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Study Resources (Accounting)

Learning Objective 6-8 1) The estimated ending merchandise inventory can be computed by subtracting cost of goods sold from the cost of goods available for sale. 2) Gross profit is calculated by dividing sales revenue by cost of goods sold. 3) The gross profit method is a way to estimate ending inventory on.
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18) Equipment was purchased for $24,000. The equipment's estimated useful life was 5 years, and its residual value was $4,000. The straight-line method of depreciation was used. Calculate gain or loss on sale if the equipment is sold for $18,000 at the end of the first year. Give journal entry.
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Learning Objective 7-3 1) Before signing a check, the controller or the treasurer should examine the purchase order, the invoice, and the receiving report to determine that the company received the goods and that the company is paying only for the goods received. 2) A receiving report should be matched with the.
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Learning Objective 6-5 1) An overstatement of ending merchandise inventory in the current period results in an understatement of net income in the current period. 2) An overstatement of ending merchandise inventory in the current period results in an overstatement of net income in the current period. 3) An overstatement of ending merchandise.
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11) The credit department must have access to cash in order to exercise effective internal control over receivables. 12) Businesses must maintain a single account receivable account for all customers. 13) Individual customer accounts of accounts receivable are known as subsidiary accounts. 14) Sales through credit cards and debit cards are journalized in.
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11) External auditors evaluate company controls to ensure the financial statements are presented fairly in accordance with Generally Accepted Accounting Principles. 12) The Sarbanes-Oxley Act was passed by the Public Company Accounting Oversight Board. 13) Burglar alarms, fire alarms, and security cameras improve internal control. 14) Separating the custody of assets from accounting.
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21) The following information is from the 2015 records of Armand Camera Shop: Accounts Receivable, December 31, 2015 $40,000 (debit) Allowance for Bad Debts, December 31, 2015 prior to adjustment 1,500 (debit) Net credit sales for 2015 175,000 Accounts written off as uncollectible during 2015 15,000 Cash sales during 2015 27,000 Bad debts expense is estimated by the percent-of-sales method. The management.
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11) The two methods of estimating uncollectible receivables are ________. A) allowance method and amortization method B) aging-of-accounts-receivable method and percent-of-sales method C) gross-up method and direct write-off method D) direct write-off method and percent-of-completion method 12) An entry to write off an account receivable under the allowance method will ________. A) reduce net income B) have.
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Learning Objective 6-4 1) If the historical cost of inventory is less than its current replacement cost, the business must write down the inventory cost. 2) If the current replacement cost of inventory is less than its historical cost, the business must adjust the inventory value. 3) For inventories, market value generally means.
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11) Adams Inc. has the following account balances at the end of the current accounting period. Beginning inventory $ 75,000 Net purchases 415,000 Net sales revenue 500,000 The normal gross profit percent is 40%. What is the estimated ending inventory as determined by the gross profit method? A) $190,000 B) $415,000 C) $196,000 D) $490,000 12) The following data is available: Net sales $13,000 Normal.
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Learning Objective 7-2 1) A point-of-sale terminal provides control over cash receipts over the counter. 2) As a part of the internal control over cash receipts by mail, the mailroom sends both the customer checks and the remittance advices to the accounting department. 3) Regarding controls over cash receipts by mail, the bank.
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Learning Objective 7-6 1) When calculating the cash ratio, the numerator includes cash equivalents. 2) A cash equivalent is a highly liquid investment that can be converted into cash in three years or less. 3) Having a cash ratio below 1 is a good thing. 4) Cash is a highly liquid asset, but cash.
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Learning Objective 8-3 1) The allowance method violates the matching principle. 2) A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see which customers the company will not collect from is known as the allowance method. 3) Under both the allowance method and.
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Learning Objective 9-2 1) Depreciation is the allocation of a plant asset's cost to expense over the useful life of the asset. 2) Residual value is also known as depreciable cost. 3) An asset is said to be obsolete when a newer asset can perform the job more efficiently. 4) When a corporation uses.
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31) A check for which a maker's bank account has inadequate money to pay the check is known as ________. A) nonsufficient funds checks B) outstanding checks C) restrictive checks D) canceled checks 32) The following information is available for Jack's Inc., for the current month. Book balance end of the month $6,875 Outstanding checks 655 Deposits in transit 3,500 Service charges 85 Interest.
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11) Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out 12) Which of the following inventory costing methods yields the lowest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in,.
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51) Which of the following items are reconciling items on the bank side of the reconciliation? A) outstanding checks and correction of book error B) deposit in transit and NSF check C) deposit in transit and outstanding checks D) bank service charge and correction of book error 52) Which of the following items are reconciling.
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Learning Objective 9-1 1) Plant assets are long-lived, tangible assets used in the operation of a business. 2) The process of allocating the cost of a plant asset over its useful life is known as cost reduction. 3) The cost principle requires a business to record the assets acquired or services received at.
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11) If a bank reconciliation includes interest revenue, a journal entry is required which credits Cash and debits Interest Revenue. 12) In a bank reconciliation, a book error will be shown on the bank side of the reconciliation. 13) In a bank reconciliation, outstanding checks will be shown on the bank side.
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11) A streamlined process that bypasses paper documents altogether and in which computers of retailers communicate directly with the computers of suppliers to automate routine business transactions is known as ________. A) Real Time Gross Settlement B) Electronic Data Interchange C) Electronic Fund Transfer D) Evaluated Receipts Settlement 12) Which of the following statements describes.
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Learning Objective 8-1 1) The receivables of an organization can be categorized into accounts receivable, notes receivable, and other receivables. 2) A company will have receivables whenever it sells goods or services on credit. 3) The two major types of receivables are interest receivable and taxes receivable. 4) A receivable can be described as.
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21) A company's accountant capitalized a payment that should be recorded as a revenue expenditure. How will this error affect the financial statements of the corporation? A) net income will be overstated B) revenues will be understated C) assets will be understated D) liabilities will be understated 22) Nobells Corp. has acquired land and paid.
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Learning Objective 7-1 1) Internal control is an organizational plan that ensures that the financial statements are prepared and submitted in time. 2) Sarbanes-Oxley Act requires all the private companies in the U.S. to maintain an internal control system. 3) The Public Company Accounting Oversight Board oversees the work of auditors of public.
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Learning Objective 9-3 1) Discarding of plant assets involves disposing of the asset for no cash. 2) When a business sells a plant asset for book value, a gain or loss should be recorded. 3) When a plant asset, fully depreciated and has no residual value, is discarded, the company will remove the.
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21) Which of the following is a requirement of the Sarbanes-Oxley Act? A) An outside auditor must issue an internal control report for each public company. B) The Public Company Oversight Board must conduct audits of public companies. C) The accounting firm that audits a public client must also provide consulting services for.
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Learning Objective 8-5 1) The acid-test ratio is also known as the quick ratio. 2) The higher the quick ratio, the lower the business's ability to pay its current liabilities. 3) The amount of Accounts Receivable is generally reported at its gross amount on the balance sheet. 4) The acid-test ratio is a more.
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Learning Objective 8-2 1) The direct write-off method of accounting for uncollectible receivables is primarily used by small, non-public companies. 2) The expense associated with the cost of uncollectible accounts receivable is known as bad debts expense. 3) Companies that follow GAAP are required to use the direct write-off method for uncollectible accounts.
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41) At Insignia Services, the accounting clerk fills out unnumbered purchase order forms for purchases of supplies. An operations engineer completes the form with a detailed description of the supplies being ordered, and the operations manager approves the purchase and passes the purchase order back to the accountant for processing. In.
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Learning Objective 6-7 1) Using the first-in, first-out (FIFO) method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory. 2) Using the last-in, first-out (LIFO) method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory. 3) Under.
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Learning Objective 6-6 1) Inventory turnover measures the number of times a company sells its average level of merchandise inventory during a period. 2) The days' sales in inventory ratio is calculated by dividing cost of goods sold by the average merchandise inventory. 3) A high rate of inventory turnover indicates difficulty in.
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56) Refer to the following bank reconciliation:            Bank                     Book          Balance, June 30, 2014$11,240.00Balance, June 30, 2014              $10,200.00 Add:Add: Deposit in transit3,110.00Note collected by bank              2,100.00 Interest revenue55.00 Less:Less: Outstanding checks #5061,200.00NSF check85.00 Outstanding checks #510900.00Bank service charge20.00 __________________ Adjusted balance, Adjusted balance, June 30, 2014$12,250.00June 30, 2014$12,250.00 Journalize the adjusting entry for the third reconciling item: NSF check. Answer:  57) Refer to the.
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31) Which of the following is an attribute of the internal control component "monitoring of controls"? A) Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting records are accurate. B) Monitoring of controls is the "tone at the top" of the business. C).
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11) When an asset is fully depreciated, no further depreciation expense is recorded. 12) Companies are required to use Modified Accelerated Cost Recovery System (MACRS) for tax purposes. 13) Which of the following categories of assets should be depreciated? A) tangible property, plant and equipment, other than land B) intangible property C) land D) natural resources 14).
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11) Charms Inc., a merchandising company, has an account receivable for $125 which it has now deemed uncollectible. The company uses the direct write-off method. Which of the following entries is required to record the write-off? A) Bad Debts Expense 125      Accounts Receivable 125 B) Cash 125      Accounts Receivable 125 C) Allowance for Bad Debts 125      Accounts Receivable 125 D).
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