Info
Warning
Danger

Study Resources (Accounting)

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.
2 Views
View Answer
11) Adams Consultancy 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.
5 Views
View Answer
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 inventory on the.
3 Views
View Answer
31) Which of the following describes 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) Monitoring of controls.
3 Views
View Answer
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.
3 Views
View Answer
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.
4 Views
View Answer
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.
3 Views
View Answer
21) An accounting information system is said to be relevant if it: A) works smoothly with the business's employees and organizational structure. B) safeguards a business's assets and reduces the likelihood of fraud and errors. C) provides information that will improve decision making and reduce uncertainty. D) can accommodate changes in the business over.
5 Views
View Answer
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,.
4 Views
View Answer
41) WAXS-D, merchandisers of musical instruments, has provided the following details: Mar.5 Inventory purchased $800,000 Mar.8 Freight In 40,000 Mar.13 Purchase returns 60,000 Mar.14 Allowances by vendor 15,000 Mar.20 Payment made to vendor for purchases on March 5 ? Credit terms are: 3/20, n/45, FOB shipping. Calculate the net cost of inventory purchased assuming that there are no other inventory related transactions during the month. A) $785,000 B).
4 Views
View Answer
11) Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser. 12) Under the perpetual inventory system, when a purchaser makes payment within the discount period, the amount of discount will be credited to the Merchandise Inventory account. 13) Under the terms FOB.
2 Views
View Answer
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.
3 Views
View Answer
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.
4 Views
View Answer
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.
2 Views
View Answer
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.
27 Views
View Answer
11) One of the advantages of a computerized accounting information system, as compared to a manual one, is that it does not cost to ensure that the firm's data and information are secure. 12) In an accounting information system, outputs are the reports used for decision making, including the financial statements. 13).
8 Views
View Answer
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 Smith, Capital 13,800 Smith, Withdrawals 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 Smith, Capital account after recording the closing entries? A) $37,800 B) $12,700 C) $24,000 D) $36,800 12) Sales revenue of.
3 Views
View Answer
11) Which of the following is an example of hardware? A) monitor B) Microsoft Office C) ERP D) QuickBooks 12) Which of the following is an entry-level accounting software package? A) Microsoft Word B) QuickBooks C) Minitab D) router 13) An enterprise resource planning (ERP) system is a: A) hardware system that controls the access of employees to different levels of.
4 Views
View Answer
Learning Objective 7-4 1) Hardware is electronic equipment that includes computers, monitors, printers, and the network that connects them. 2) Enterprise resource planning (ERP) systems are software systems that can integrate all of a company's functions, departments, and data into a single system. 3) One of the main disadvantages of a typical ERP.
3 Views
View Answer
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 physical count of inventory to determine the quantity of.
5 Views
View Answer
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.
2 Views
View Answer
1) An accounting information system (AIS) collects, records, stores, and processes accounting data to produce information that is useful for decision makers. 2) The collection of time records is an Accounting Information System activity that is classified as a business transaction that involves the sale of merchandise inventory. 3) An effective accounting.
12 Views
View Answer
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) Sales Revenue 5,500 Cost of Goods.
3 Views
View Answer
31) Which of the following is an example of a storage device in an accounting information system? A) monitor B) network C) printer D) server 32) Which of the following is an input device in an accounting information system? A) keyboard B) internet protocol C) printer D) router 33) Which of the following is an output device in an accounting.
3 Views
View Answer
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.
9 Views
View Answer
Learning Objective 5-3 1) An amount that a merchandiser earns by selling its inventory is known as Sales Revenue or Sales. 2) When a customer returns goods to the seller, the seller records it as purchase returns. 3) When a merchandiser records sales returns, the Accounts Receivable account is credited. The seller uses.
4 Views
View Answer
41) In the following situation, which internal control procedure needs strengthening? At Syria 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.
6 Views
View Answer
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 Smith, Capital 326,000 Smith, Withdrawals 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: 22) An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the.
5 Views
View Answer
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.
5 Views
View Answer
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).
3 Views
View Answer
11) The purchases journal is a special journal used to record: A) cash receipts, interest rate payments, and purchases. B) credit sales of assets that occur infrequently such as buildings, property, and equipment. C) credit sales. D) merchandise inventory, office supplies, and other assets purchased on account. 12) Which of the following is a column.
3 Views
View Answer
Learning Objective 8-3 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.
3 Views
View Answer
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) In which of the financial statements do Merchandise Inventory and Cost of goods sold appear? A) on the balance sheet and statement of.
6 Views
View Answer
21) Which of the following transactions is recorded in the "Receive Payments" function of QuickBooks? A) Paying electricity bill B) Sold merchandise inventory on account to a customer C) Sold a product to a customer for cash D) Coupon payments to the bondholders 22) Which of the following transactions is recorded in the "Enter Bills".
6 Views
View Answer
21) Harris Company had the following balances and transactions during 2015: Beginning Merchandise Inventory 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 31, 2015 if the perpetual.
3 Views
View Answer
Learning Objective 7-2 1) A general ledger is an accounting journal designed to record one specific type of transaction. 2) Sales on account are recorded in a cash receipts journal. 3) A subsidiary ledger is a record of accounts that provides supporting details on individual balances, the total of which appears in a.
7 Views
View Answer
21) A company has four vendors and the accounts payable subsidiary ledger shows the following balances. Alpha $275,821 Beta 143,474 Gamma 78,943 Delta 34,187 Calculate the accounts payable balance in the general ledger. A) $419,295 B) $532,425 C) $275,821 D) $256,604 22) Which of the following is true of a sales journal? A) It is a special journal used to record all the cash sales. B).
4 Views
View Answer
    Learning Objective 8-1 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.
11 Views
View Answer
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.
2 Views
View Answer
Learning Objective 8-2 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.
4 Views
View Answer
Learning Objective 7-3 1) Cash purchases are recorded in the purchases journal. 2) The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account. 3) When recording in a purchases journal with a periodic inventory system, the Merchandise Inventory DR column would.
3 Views
View Answer