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Study Resources (Accounting)

41) The following data was extracted from the records of Winsam Company: Sales revenue 450 units @ $35 per unit Beginning inventory 100 units at $16 per unit Purchases 400 units at $20 per unit What is the gross profit using the FIFO method? A) $6,950 B) $7,150 C) $8,600 D) $8,800 42) The following data was collected from the accounting records.
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5.6   Learning Objective 5-6 1) Accepting credit cards can increase revenue for a company, but the added revenue comes at a cost. 2) When a company factors its receivables, accounts receivable will be credited. 3) Accounts receivable can be sold to a factor as a means of speeding up cash flows. 4) Cash that.
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5.7   Learning Objective 5-7 1) Ratios are used only by company management, and not investors, to evaluate the financial health of a company. 2) Because it includes only cash and short-term investments in the numerator, the current ratio is a more stringent measure of a firm's ability to pay current liabilities than.
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48) Samantha Puff is the controller for Hedgehog, Inc. Samantha has gathered the following information for the month of July: Sales$80,000 Purchases$56,000 Purchase discounts$4,300 Sales discounts$1,000 Purchase returns$700 Operating expenses$18,000 Determine Hedgehog, Inc.'s: a.Net sales b.Net purchases 49) Michelle Industries has the following information available for February 2012: Total sales$3,000,000 Credit sales70% Purchases$1,800,000 Credit purchases40% Beginning inventory$   265,000 Cost of goods sold65% of sales Required: 1.Prepare the journal.
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23) Julie Newmar, the controller for Cat Supplies, Inc. scheduled the following accounts. Cat Supplies is considering purchasing Meow Now Co. and its accounts are shown below: Cat SuppliesMeow Now Cash$12,000$15,000 Short-term investments4,5000 Year end and average current receivables22,00032,000 Year end and average inventory26,00018,000 Prepaids2,0003,000 Accounts Payable17,00028,000 Short-term Notes Payable2,0006,000 Total Credit Sales300,000200,000 Required: 1.Compute the Current Ratio for both companies 2.Compute.
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  6.1   Learning Objective 6-1 1) Inventory is an asset and cost of goods sold is an expense. 2) Inventory is presented on the balance sheet at the selling price of the item. 3) Service entities will have both a cost of goods sold and an inventory account. 4) Operating expenses are subtracted from sales.
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5.4   Learning Objective 5-4 1) Accounts receivable are shown on the balance sheet at their net realizable value. 2) Selling on credit creates both a benefit and a cost. 3) Uncollectible-account expense is an operating expense on the income statement. 4) The journal entry to record uncollectible-account expense includes a credit to Accounts Receivable. 5).
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31) To record estimated bad debts under the direct write-off method: A) debit Allowance for Uncollectible Accounts and credit Accounts Receivable. B) debit Accounts Receivable and credit Allowance for Uncollectible Accounts. C) debit Uncollectible-Accounts Expense and credit Allowance for Uncollectible Accounts. D) no journal entry is needed. 32) Which of the following is NOT true.
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21) Which is the correct order for items to appear on the income statement? A) Sales revenue, operating expenses, gross profit, net income B) Sales revenue, gross profit, net income, operating expenses C) Sales revenue, gross profit, cost of goods sold, operating expenses D) Sales revenue, cost of goods sold, gross profit, net income 22).
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24) TV Company's accountant obtained the following data from the company's records: Accounts payable$  76,500 Average accounts receivable$  47,500 Cash$  43,700 Inventories$110,000 Long-term bonds payable$320,000 Net accounts receivable$  42,300 Net sales$514,700 Short-term investments$  28,000 Required: 1.Compute the company's quick ratio. 2.Compute the company's average daily sales. 3.Compute the company's days' sales in receivables 25) Complete the following chart by filling in the missing.
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14) Wendy Industries has the following information available for March: Total sales $810,000 Purchases $440,000 Beginning inventory $212,000 Ending inventory ?? Cost of goods sold 60% of sales Calculate Wendy's ending inventory. 15) The Fence Company needs to determine the amount of its purchases for the month. It has the following information available for March: Cost of goods sold anticipated for March $10,000 Desired ending.
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51) Consider the following INDEPENDENT situations for XYZ Company: a.The Allowance for Uncollectible Accounts has a $1,200 credit balance prior to adjustment. Net credit sales during the year are $830,000 and 4% are estimated to be uncollectible. Accounts Receivable has a balance of $110,000 at the beginning of the year. b.The Allowance.
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6.7   Learning Objective 6-A 1) In the periodic inventory system, the inventory account is debited for the purchases made during the year. 2) Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the merchandise sold. 3) The journal entry.
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6.6   Learning Objective 6-6 1) Overstating ending inventory in the current period will overstate the following year's net income. 2) An error in ending inventory creates errors for three accounting periods. 3) One way a company can deliberately overstate inventory is to overstate the inventory count. 4) If ending inventory for the period is.
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6.5   Learning Objective 6-5 1) A company can use the cost-of-goods-sold model to determine how much inventory to purchase. 2) The gross profit method can be used to estimate ending inventory. 3) The gross profit method is often used for calculating inventory destroyed by a disaster, such as a fire. 4) The cost-of-goods-sold-model can.
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45) Mary Sue is the controller for Sue's Flowers, Inc. and needs your help. Mary Sue has the following information for the month of April: Sales$98,000 Sales discounts$     800 Cost of goods sold$51,000 Salary expense$  8,000 Rent expense$  3,000 Income tax expense$  1,000 Prepare an income statement for Hedgehog for the month ending April 30. 46) The following.
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6.3   Learning Objective 6-3 1) Without knowledge of the accounting method a company uses to value its inventory, a banker could make an unwise lending decision. 2) When applying the lower-of-cost-or-market rules to inventory valuation, market value generally refers to the cost at which the company can sell a unit of inventory. 3).
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60) During its first year of operations, Credit Company had the following transactions. The company uses the percent-of-sales method to estimate uncollectible accounts. Credit sales$500,000 Collections on account$380,000 Write-offs of uncollectible accounts$7,500 Uncollectible-account expense2.5% of credit sales Create T accounts for accounts receivable, allowance for uncollectible accounts, and uncollectible accounts expense. Post the journal entries,.
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27) Following is the unclassified balance sheet for Heidi's Hut, Inc. Heidi's Hut, Inc. Balance Sheet March 31, 2012 Assets Cash$600 Accounts Receivable1,800 Inventory3,000 Store Supplies1,900 Prepaid Rent 1,500 Land23,000 Building50,000 Accumulated Depreciation—Building  (7,500)42,500 Store Equipment27,000 Accumulated Depreciation—Store Equipment (15,625)              11,375 Total Assets    $85,675 Liabilities and Stockholders' Equity Liabilities Accounts Payable$6,000 Salaries Payable2,500 Unearned Revenue (to be earned in 2 months) 2,000 Long-term note payable   6,000 Total Current Liabilities$16,500 Stockholders' Equity Common Stock31,655 Retained.
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26) For each of the following independent situations, prepare the appropriate adjusting journal entry on the last day of the fiscal year end (FYE). Use the information provided below for each situation. Principal Interest Rate Time Interest Maturity Value 1 $12,000 10% 120 days $400 $12,400 2 $50,000 8% 9 months $3,000 $53,000 3 $15,000 33.33% 180 days $2,500 $17,500 4 $60,000 18% 1 year $10,800 $70,000 5 $90,000 6% 60 days $900 $90,900 1Note executed on July 01, 2012 and FYE is September 30. (92.
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10) A separate account for each customer is kept in a(n): A) control account. B) subsidiary ledger. C) general ledger. D) control ledger. 11) ________ may be required on a note receivable as security for the loan. A) Maturity value B) Interest C) Collateral D) Principal 12) One method of establishing proper internal control over the collection of accounts receivable.
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49) The following data was obtained from the records of Bitter Inc., for the current year: 01/01Beginning inventory110 units at $10 02/15Purchase200 units at $12 04/22Purchase125 units at $13 07/19Purchase 90 units at $14 12/31Ending inventory 75 units Required: 1. Calculate the value of the ending inventory using: a.FIFO. b.LIFO. c.Average-cost. 2.Calculate the Cost of goods sold by: a.FIFO. b.LIFO. c.Average-cost. .
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5.2    Objective 5-2 1) Sales discounts and sales returns and allowances are deducted from gross revenue to determine net revenue. 2) The amount of revenue to be recognized is the cash value of the goods or services transferred from the seller to the buyer. 3) The shipping terms in the sales contract determine.
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6.2   Learning Objective 6-2 1) The choice of an inventory costing method does not impact company's balance sheet. 2) The specific unit cost method is used for inventory items that have common characteristics. 3) The FIFO method assigns the most recent inventory cost to expense. 4) In a period of rising prices, FIFO and.
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6.4   Learning Objective 6-4 1) For most firms, the gross profit percentage changes significantly from year to year. 2) The gross profit percentage is net sales divided by gross profit. 3) The inventory turnover ratio should be the same for all types of industries. 4) The gross profit percentage: A) is markup stated as a.
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5.3   Learning Objective 5-3 1) The two major types of receivables are accounts receivable and trade receivables. 2) Accounts (trade) receivables are amounts to be collected from customers from the sale of goods or services. 3) Accounts receivable have a maturity date. 4) The Accounts Receivable account in the general ledger has a separate.
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11) Days' sales in receivables can be computed in two logical steps. In the second step: A) the collection period must be determined. B) the average daily sales are computed. C) the average daily sales are divided by the average receivables. D) the average receivables are divided by the average daily sales. 12) When computing.
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11) The lower-of-cost-or-market rule is based on the accounting principle of: A) disclosure. B) materiality. C) conservatism. D) revenue. 12) The lower-of-cost-or-market rule requires a company to report inventories at the lower of: A) historical cost or current sales price. B) historical cost or current replacement cost. C) current replacement cost or sales invoice price. D) FIFO cost or.
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11) The most acceptable way to measure bad debts is by: A) the direct write-off method. B) the percent-of-sales method. C) the allowance method. D) none of the above. 12) When evaluating the collectability of accounts receivable: A) the uncollectible-account expense is a contra account. B) the allowance for uncollectible accounts is an operating expense in the.
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41) Using the percentage-of-sales method, you estimate that total uncollectible accounts is $5,875. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $2,635. The amount of the adjusting entry for uncollectible accounts expense is: A) $2,635. B) $3,240. C) $5,875. D) $8,510. 42) The following item appeared on a balance sheet: Receivables,.
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11) Michelle Industries has the following information available for the current year: Total sales $3,000,000         Purchases $1,800,000 Beginning inventory $265,000 Ending inventory $115,000 Cost of goods sold 65% of sales Required: 1.Calculate the following: Inventory turnover Gross profit margin 2.If the industry average for inventory turnover is 5.29, and for gross profit margin is 28.2%, comment on how this company compares to the              .
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50) The following data was obtained from the records of Bitter Inc., for the current year: 01/01Beginning inventory110 units @ $10 02/15Purchase200 units @ $12 04/22Purchase125 units @ $13 07/19Purchase90 units @ $14 12/31Ending inventory75 units Additional information: Sales are $25,000; operating expenses are $14,500; the tax rate is 40%. REQUIRED:  Prepare the income statement using: •FIFO. •LIFO. •Average cost. 51).
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21) The percent-of-sales method: A) computes uncollectible-account expense as a percent of accounts receivable. B) takes a balance sheet approach. C) employs the expense recognition (matching) concept. D) will result in the same amount of estimated uncollectible accounts expense as the aging method. 22) The allowance method that brings the balance of the allowance account.
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11) All of the following costs would be included in inventory EXCEPT for: A) freight-in. B) advertising. C) taxes paid on the purchase price. D) insurance while in transit. 12) ABC Auto Sales sells new Lexus vehicles. ABC will most likely use the ________ method to cost its ending inventory. A) First-in, first-out B) Last-in, first-out C) Specific-unit-cost D).
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53) Tom Golden, the accountant for Beauty Galore, Inc., gathered the following information of the month of October: October01Beginning inventory30 units$100 each 08Purchase25 units$130 each 23Purchase27 units$135 each Sales for the month of October50 units Required: 1.Calculate the cost of goods sold for this product for October, using the FIFO method and a perpetual inventory system. 2.Calculate.
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54) Journalize the following transactions for The Computer Store. The Computer Store uses the direct write-off method of accounting for uncollectible receivables. April 5The Computer Store sells $3,200 of computer equipment on account to Jane Doe. June 5Jane Doe pays The Computer Store $2,000 of the amount she owes. July 7After repeated attempts.
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