Accounting Test 2

Sales Tax A sale of merchandise on account for $15,300 is subject to an 8% sales tax. (b) What is the amount of the sale?

$15,300

Sales-Related Transactions Merchandise is sold on account to a customer for $9,400, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $440. 3.) Determine the amount of the discount for early payment.

$188 $9400 * 0.02 = $188

During the current year, merchandise is sold for $814,000. The cost of the goods sold is $545,380. a.) What is the amount of the gross profit?

$268,620

Sales-Related Transactions Merchandise is sold on account to a customer for $9,400, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $440. 1.) Determine the amount of the sale.

$9212 $9400 * 0.02 = 188 $9400 - 188 = 9212

Sales-Related Transactions Merchandise is sold on account to a customer for $9,400, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $440. 4.) Determine the amount due within the discount period.

$9652 $9212 + $440 = $9652

Sales-Related Transactions Merchandise is sold on account to a customer for $9,400, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $440. 2.) Determine the increase to Accounts Receivable.

$9652 $9212 + $440 = $9652 The amount recorded in Accounts Receivable is the amount due from the customer. The shipping was paid by the seller, but it is the expense of the buyer.

Sales Tax A sale of merchandise on account for $15,300 is subject to an 8% sales tax. (c) What is the amount of the increase to Accounts Receivable? If required, round your answers to nearest whole value.

15300 * 0.08 = $1224 15300 + $1224 = $16,524

During the current year, merchandise is sold for $814,000. The cost of the goods sold is $545,380.Compute the gross profit percent. Round to the nearest whole number.

33% $268,620 ÷ $814,000

The December 31 Bank Statement shows the collection of $1,100 receivable from one of the company's customers. The company had not recorded this. How would you treat this while reconciling the company book balance? A.) Add $1,100 as collection of a receivable to the company's balance. B.) Add $1,100 as an error to the company's balance. C.) Add $1,100 as a collection of a receivable to the bank balance. D.) Add $1,100 as an error to the bank balance.

A.) Add $1,100 as collection of a receivable to the company's balance.

Sales Tax A sale of merchandise on account for $15,300 is subject to an 8% sales tax. (a) Should the sales tax be recorded at the time of sale or when payment is received? A.) At the time of sale B.) When Payment is Received

A.) At the time of sale

A check that has been distributed by the company but has not cleared the bank as of the statement date is known as: A.) Outstanding check. B.) Deposit in transit. C.) Credit memorandum. D.) Debit memorandum.

A.) Outstanding check.

Sales Tax A sale of merchandise on account for $15,300 is subject to an 8% sales tax. (d) What is the title of the account in which the $1224 (15,300 x 8%) is credited? A.) Sales Tax Payable B.) Sales Tax Expense C.) Accounts Payable D.) Fees Earned

A.) Sales Tax Payable Sales tax is recorded in Sales Tax Payable when collected, and it is decreased when sales tax is paid.

Lyle Steinberg has recently been hired as the manager of Laramie Coffee, a national chain of franchised coffee shops. During her first month as store manager, Lyle encountered the following internal control situations: a. Laramie Coffee has one cash register. Prior to Lyle's joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Lyle made one employee on each shift responsible for taking orders and accepting the customer's payment. Other employees prepare the orders. State whether you agree or disagree with Lyle's method of handling each situation?

Agree, Recall that assigning duties to competent employees and segregating duties are two of the control procedures that assure that business goals are achieved.

Checks written in late December do not appear on a December 31 Bank Statement because they were not cleared by the bank as of March 31. How would you treat this difference while reconciling the bank balance? A.) Add them to the bank balance. B.) Subtract them from the bank balance. C.) Add them to the company's cash balance. D.) Subtract them from the company's cash balance.

B.) Subtract them from the bank balance.

The mailroom employees send all remittances and remittance advices to the cashier. The cashier deposits the cash in the bank and forwards the remittance advices and duplicate deposit slips to the Accounting Department. Indicate the weak link in internal control in the handling of cash receipts.

Both the remittances and remittance advices are sent to the cashier.

During a period of consistently rising prices, the method of inventory costing method that will result in reporting the greatest cost of merchandise sold is _______ A.) Outstanding check. B.) Debit memorandum. C.) Credit memorandum. D.) Deposit in transit.

C.) Credit memorandum.

Lyle Steinberg has recently been hired as the manager of Laramie Coffee, a national chain of franchised coffee shops. During her first month as store manager, Lyle encountered the following internal control situations: Lyle caught an employee putting a case of single-serving tea bags in her car. Not wanting to create a scene, Lyle smiled and said, "I don't think you're putting those tea bags on the right shelf. Don't they belong inside the coffee shop?" The employee returned the tea bags to the stockroom. State whether you agree or disagree with Lyle's method of handling each situation?

Disagree, Remember that stealing is a serious issue. Proper security measures should be used to safeguard assets.

Lyle Steinberg has recently been hired as the manager of Laramie Coffee, a national chain of franchised coffee shops. During her first month as store manager, Lyle encountered the following internal control situations: Since only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Lyle expects each cashier to balance the drawer to the penny every time—no exceptions. State whether you agree or disagree with Lyle's method of handling each situation?

Disagree, Remember that the responsibility for related operations should be divided among two or more persons. This decreases the possibility of errors and fraud.

The mailroom employees send all remittances and remittance advices to the cashier. The cashier deposits the cash in the bank and forwards the remittance advices and duplicate deposit slips to the Accounting Department. How can the weakness be corrected?

Have the mailroom send the remittance advices directly to the Accounting Department.

Greenleaf Co. is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficient bank balance, a significant amount of available cash discounts had been lost because of failure to make timely payments. In addition, it was discovered that the invoices for several purchases had been paid twice. Each voucher (document shows approval for money to leave the company, payroll, pay off venders etc) should be approved for payment by a designated official before the price, quantities, and terms are verified. Yes/No

No, Need to be approval AFTER completion of the following verifications: (a) that prices, quantities, terms, etc.

Greenleaf Co. is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficient bank balance, a significant amount of available cash discounts had been lost because of failure to make timely payments. In addition, it was discovered that the invoices for several purchases had been paid twice. At the time of payment, all vouchers and supporting documents should be stamped "Paid."

Yes

Greenleaf Co. is a small merchandising company with a manual accounting system. An investigation revealed that in spite of a sufficient bank balance, a significant amount of available cash discounts had been lost because of failure to make timely payments. In addition, it was discovered that the invoices for several purchases had been paid twice. Each voucher (voucher is approval for money to leave a company to pay employees, venders etc) should be filed by the last day of the discount period or the due date if the invoice is not subject to a cash discount. Yes/No

Yes,