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21) The cost of merchandise acquired is the invoice price of the goods plus directly identifiable inbound transportation costs less any cash or quantity discounts and less any returns or allowances. 22) Silver Line Transportation purchased inventory on account for $20,000 on April 2, 20X3. They use a periodic inventory system..
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Learning Objective 6.3 Questions 1) Martin Optical has found that 2% of credit sales turn into bad debts and it costs the company $2,000 in administration expenses per year to manage the bad debts. Martin Optical obtains $30,000 of credit sales each year that it would not otherwise obtain if it.
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11) A policy that requires organizations to use procedures manuals to specify the flow of documents and provide information and instructions to facilitate adequate record-keeping is an example of A) adequate documentation. B) general authorization. C) specific authorization. D) proper procedures. E) an independent check. 12) Which of the following tasks is not commonly performed by.
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25) Fill in the appropriate blank figures in the income statement below. Gross sales $7,500 Sales returns and allowances A Less: Cash discounts on sales 250 B _______________________ $7,100 Cost of goods sold Inventory, January 1, 2X10 200 Purchases (gross) $3,210 C _______________________ 275 Less: Cash discounts on purchases 280 Net Purchases D Add: Freight In 50 Total cost of merchandise acquired.
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Learning Objective 5.3 Questions 1) Cleft Company had the following account balances on its balance sheet at December 31, 2012 and 2011, respectively: 12/31/12 12/31/11 Long-term Bonds Payable $39,000 $36,000 Assume no bonds were retired during 2012. What was the positive cash flow associated with the long-term debt for Cleft Company in 2012? A) $10,000 B) $3,000 C).
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Learning Objective 7.1 Questions 1) Given the following data, what is cost of goods sold? Sales revenue $730,000 Beginning inventory 80,000 Ending inventory 95,000 Purchases of inventory160,000 A) $585,000 B) $145,000 C) $570,000 D) $175,000 E) $555,000 2) Given the following data, what is cost of goods sold? Sales revenue $10,000 Beginning inventory 3,000 Ending inventory 7,000 Purchases of inventory 5,000 A) $12,000 B) $ 9,000 C).
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Learning Objective 4.8 Questions 1) Gross profit appears on a A) single-step income statement. B) classified balance sheet. C) multiple-step balance sheet. D) multiple-step income statement. E) single-step balance sheet. 2) Which account is usually a separate line item on the multiple-step income statement? A) Cash B) Dividends C) Paid-in capital D) Retained earnings E) Income taxes 3) Gross profit is defined as A).
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Learning Objective 5.6 Questions 1) The indirect method of preparing the statement of cash flows A) is seldom used by companies because of the extra effort required to gather cash flow information. B) calculates only the cash effect of each operating activity. C) is the method preferred by the FASB. D) begins with net income,.
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Learning Objective 6.1 Questions 1) A long term contract to provide services for New York City was awarded to Mason Technology on December 30, 20X1. The 4-year contract is set for $160 million and payment is certain. Services are to be provided evenly over 20X2 through 20X5. Progress measures are dependable,.
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31) There are no contra accounts on the income statement. 32) Net sales is always equal to total sales revenue less sales returns and allowances. 33) Net sales is equal to total sales revenue plus sales returns and allowances and sales discounts. 34) If a company normally sells merchandise for $5,000, but allows.
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20) Bearington Motors Income Statement For the Year Ended December 31, 2012 Sales $624,000 Less Expenses: Cost of Goods Sold $332,000 Wage Expense 211,000 Depreciation Expense 20,000 Rent Expense 18,000 Income Tax Expense 16,000 597,000 Net Income $ 27,000 Bearington Motors Balance Sheet December 31, 2011 and 2012 12/31/12 12/31/11 12/31/12 12/31/11 Current Assets: Current Liabilities: Cash $ 8,100 $ 10,600 Accounts Payable $ 57,200 $59,900 Accts..
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3) The issuance of a long-term debt for cash would appear on the statement of cash flows as a(n) A) investing activity. B) operating activity. C) financing activity. D) equity activity. E) debt activity. 4) The issuance of stock for cash would be classified as a(n) A) investing activity on the statement of cash flows. B) equity activity.
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Learning Objective 6.4 Questions 1) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning Cash 18,000 Ending Cash 11,500 Beginning Retained Earnings 32,300 Ending Retained Earnings 41,700 Beginning Accounts Receivable 40,000 Ending Accounts Receivable 50,000 Net Income 64,000 What is the accounts receivable turnover? A) 1.20 B) 2.92 C) 11.33 D) 12.64 E) 13.78 2) Consider the following information: Cash sales $ 59,000 Credit sales 510,000 Beginning.
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Learning Objective 5.7 Questions 1) Which of the following statements is incorrect, regarding the effect of depreciation expense on a statement of cash flows using the indirect method? A) Depreciation expense is not an outflow of cash. B) Depreciation expense represents an inflow of cash. C) Depreciation expense is added in the operating activities.
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Learning Objective 5.1 Questions 1) Which of the following statements show the results of a company over a period of time? 1. Balance sheet 2. Income statement 3. Statement of cash flows 4. Statement of stockholders' equity A) 2 and 4 B) 3 and 4 C) 1 D) 2 E) 2, 3, and 4 2) The statement of cash flows has.
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11) Biscuit Bakery had the following activity in its inventory account during August 20X3. Cost per Date        Activity                 Units     Unit Cost     Total August 1  Beginning inventory100 $3.00$300 August 3  Purchase 403.10 124 August 7  Sale 50 August 12  Purchase 503.20160 August 16  Sale 70 August 23  Sale 40 August 30  Purchase 603.30198 What is the ending inventory balance at August.
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11) Which of the following transactions increase cash? 1. Sales of goods and services for cash 2. Receiving cash dividends 3. Collection of accounts receivable 4. Reclassifying long-term debt to short-term debt 5. Accruing interest revenue A) 1 and 2 B) 1 and 3 C) 1, 2, and 3 D) 1, 2, 3, and 4 E) 1, 2, 3, and.
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Learning Objective 8.1 Questions 1) Repairs made to equipment as part of yearly maintenance would be recorded in the journal by A) debiting equipment. B) debiting repairs expense. C) debiting depreciation expense. D) debiting accumulated depreciation. E) crediting accumulated depreciation. 2) Treating a capital expenditure as repairs and maintenance expense A) understates expenses and overstates owners' equity. B) understates.
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36) Gabby Company operates under a perpetual inventory system. It began operations on March 1, 20X9, and had the following transactions affecting inventory during March, 20X9. March 1 Purchase 500 units @ $5.00 $2,500 March 5 Sale 200 units March 10 Purchase 300 units @ $5.20 $1,560 March 15 Sale 320 units March 20 Purchase.
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23) Cash flows from financing activities include the payment of interest on a note payable. 24) A transaction in which long-term debt of $50,000 is converted to common stock would be reported in the financing section of the cash flow statement. 25) Dividends received from a subsidiary would be classified as an.
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13) All of the following would be included in a company's investing activities except A) purchase of land. B) payment of dividends. C) collection of loan repayments. D) purchase of equipment. E) purchase of another company's stock. 14) All of the following would be included in a company's financing activities except A) issuing equity securities. B) purchasing treasury.
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23) Given the following year-end balances, prepare a classified balance sheet for Briggs Manufacturing dated December 31, 2012. (Hint: Compute net income first.) Interest Expense $ 2,000 Beginning Retained Earnings 13,100 Depreciation Expense 5,200 Cash 26,900 Accounts Payable 3,300 Rent Expense7,200 Accumulated Depreciation, Equipment 13,500 Wage Expense 59,200 Prepaid Rent 1,400 Paid-in Capital 9,000 Accounts Receivable 13,600 Wages Payable 3,200 Equipment 63,000 Sales 249,600 Inventory.
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Learning Objective 4.9 Questions 1) Which of the following statements is true with respect to the gross profit percentage? A) The gross profit percentage shows the relationship of net income to sales revenue. B) The gross profit percentage is widely regarded as the ultimate measure of overall accomplishment. C) Retailers have high gross profit.
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26) Bearpaw Tours Income Statement For the Year Ended December 31, 2012 Sales $624,000 Less Expenses: Cost of Goods Sold $332,000 Wage Expense 211,000 Depreciation Expense 20,000 Rent Expense 18,000 Income Tax Expense 16,000597,000 Net Income $ 27,000 Bearpaw Tours Balance Sheet December 31, 2011 and 2012 12/31/12 12/31/11  12/31/12 12/31/11 Current Assets: Current Liabilities: Cash $ 8,100 $ 10,600 Accounts Payable $ 57,200 $59,900 Accts. Rec..
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11) Neslund Ornamentals offered a 2% trade discount to Parsons Retail Outlet for all purchases over $200,000. Parsons Retail Outlet purchased $300,000 from Neslund Ornamentals on account. Neslund uses the periodic inventory system. Which of the following is the journal entry made by Neslund Ornamentals to recognize the sale and.
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Learning Objective 7.5 Questions 1) The lower-of-cost-or-market practice is based on the A) consistency principle. B) entity concept. C) reliability principle. D) conservatism principle. E) historical cost concept. 2) The replacement costs have increased from $5.60 per unit to $6.20 per unit from the time 200 units of inventory were purchased. The year-end audit found 120 units.
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Learning Objective 6.6 Questions 1) Good accounting controls A) include all methods and procedures that facilitate management's planning and control of operations. B) help maximize efficiency and minimize waste, unintentional errors, and fraud. C) are not concerned with the accuracy of the financial records. D) are not concerned with safeguarding assets. E) All of the above.
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10) For each of the following items, identify whether they are a tangible or intangible asset. In addition, if the asset is long-lived, identify whether it is depreciated, amortized, or depleted. If the asset is not a long-lived asset, identify it as a current asset. Tangible/ Depreciated/ Intangible /Current Amortized/Depleted 1) Natural gas.
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Learning Objective 6.5 Questions 1) Heintz Corporation wishes to borrow $83,000 at 11% interest from the local bank. However, the bank requires a compensating balance of 10%. The effective interest rate that Heintz Corporation will pay on the loan is which of the following? A) 10.1% B) 12.2% C) 13.2% D) 16.4% E) 14.1% 2) Which of.
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Learning Objective 7.3 Questions 1) In a transaction where the merchandise invoice indicates F.O.B. shipping point, who pays the cost of shipping? A) The buyer B) The seller C) The common carrier D) The freight forwarder E) None of the above 2) On March 1, 20X3, Environmental Impacts acquired inventory on account. The cost of the inventory.
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31) An attribute associated with inventory valuation methods is that the lower the cost of goods sold the higher the ending inventory. 32) U.S. tax law contains a conformity requirement that allows companies to use LIFO for tax purposes only if the companies use LIFO for financial reporting purposes. 33) The LIFO.
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11) Queen Mattresses, Inc. had the following transactions occur during May 20X3. Assume there is no beginning inventory. May 2 Inventory was purchased on account for $5,000, terms 2/10, n/30. May 3 Inventory costing $1,000 was returned. May 9 Paid for the inventory. May 15Inventory costing $2,200 was sold on account for $3,800, terms.
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2) Which of the following statements is FALSE? A) Historically, the periodic system has been associated with low volume, high value items. B) Historically, the perpetual system has been considered more expensive and cumbersome to maintain. C) The perpetual system is better able to aid management in pricing and ordering inventory. D) Computerized inventory.
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Learning Objective 7.6 Questions 1) If the ending inventory is overstated by $18,000 in 20X3, and assuming a constant 30% tax rate, then what will be the effect on net income in 20X4? A) Net income will be understated by $5,400 in 20X4. B) Net income will be overstated by $5,400 in 20X4. C).
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Learning Objective 6.7 Questions 1) The following represent common reconciling items within a bank reconciliation: 1. Bank service charges 2. Deposits in transit 3. Outstanding checks Which of the above items will be an adjustment to the balance per books? A) 1 only B) 2 only C) 3 only D) 1 and 2 E) 2 and 3 2) In a bank.
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31) Morland Company has determined that 2% of $50,000 credit sales are uncollectible. The Allowance for Uncollectible Accounts currently has a debit balance of $250. The adjusting entry for bad debts should be prepared for $1,250. 32) In its first year of operations, 20X2, Flow Crafts, Inc., had credit sales of.
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9) Two companies have the following balance sheets as of December 31, 2012: Reef Company Cash $ 25,000 10% Note Payable, $ 50,000 Other Assets 75,000 Stockholders' Equity 50,000 Total Liabilities And Total Assets $100,000 Stockholders' Equity $100,000 Score Company Cash $ 25,000 Other Assets 75,000 Total Assets $100,000Stockholders' Equity $100,000 In 2012, each company had sales of $225,000 and.
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21) Assume the periodic inventory system is used. Nicolla Company sold inventory for cash of $6,000. A week later, the inventory was returned and a cash refund was given to the customer. Nicolla's journal entry to record the return of the inventory would be which of the following? A) Cash 6,000 Accounts.
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Learning Objective 5.8 Questions 1) The balance sheet equation provides the conceptual basis for all financial statements and can be rearranged to incorporate the statement of cash flows as follows: A) Cash + Noncash assets = Liabilities + Stockholders' equity B) Cash - Noncash assets = Liabilities + Stockholders' equity C) Assets = Liabilities.
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Learning Objective 6.2 Questions 1) Lazareth Machine Metals sold inventory to Talla Manufacturing for $5,000 cash. Which of the following is the journal entry made by Lazareth Machine Metals? Assume the periodic inventory system is used. A) Cost of Goods Sold 5,000 Sales 5,000 B) Cash 5,000 Inventory 5,000 C) Accounts Receivable 5,000 Sales 5,000 D) Cash 5,000 Sales.
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Learning Objective 7.7 Questions 1) Fortune Company had sales during July 20X3 of $29,000. During the month, the company had purchases of $17,000. At July 1, 20X3, the company had inventory of $4,500. Assuming the company has a gross profit percentage of 40%, what is the estimated ending inventory for Fortune.
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Learning Objective 5.4 Questions 1) Chorba Chocolates had the following account balances on its balance sheets at December 31, 2012 and 2011, respectively: 12/31/12 12/31/11 Fixed Assets $80,000 $67,000 Accumulated Depreciation 44,000 39,000 Depreciation expense for 2012 was $7,000. There were no gains or losses on the 2012 income statement. One fixed asset with an.
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21) If unit costs and prices did not fluctuate, specific identification, LIFO, FIFO, and weighted-average would show the same ending inventory and cost of goods sold balances. 22) The specific identification method is frequently used for items with common characteristics, such as tons of coal. 23) Under the FIFO method, ending inventory.
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Learning Objective 7.4 Questions 1) Using the LIFO method, the earliest purchases of inventory are assumed to be contained A) on the balance sheet as part of ending inventory. B) on the income statement as part of cost of goods sold. C) equally split between the income statement and the balance sheet. D) Impossible to.
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Learning Objective 5.5 Questions Exhibit 5-1 Cartell Paper Products Balance Sheet December 31, 2012 and 2011 12/31/12 12/31/11 Current Assets: Cash $ 4,600$ 3,100 Accounts Receivable 9,6007,900 Inventory 17,500 18,600 Supplies 1,200 2,100 Prepaid Insurance 1,400 1,000 Total Current Assets 34,300 32,700 Long-term Assets: Fixed Assets 71,000    58,000 Accumulated Depreciation (30,400)        (26,500) Patent 6,0007,100 Total Long-term Assets 46,600 38,600 Total Assets $ 80,900         $ 71,300 Current Liabilities: Accounts Payable $.
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