receive payment in full on day 2 of the following month, prior to completing the month end close process. The 33-day aged balance should be reserved for when completing the current month's financial statement.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true because the contract in transit balance, which is aged 33 days on the last day of the current month, should be reserved for when completing the current month's financial statement. This means that even though payment is received in full on day 2 of the following month, the aged balance should still be accounted for in the current month's financial statement.

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44.

True or False: If a journal entry is prepared by the dealership Controller/Office Manager, it must be approved by the General Manager.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
In a dealership, the Controller/Office Manager is responsible for preparing journal entries, which are financial records of transactions. However, to ensure accuracy and accountability, these entries must be approved by the General Manager, who holds overall authority and responsibility for the dealership's operations. This approval process helps to maintain financial integrity and prevent any potential errors or fraudulent activities. Therefore, the statement that a journal entry prepared by the dealership Controller/Office Manager must be approved by the General Manager is true.

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45.

True or False: It is appropriate for the dealership Service Manager to have access to the Parts Department as long as approval has been obtained from a parts employee.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
It is not appropriate for the dealership Service Manager to have access to the Parts Department, even if approval has been obtained from a parts employee. The Service Manager should not have direct access to the Parts Department in order to maintain separation of duties and prevent any potential conflicts of interest or misuse of resources.

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46.

True or False: As long as all journal entries for the month are accounted for, there is no need to ensure that the journal entry numbers assigned are numerical.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
It is important to assign numerical journal entry numbers to ensure proper organization and tracking of the entries. This allows for easier identification and retrieval of specific entries when needed.

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47.

True or False: As long as the receipt/invoice has been defaced or somehow marked to prevent duplicate submission for reimbursement, a photocopy of the receipt/invoice will suffice as adequate disbursement backup.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The statement is false because even if a receipt or invoice has been defaced or marked to prevent duplicate submission, a photocopy of it is not considered adequate disbursement backup. In order for a receipt or invoice to be considered valid for reimbursement, it needs to be in its original form and not altered in any way. A defaced or marked receipt/invoice may raise doubts about its authenticity, which is why a photocopy would not be accepted as sufficient evidence of a valid transaction.

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48.

Which statement must be reconciled by the end of each month and always before completion of a parts physical inventory count?
- A.
  
  Customer
- B.
  
  Factory/Manufacturer
- C.
  
  Vendor
Correct Answer
B. Factory/Manufacturer

Explanation
The statement that must be reconciled by the end of each month and always before completion of a parts physical inventory count is the statement from the Factory/Manufacturer. This is because the Factory/Manufacturer is responsible for producing and maintaining inventory of the parts, so it is important to reconcile their statement to ensure accuracy and completeness of the inventory count.

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49.

The dealership parts inventory should be fully cycle-counted how many times per year by Parts Department employees?
- A.
  
  One
- B.
  
  Two
- C.
  
  Three
- D.
  
  Four
Correct Answer
D. Four

Explanation
The dealership parts inventory should be fully cycle-counted four times per year by Parts Department employees. This means that the inventory should be checked and counted four times annually to ensure accuracy and prevent any discrepancies. This frequent cycle counting helps in maintaining an up-to-date inventory record and allows for better management of parts stock.

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50.

True or False: When reserved for as bad debts, receivables should be reserved for net of any credits or discounts.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Kuni Automotive Controller/Office Manager Certification Test

Which of the following is appropriately capitalized as a fixed asset?

Which of the following statements regarding fixed assets is most accurate?

Customer deposits on vehicles are most appropriately recorded in which of the following accounts?

Which of the following best describes the number of days outstanding at which CIT and Vehicle Receivables must be reserved as bad debts, assuming there is no event which would cause immediate write-off?

Which of the following responsibilities would not be appropriate for the warranty administrator to handle from a segregation of duties standpoint?

Who is primarily responsible for submission of RDR’s?

A factory incentive should be appropriately recorded as a reduction of cost of sales if it is (choose one):

True or False: Flooring interest credits should be set up as deferred credits when a vehicle is purchased into inventory and should be recognized into income upon sale of the vehicle to the end customer.

True or False: Differences between factory incentive credit received and the corresponding factory incentive receivable balance per the factory incentive schedule should be written off to delivery expense if the write off occurs in a month subsequent to the corresponding vehicle sale.

On June 20, the dealership sells $1200 of parts to an approved customer on credit. On July 28, it becomes evident that collection of this receivable is unlikely. As of July 31, the receivable is aged 41 days. Which of the following statements is true?

Which of the following best describes when a new vehicle should be stocked into inventory?

Which of the following is true with regard to chrome wheels?

Which of the following are not appropriate additions to the cost of a new vehicle in inventory?

True or False: The New Vehicle Inventory schedule must be reconciled to the final physical inventory before calculation of new vehicle LIFO is started.

True or False: In dealer trade transactions, ownership transfer is deemed to occur on the date of the buyer's order, regardless of the vehicle's physical location.

True or False: Vehicle sales to employees should be recorded as regular retail sales.

True or False: Approved wholesalers may be allowed to take delivery of a vehicle as long as they have good credit history and agree to pay within 5 business days.

Which of the following items must be confirmed before a vehicle RDR can be submitted?

Which of the following are true with regard to credit and debit card purchases on vehicle sales transactions? (select all that apply)

Which of the following is NOT true with regard to the company’s Intercompany Vehicle Sales policy?

True or False: On intercompany vehicle sales, vehicle aging starts over for the purchasing dealership as of the date of the signed buyer’s order.

True or False: If a deferred down payment is disclosed as a cash down payment on the sales contract, the dealership must have the cash before the contract can be submitted for funding.

True or False: If bin cycle counts are completed on a regular basis by the parts department throughout the year, the accounting department doesn’t need to perform independent bin cycle counts.

True or False: As parts are returned to the manufacturer, a receivable must be set up in accounting and should remain on the books until the associated parts return credit is received.

Which one of the following should NOT be classified as a prepaid expense?

Which of the following must be completed in establishing business with a new vendor?

True or False: All department managers must submit open invoices to the Accounting Department by the end of the 2nd working day following the end of the month.

True or False: Because we outsource our payroll processing to ADP, we no longer need to reconcile our payroll tax accounts and quarterly tax filings.

True or False: Business customer’s wishing to establish charge accounts with our parts and/or service departments must complete the Preferred Customer Credit Application and Contract, which must be signed by both the Dealership Controller/Office Manager and the General Manager.

Which of the following individuals should NOT have access to make credit limit changes in the DMS system for parts and service credit customers?

Which of the following cash disbursement methods require dual signature?

True/False: If the dealership issues paper gift certificates, they must be consistently formatted, must clearly state an expiration date of one year, and must be reclassified to unclaimed property after one year.

To be considered a properly completed parts inventory reconciliation, there must be how many signatures documented on the reconciliation and these signatures must be from which employees?

True or False: As long as the Controller/Office Manager and General Manager signatures are documented on the Kuni Book Table of Contents, there is no need to duplicate them on the enclosed bank reconciliation(s).

True or False: It's ok to allow a vendor to work on the dealership lot as long they promise to obtain a certificate of liability of insurance listing the dealership as an Additional Named Insured.

Which of the following vendors are required to have a certificate of liability insurance on file?

The Total Investment value from Line 1 of your parts inventory reconciliation should agree to which Reynolds generated report?

Returned checks should be included in the Allowance for Doubtful Accounts balance when aged how many days?

True or False: If a journal entry is prepared by the dealership Controller/Office Manager, it must be approved by the General Manager.

True or False: It is appropriate for the dealership Service Manager to have access to the Parts Department as long as approval has been obtained from a parts employee.

True or False: As long as all journal entries for the month are accounted for, there is no need to ensure that the journal entry numbers assigned are numerical.

True or False: As long as the receipt/invoice has been defaced or somehow marked to prevent duplicate submission for reimbursement, a photocopy of the receipt/invoice will suffice as adequate disbursement backup.

Which statement must be reconciled by the end of each month and always before completion of a parts physical inventory count?

The dealership parts inventory should be fully cycle-counted how many times per year by Parts Department employees?

True or False: When reserved for as bad debts, receivables should be reserved for net of any credits or discounts.

True or False: All department managers must submit open invoices to the Accounting Department by the end of the 2^nd working day following the end of the month.