AC 210 Learnsmarts 5-8

9910

Acme, Inc.'s books show an ending cash balance of $10,000 before preparing the bank reconciliation. Given the bank reconciliation shows outstanding checks of $3,000; deposits in transit of $2,000; NSF check of $100; and interest earned on the bank account of $10, the company's up to date ending cash balance = ____________

36.5

Barry Bees Cost of goods sold equals $10,000. Its beginning inventory was $800, and its ending inventory was $1200. Barry Bee's days to sell equals _____________ days

destination

FOB ____________ is the term used when ownership of the goods transfers to a buyer when the goods arrive at the buyer's place of business

arrive at buyer's place of business

FOB destination means that goods are owned by the buyer as soon as ______________________

FIFO

If a company's inventory costs are rising, ________ inventory costing method typically results in a higher income tax expense

deducted from the bank balance

In a bank reconciliation, an outstanding check is ___________

gross profit

Oops Inc. overstated its ending inventory, during its physical inventory count by $1,000 in Year 1. Because of this __________________________ will be overstated by $1000

perpetual

PERPETUAL OR PERIODIC: -the journal entry to record a sale on account includes a debit to cost of goods sold, credit to inventory, credit to sales revenue, and a debit to accounts receivable

true

TRUE OR FALSE: -Cost of goods sold may include the write-down of inventory to market even though the goods havent been sold yet

accounts receivable, sales revenue

a sale on account is recorded with a debit to ____________________, and a credit to ___________________

contra, credit

allowance for doubtful accounts is a __________-asset account, and has a normal ________ balance

factoring

an arrangement where receivables are sold to another company for immediate cash is called ___________

decreases

assuming sales remain unchanged, if cost of goods sold increases then gross profit ____________________

5

if Barry Bees, Inc.'s days to sell equals 73 days based on a 365-day year, then its inventory turnover ratio equals ________ times

debit to cash of 5100, a credit to cash overage of 4, and a credit to sales revenue of 5096

if a cashier rand up sales totaling $5,096, but had $5,100 to deposit, which journal entry would be recorded? (3 accounts are affected)

inventory

in a perpetual system, the _______________ account is debited when a company purchases merchandise on account

debit cost of goods sold, credit inventory

in a perpetual system, the entry to record the sale of merchandise to a customer on account would include a ______________, ______________ (2 accounts)

vacation

mandatory __________ is a policy that is established to make it difficult for fraudsters to cover up their theft while they are away

retunrns

purchase _____________ and allowances are accounted for with a credit to Inventory and a debit to Cash or Accounts Payable

current assets, used

supplies are _________________________ intended to be ___________

financial statement fraud, corruption, asset misappropriation

the 3 categories of employee fraud are ____________

debit

the bank will show a customers withdrawal as (remember it is from the banks point of view)

incentive, opportunity, and rationalization

what are the 3 components of the fraud triangle?

company's management

who decides which of the many inventory accounting methods a company should use?

interest receivable, 10

ABC corp. received a 2-month, 8% per year, $1,500 note receivable on December 1. The adjusting entry on December 31 will include a debit to ___________________ for $__________

10

Barry, Inc.'s sales equal $30,000 and cost of goods sold equals $10,000. Its beginning inventory was $800 and its ending inventory is $1,200. Barry's inventory turnover ratio equals __________

assets, liabilities, and SE are understated

Boopsie Agin, the company's bookkeeper, recorded the purchase of merchandise on account with a debit to Cost of Goods Sold and a credit to Cash. As a result ______________ (how are A, L, and SE affected)

37,000

Boron Company has Net Sales of $60,000; Beginning Inventory of $7,000; Purchases of $35,000 and Ending Inventory of $5,000. The Cost of Goods Sold is _____________

breyer company

Breyer Company bought inventory FOB shipping point from Cellar Company for $4,000 cash, including shipping charges. On December 31, the last day of the accounting year, the goods were on a truck owned by Common Carrier Company, and not expected to arrive until January 3. Which company should include these goods in its December 31 inventory?

solar

Breyer company bought inventory from Solar Company, FOB destination. On December 31, the last day of the accounting year, the goods were on a truck owned by Common Carrier Inc, and not expected to arrive until January 2. Which company should include these goods in its December 31 inventory?

560

Delta Diamonds has 5 diamonds available for sale this year. 1 purchased on June 1 for $500, 2 purchased on July 9 for $550 each, and 2 purchased September 23 for $600 each. On December 24, it sold 1 of the diamonds. Using periodic weighted average cost, its cost of goods sold is _____________

added to the bank balance

Deposits in transit are __________________________ on a bank reconciliation

shipping point

FOB _________________ is the term used when ownership of the goods transfers to a buyer as soon as the gods leave the seller's place of business

allowance for doubtful accounts, accounts receivable

Ima Broke is a customer that owes the company for credit sales and has declared bankruptcy. As a result, Ima Broke's subsidiary account receivable will be eliminated when a write off is recorded by debiting ________________, and crediting ___________________

220

On May 1, beginning inventory consists of 10 items at a cost of $10 each. On May 3, 10 items are purchased at $12 each. On May 8, 12 items are sold. On May 15, 10 items are purchased at $14 each. Using perpetual LIFO, ending inventory at May 31 equals ___________

cost of goods sold

Oops Inc. overstated its ending inventory, during its physical inventory count by $1,000 in Year 1. Because of this __________________________ will be understated by $1000

true

TRUE OR FALSE: -LIFO is not allowed by IFRS which makes comparisons of international companies with US companies more difficult

true

TRUE OR FALSE: -the inventory method selected by management does not have to correspond to the physical flow of goods in accordance with GAAP

true

TRUE OR FALSE: When a company sells different types of products, the income statement will report the Cost of Goods Sold for all of the products in one line item

opportunity

______________ is one of the 3 components of the fraud triangle that relates to taking advantage of weak internal controls

inventory turnover ration

cost of goods sold/average inventory

transit, bank

deposits in ___________ are added to the ________ side of the bank reconcilliation

percentage of credit sales

estimates bad debt expense based on the historical percentage of sales that lead to bad debt losses

aging of accounts receivable

estimates the allowance for doubtful accounts based on the age of each account receivable

subsidiary

for billing and collection purposes, companies keep a separate accounts receivable account for each customer called a ______________ account

cost of goods sold on the income statement

goods available for sale will become ____________________ when sold

direct write off

if a company writes off a specific customers account with a debit to bad debt expense and a credit to accounts receivable, it must be using the ______________________ method

product quality issues

if sales returns and allowances are a large dollar amount relative to initial sales revenue, it may mean ______________

perpetual

perpetual or periodic inventory system: -the purchaser should record freight-in as an asset, inventory -the seller should record freight-out as a selling expense

write off

removing an uncollectible account and its corresponding allowance from the accounting records is called a _______________

Net Sales

sales revenue - sales returns and allowances = ?

gross, net

the ________ method accounts for purchase discounts later when the payment is made, and the __________ method accounts for purchase discounts at the time the goods are received

periodic

the _________ inventory system requires that the inventory account be updated only at the end of the accounting period

direct

the _________ write off method is not allowed under GAAP

lower, higher

when costs to purchase inventory are falling over time, using LIFO leads to reporting _________ cost of goods sold and _____________ net income than FIFO

lower, balance sheet

when costs to purchase inventory are falling over time, using LIFO leads to reporting ___________ inventory on the _____________________________ than FIFO

older, newer

when determining the desired amount of the allowance for doubtful accounts, the _________ receivables are assigned a higher percentage than the ___________ ones

high, high

you ideally would rather invest in a company that has a _________ gross profit percentage, and a ________________ sales volume

book

NSF checks from customers should be subtracted from the ____________ balance on a bank reconcilliation

30

Net Sales revenue is $730,000. Beginning inventory is $62,000, and ending inventory is $58,000. What is the days to collect?

20

On November 1, 2020 ABC Inc. received a 3-month, $1,500 note receivable with the 8% annual interest and principal to be collected on February 1. What is the amount of interest revenue that should be recorded for the year ended December 31, 2020?

assets and stockholders equity

Probes Inc. wrote down its inventory to the lower replacement value. The effect on Probes' accounting equation includes a decrease in ________________, and _________________________

credit, debit

Purchase returns and allowances are accounted for with a _____________ to inventory and a __________ to Cash or Accounts Payable

FIFO

Risen, Inc. has beginning inventory of $16 which consists of 2 units at $8 each. It purchased 10 units at $10 each. It sold 5 units for $20 each. Which would result in the higher gross profit, LIFO or FIFO

deduction from sales

Sales discounts should appear on the financial statements as _______________________

debited

The Allowance for Doubtful Accounts, a contra-asset account, is _____ when specific uncollectible accounts are written off

unadjusted credit balance

The bad debt expense on the income statement is less than the allowance for doubtful accounts on the balance sheet because the allowance for doubtful accounts had an _______________________ ________________ ______________

debit inventory, credit cash

The journal entry to record the payment of cash to FedEx for shipping costs for inventory purchased FOB shipping point includes a

direct

a ________ deposit is initiated by an EFT instructing a bank to transfer pay due to employees into the employees' bank accounts

convenant

a loan ______________ specifies terms of a loan agreement that, if broken, can allow the lender to renegotiate the terms of the loan or force repayment

increases

as inventory quality increases, its cost usually _________

equivalents

cash ________ are short term, highly liquid, investments purchased within 3 months of maturity

term of sale were FOB shipping point

if the purchaser of merchandise debited Inventory and credited cash for transportation costs _________________________

credit

in a periodic system, the end-of-period adjustment that adjusts cost of goods sold for the amount in ending inventory requires a __________ to cost of goods sold

debit

in a periodic system, the end-of-period adjustment to transfer beginning inventory into cost of goods sold requires a __________ to cost of goods sold

debit

in a periodic system, the end-of-period adjustment to transfer beginning inventory into cost of goods sold. requires a __________ to Cost of Goods Sold

one asset to increase, another asset to decrease

in a perpetual inventory system, the journal entry to record the payment of cash for the shipping costs of purchased merchandise will cause ________________

bank reconcilliation

internal report prepared to compare the company's cash records with the bank statement

current asset, balance sheet

inventory is reported as a ___________________ on the ________________________

perpetual

inventory shrinkage as a result of theft, damage, or obsolescence that is discovered during a physical inventory count at the end of the accounting period is recorded with a decrease to inventory in a _______________ system.

higher

is a higher or lower receivables turnover ratio more desirable and better?

contra-revenue, debited

sales returns and allowances is a ________________ account and is ____________ when goods are returned by customers for a refund

inventory on the balance sheet

the adjustment to record inventory shrinkage will decrease _____________

cost of goods sold on the income statement

the adjustment to record inventory shrinkage will increase _______________________

credit

the allowance for doubtful accounts T-account will have the estimated bad debts from the adjusting entry on the __________ side

receivables turnover ratio

-a higher ratio means faster (better) turnover -the number of times the average receivables balance is collected during the period

10

A company lends $1000 each to two employees at a rate of 6% on December 1. One employee is to repay the note in 3 months and the other in 6 months. At December 31, how much interest will the company accrue? $_________

interest receivable, 1000

On November 1, 2020, Lendem Inc. loaned an employee $100,00 at 6% with both the interest and principal due in 1 year. The adjusting entry to record the interest generated but not received as of December 31, 2020 includes a debit to __________________ of $_______________

voucher

a __________ system is a process for approving and documenting all purchases and payments made on account

deduction from the book balance

a bank service charge should be a ______________ on a bank reconciliation

perpetual

a benefit of the ____________ inventory system is that inventory shrinkage from theft, fraud, and error is able to be estimated

overage

a cash _________ occurs when the total of the cash receipts for petty cash expenditures plus the remaining cash is greater than the original amount in the petty cash box

8750

a company has a $8000 cash balance per its books. The bank statement has a balance of $8,450. The bank reconciliation included $800 of deposits in transit, $500 of checks outstanding, EFTs of $1000 were received from customers, a $200 NSF check from a customer, and a $50 bank service charge. Given the above reconciling items, the up-to-date cash balance = ______________

reconciling

comparing two sets of records is called _____________

cost of goods sold will be higher, income tax expense will be lower, gross profit will be lower

if cost of acquiring inventory is rising, LIFO will result in which of the following compared to FIFO?

accounts receivable

if the allowance for doubtful accounts was debited, what account was credited?

manufacturer

Acme Company's balance sheet shows three inventory accounts- raw materials, work-in process, and finished goods. Acme Company must be a _______________

sales expense

Assume ABC Corp. needs to speed up its cash collections from customers and decides to enter a factoring agreement. Assume ABC enters this type of agreement regularly. How should the factoring fee be reported in the income statement?

bad debt expense of 950, allowance for doubtful accounts of 1000

Delectable, Inc.'s unadjusted trial balance includes accounts receivable of $10,000; Allowance for Doubtful accounts of $50 credit balance; and credit sales of $100,000. Based on an aging of its receivable, management estimates that $1000 of receivables will be uncollectible. Delectable's financial statements will show ______________________, __________________ (2 accounts)

760

In its first year of business ABC inc. had accounts receivable of $8000 and credit sales of $38,000. Management estimates 2% of the total credit sales will be uncollectible. Bad Debt Expense equals _________

assets and stockholders equity would be overstated

of a company were to ignore the fact that the market value of its inventory is lower than its cost then ___________________

income statement

sales returns and allowances are reported on the ________

full cost, inventory

the 2 stages of accounting for a purchase discount using the gross method includes: -the purchase is first recorded at ______________ -____________ account is later reduced if payment is made within the discount period

assets, stockholders equity

the adjusting entry to record the allowance for doubtful accounts causes total _____________, _____________ to decrease

bad debt expense, allowance for doubtful accounts

the adjusting entry to record the estimated amount of bad credit sales is a debit to ____________________, and a credit to _________________

income statement, balance sheet

the assumption that a company makes about its inventory cost flow can affect cost of goods sold on its _______________________ and inventory on its ____________________

deduction from the bank balance

the bank credited your account for a deposit that should have been deposited int another customer's bank account, not yours. This bank error should be a ______________ on a bank reconciliation

income statement and not the balance sheet

the cost of inventory sold is reported on the ____________________

deferred revenue, inventory

the entry to record a sales return that results in the issuing of a gift card is recorded with a debit to sales revenue and a credit to ___________ ____________, and also a debit to ________________ and a credit to Cost of Goods Sold

deferred revenue, service revenue

the entry to record the revenue recognized from the service portion of a bundle sale that was collected in advance is recorded with a debit to ___________ and a credit to ____________

decrease

the gross profit percentage is the ratio to watch if you are worried about increased competition. If the company lowers its prices to retain market share without lowering its cost of goods sold, its gross profit percentage will ______________

purchase returns and allowances

the inventory account may be credited for ___________________________

FIFO

which method will result in the same Cost of Goods Sold amount whether it is computed using the periodic inventory system or the perpetual inventory system

2100

Accounts receivable has a $2,300 balance, and the allowance for doubtful accounts has a $200 credit balance. An $80 account receivable is written off. Net Receivables (net realizable value) after the write-off equals _______________

4000

Ace Electronics uses a perpetual inventory system, On May 1, beginning inventory was $100,000. During May, Ace purchased $35,000 of inventory and sold $71,000 of inventory. After the store closed on May 31, employees counted the inventory in the store and found that $60,000 of inventory remained unsold. What was Ace's inventory shrinkage?

customer received a damaged product and returned it

Ace Electronics, which uses a perpetual inventory system, recorded a debit to Sales Returns & Allowances and a credit to Accounts Receivable, along with a debit to Inventory and a credit to Cost of Goods Sold. What business event must have taken place?

customer received a damaged product, but kept it and asked for a price reduction

Acme Enterprises, which uses a perpetual inventory system, recorded a debit to Sales Returns & Allowances and a credit to Accounts Receivable (no other accounts were affected) What business event must have taken place?

debit cost of goods sold, credit inventory

After performing a physical count of inventory at the end of the accounting period, it was discovered that the amount of inventory on hand was less than the accounting records reported. The entry to record this inventory shrinkage includes ______________ (2 accounts)

4.25

Alpha Company bought 75 units of inventory for $4 each and 25 units of inventory for $5 each. Alpha's weighted average cost per unit is ____________

debit cash, credit deferred revenue

On October 25, Yacht Doc. received $200,000 for a yacht valued at $180,000 and a 4-month service contract. During November, the yacht was delivered and 1 month of the service contract was performed. The remaining services are to be performed evenly over the next 3 months. What is the entry Yacht Doc should record on October 25? (2 accounts)

cash, sales revenue, inventory

Walmart sells a bike that costs $100 to a customer for $250 cash. Using a perpetual inventory system, the entry to record the sale includes a debit to _____________ and a credit to _____________ _____________ for $250. The entry to record the cost of the sale includes a debit to Cost of Goods Sold and a credit to ______________ for $100.

increase

What is the effect on the allowance for doubtful accounts balance if the write-offs end up being less than the amount owed for when recording the adjusting entry?

sales revenue, accounts receivable

X company, which uses a perpetual inventory system, sold $2000 of merchandise on account with credit terms of 2/10, n/30. The journal entry to record the initial sale gross of any discounts will include a credit to ______________________ of $2000, and a debit to ____________________ of $2000

liabilities will be overstated, assets will be overstated

XYZ's journal entry to record the return of merchandise previously purchased on account by XYZ was recorded by debiting Inventory and crediting Accounts Payable. As a result of this entry _________________

consignment

_____________ inventory refers to goods a company is holding on behalf of the actual owner of the goods. The company is willing to try to sell the goods for the owner for a fee.

segregation

______________ of duties is essential for safeguarding assets. The person who has custody of an asset should not also account for the asset. A person who performs both duties can steal the asset and hide the theft by making a bogus entry in the accounting records

added to the bank balance

a $250 deposit made on the last day of the month did NOT appear on this month's bank statement. How would this item be treated on the bank reconcilliation?

petty

a ________ cash system involves putting money into a fund, paying money out to reimburse others and putting money back into to replenish the fund.

channel stuffing

a scenario under which a company's credit sales are increasing and its accounts receivable turnover is decreasing would suggest ____________________

inventory, purchases

beginning inventory was $100. Purchases during the year were $3,000. Based on a physical count at year-end, inventory should equal $300. In a periodic system, the year-end adjusting entry to transfer beginning and ending inventory balances to cost of goods sold includes credits to __________ of $100, and ______________ of $3000

purchases

cost of goods sold equals beginning inventory plus _____________ minus ending inventory

perpetual

cost of goods sold will show a higher balance during the accounting period if a ___________ system is used

not change your records

if the bank makes an error by depositing your check into another depositor's account, then you should _________________________ and contact the bank

higher

if the days to collect ratio has a ________ number of days it means a longer (worse) time for collection

transportation costs, inventory account

in a perpetual inventory system, the buyer of merchandise with the shipping terms FOB shipping point will add ____________________, to its ______________________

gross profit percentage

measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold

may 3

on May 1, Doormart received an order from a customer. The goods were shipped FOB shipping point on May 3. The customer received the goods on May 5 and paid for the merchandise on June 1. When should Doormart record the sale?

132

on May 1, beginning inventory consists of 10 items at a cost of $10 each. On May 3, 10 items are purchased at $12 each. On May 8, 12 items are sold. On May 15, 10 items are purchased at $14 each. using the perpetual weighted average cost, cost of goods sold for the month ended may 31 is ____________

november

on October 25, Yacht Doc received $200,00 for a yacht valued t $180,000 and a 4-month service contract. During November, the yacht was delivered and 1 month of the service contract was performed. The remaining services are to be performed evenly over the next 3 months. In what month should the $180,000 for the yacht be recognized as revenue?

no effect

the entry to record the write off of a specific customers account has __________________ on assets, liabilities, and SE when using the allowance method

allowance for doubtful accounts, accounts receivable

the entry to record the write-off of a specific customers account requires a debit to _____________________________, and a credit to _____________________

bad debt expense, accounts receivable

the journal entry for the direct write-off method includes a debit to _______________________, and a credit to ______________________

inventory, sales revenue

the journal entry to record a write-down of inventory from cost to its lower market value includes a credit to _____________, and a debit to ________________

credit, debit

the journal entry to record taking a discount when paying for goods previously purchased on account and recorded using the gross method includes a ________ to two asset accounts, and a ___________ to a liability account

credit to cash, debit to accounts payable

the journal entry to record the payment for merchandise previously purchased on account includes a _______________, ________________

remain unchanged

the journal entry to record the payment for merchandise previously purchased on account will cause stockholders' equity to ___________

total assets and liabilities to decrease

the journal entry to record the payment within the discount period for goods previously purchased on account causes ____________________________________

independent verification

the procedure of bank reconciliation is an example of which principle of internal control?

inventory

the purchaser's entry to record the payment for transportation costs on the purchase of merchandise sold FOB shipping point is debited to ________________

deducted from the book balance

this month's bank statement includes a check from a customer that was marked NSF. How would this item be treated on the bank reconcilliation

added to the book balance

this month's bank statement shows interest earned of $45. How would this item be treated on the bank reconcilliation?

accounts payable, inventory

under a perpetual inventory system, the entry to record the return of goods you had previously purchased on account was recorded with a debit to ____________ ____________, and a credit to ________________

credit inventory, debit accounts payable

using a perpetual inventory system, the entry to record the return of goods you previously purchased on account includes a __________________, ________________ (2 accounts)

allowance for doubtful accounts, 90,000

using its aging of accounts receivable, Age Old Inc. estimates that 90,000 of its 4,000,000 of accounts receivable will be uncollectible. Prior to making its adjusting entry, the unadjusted Allowance for Doubtful Accounts has a debit balance of 1000. After the adjustment the ____________________________ will have a _____________ credit balance.

900

using the aging approach, management estimates that $1000 of accounts receivable will be uncollectible. The allowance for doubtful accounts has a $100 unadjusted credit balance. The adjusting entry to record the estimated bad debts includes a credit to allowance for doubtful accounts, and a debit to bad debt expense for $____________

less

using the aging approach, management estimates that 10% if the 10,000 accounts receivable will be uncollectible. The Allowance for doubtful accounts has a $100 unadjusted credit balance. After the bad debt adjusting entry is recorded, Bad debt expense on the income statement will be $100 __________ than the allowance for doubtful accounts on the balance sheet..

1100

using the aging approach, management estimates that 10% of the $10,000 of accounts receivable will be uncollectible. The allowance for doubtful accounts has a $100 unadjusted debit balance. The adjusting entry to record the estimated bad debts includes a credit to allowance for doubtful accounts, and a debit to bad debt expense for $____________

greater than

using the aging of receivables method, an unadjusted allowance for doubtful accounts will have a debit balance when the amount of write-offs recorded during the period is _________________________ the amount estimated to be uncollectible in the prior accounting period

cost of goods sold, sales revenue, gross profit

what 3 things are found on the income statement of a merchandiser?

balance is the same

what is the effect of a write off of a specific customers account on net receivables on the balance sheet?

debit interest receivable, credit interest revenue

what is the journal entry to record the adjusting entry to record interest owed

debit notes receivable, credit cash

what is the journal entry to record the issuance of a note?

debit cash, credit interest receivable

what is the journal entry to record the receipt of an interest payment

debit cash, credit notes receivable

what is the journal entry to record the receipt of the principal payment?

sales revenue

what reports sales price times the quantity of goods sold

days to collect ratio

what shows the average number of days from sale on account to collection

interest deposited

what would be added to your cash balancer based on the information on your bank statement?

inventory

what would be found on a merchandiser's balance sheet and typically not on a service firms

cleared

when a check is presented to a bank for payment and the amount is deducted from the payer's account, the check is said to have __________ the bank.

revenue

when a seller fulfills its performance obligation, it credits _______________

sales discounts, returns, and allowances

which 3 items are netted against sales revenue to arrive at Net Sales (Sales Revenue, net)

perpetual

which inventory system requires that the inventory account be updated when merchandise is purchased?