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Study Resources (Accounting)

21) Refer to the following trial balance. Debit Credit Cash $15,000 Accounts Receivable 42,000 Merchandise Inventory 60,000 Supplies 15,000 Land 300,000 Accounts Payable $3,000 Notes Payable 25,000 Common Stock 300,000 Retained Earnings 26,000 Dividends 3,000 Sales Revenues 480,000 Sales Returns and Allowances 6,000 Sales Discounts 9,000 Cost of Goods Sold 240,000 Salary Expense 15,000 Utility Expense 69,000 Rent Expense 54,000 Interest Expense 6,000 _______ Totals $834,000 $834,000 Prepare a multi-step income statement: .
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Learning Objective 6-2 1) Ending inventory is calculated by multiplying the number of units on hand with the unit cost. 2) Ending inventory equals the cost of goods available for sale less beginning inventory. 3) Under the last-in, first-out (LIFO) method, the cost of goods sold is based on the oldest purchases. 4) When.
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21) Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be ________. A) Cost of Goods Sold 5,500        Accounts Receivable 5,500 B).
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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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Learning Objective 5-6 1) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold. 2) A small increase in the gross profit percentage may indicate an important rise in income. 3) Which of the following is the correct formula for calculating gross profit percentage? A) Net profit.
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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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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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19) An adjusted trial balance of a merchandiser is given below. Debit Credit Cash $12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 30,000 Accounts Payable $4,200 Salaries Payable 1,000 Notes Payable 800 Common Stock 10,000 Retained Earnings 3,800 Dividends 1,000 Sales Revenue 96,000 Sales Returns and Allowances 1,600 Sales Discounts 400 Cost of Goods Sold 23,000 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense 500 ________ Total $115,800 $115,800 Give journal entry to close the expense accounts and contra revenue accounts with a debit balance. 20) An adjusted trial balance.
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Learning Objective 5-4 1) The loss of inventory that occurs because of theft, damage, and errors is referred to as inventory shrinkage. 2) When a company uses the perpetual inventory system, there is no need to conduct a physical count of inventory. 3) The entry to close Sales Discounts will include a debit.
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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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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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55) 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 bank2,100.00 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 second reconciling item: Interest revenue. 56) Refer to the following bank reconciliation:              Bank                          Book            Balance,.
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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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22) An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the company. Cash $15,000 Accounts Receivable 42,000 Merchandise Inventory 60,000 Supplies 15,000 Land 300,000 Accounts Payable $3,000 Notes Payable 25,000 Common Stock 300,000 Retained Earnings 26,000 Dividends 3,000 Sales Revenues 480,000 Sales Returns and Allowances 6,000 Sales Discounts 9,000 Cost of Goods Sold 240,000 Salary Expense 15,000 Utility Expense 69,000 Rent Expense 54,000 Interest Expense 6,000 _______ Totals $834,000 $834,000 .
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57) 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 bank2,100.00 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 fourth reconciling item: Bank service charge. 58) The following information is needed.
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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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31) A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7,000 and paid $750 for the freight-in. The company sold the whole lot to a supermarket chain for $13,000 on account. The company uses the specific-identification method of inventory costing. Which of the following.
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11) Under which of the following inventory costing methods is the ending inventory valued on the cost of the most recent purchases? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out 12) Which of the following methods of inventory valuation requires the calculation of a new average cost after each purchase? A) specific identification B).
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Learning Objective 6-1 1) The consistency principle states that a business should use the same accounting methods from period to period. 2) The lower-of-cost-or-market rule demonstrates accounting conservatism in action. 3) A company reports in its financial statements that it uses the FIFO method of inventory costing. This is an example of the.
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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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17) The trial balance of a merchandiser is as follows. A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand. (Assume a perpetual inventory system) Debit Credit Cash $12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 30,000 Accounts Payable $4,200 Salaries Payable 1,000 Notes Payable 800 Common Stock 10,000 Retained Earnings 3,800 Dividends 1,000 Sales Revenue 96,000 Sales Returns and Allowances 1,600 Sales Discounts 400 Cost of Goods Sold 23,000 Salaries Expense 21,000 Rent.
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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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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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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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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 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 5-5   1) Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement. 2) The net income calculated using both the single and multi-step formats of income statement is always the same. 3) Operating income is gross profit minus operating expenses. 4) A single-step income statement.
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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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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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Learning Objective 5-7 1) Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur. 2) If a merchandiser uses the periodic inventory system, it is necessary to conduct a physical count of inventory to determine the quantity.
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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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21) Harris Inc. had the following balances and transactions during 2015:   Beginning Merchandise Inventory as of January 1, 2015 100 units at $80 March 10 Sold 50 units June 10 Purchased 200 units at $82 October 30 Sold 150 units What would the Cost of Goods Sold be as reported on the income statement for the year ending December.
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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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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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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 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) 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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11) On a multi-step income statement, the operating expenses are subtracted from ________ to arrive at operating income. A) net sales B) cost of goods sold C) net profit D) gross profit 12) Merchandise Inventory and Cost of Goods Sold appear ________. A) on the balance sheet and statement of retained earnings, respectively B) on the statement.
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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) An adjusted trial balance is given below. Debit Credit Cash $12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 28,000 Accounts Payable $4,200 Salaries Payable 1,000 Notes Payable 800 Common Stock 10,000 Retained Earnings 3,800 Dividends 1,000 Sales Revenue 96,000 Sales Returns and Allowances 1,600 Sales Discounts 400 Cost of Goods Sold 25,000 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense 500 ________ Total $115,800 $115,800 What will be the final balance in the corporation's Retained Earnings account after recording the closing entries? A) $27,800 B) $2,700 C) $14,000 D) $26,800 12) The sales.
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