ACCT 2300 Exam 2

Which method will result in the least amount of income before taxes, assuming a period of rising prices?

LIFO

____ is an inventory costing method that assigns the most recent costs to cost of goods sold; whereas ____ is an inventory costing method that assigns the most recent costs to ending inventory:

LIFO,FIFO

Which one of the following items is not included in cash?

a bank certificate of deposit for one year

Which inventory costing method results in the lowest income tax expense during a period of decreasing prices?

FIFO

Which method assigns the cost of the most recent items purchased to ending inventory?

FIFO

Which one of the following would not appear on a bank statement for a checking account?

outstanding checks

The total (cumulative) amount of interest calculated annually on a $7,000 promissory note payable for 3 years at 12% that is not compounded is (this is the total amount of interest over the 3 year life of the loan).

$2,520

The Tree Store borrowed $100,000 on a 120 day, 10% promissory note. The total interest that Tree Store will repay at maturity is

$3,333

How would deposits in transit be dealt with in a bank reconciliation?

added to bank statement balance

If the amount assigned to ending inventory is incorrect,

both the balance sheet and income statement are affected

If the amount assigned to ending inventory is incorrect,

both the balance sheet and income statement are effected

Where can the amounts needed to compute the accounts receivable turnover ratio be found?

both the income statement and balance sheet

Each of the following documents is used in the control of cash receipts except:

canceled checks from customers

If a company constructs an asset over a period of time and borrows money, the amount of interest incurred during construction on the borrowed money is

capitalized as part of the cost of the plant asset

If technology changes rapidly, a firm should

consider an accelerated rate of depreciation

Beginning inventory plus _____ equals cost of goods available for sale less ending inventory equals ____

cost of goods purchased, cost of goods sold

Inventory turnover, a measure of the number of times inventory is sold during the period, is calculated as:

costs of goods sold divided by average inventory

Your company purchased bonds from another company, how would you record the initial purchase of these bonds in your company's books?

debit investment in bonds and credit cash

Securities issued by corporations and governmental bodies as forms of borrowing are ___ and securities issued by corporations as a form of ownership in the business are ___?

debt or bonds, equity or stocks

The effect of recording depreciation for the year is a(n):

decrease in assets and a decrease in net income

The entry required to recognize the bad debts expense for 2014 will act to:

decrease total assets and retained earnings

Assets classified as property, plant, and equipment are reported at

each assets original cost less depreciation since aquisition

Dividing gross profit by net sales results in the:

gross profit ratio

What would be added to the balance per books in a bank reconciliation?

interest on customer note

If a company uses the allowance method of accounting for bad debts, which one of the following statements is true?

it will report accounts receivable in the balance sheet at their net realizable value

Which one of the following procedures is not part of preparing a bank reconciliation of a checking account

preparing adjustments to reverse the transaction recorded for checks that are still outstanding

Which one of the following documents is used in the control of cash disbursements?

receiving reports

Net sales is equal to:

sales revenue less sales returns and allowances and sales discounts

What would be subtracted from the balance per books in a bank reconciliation ?

service charges

At the year end inventory count, if the goods in transit shipped FOB shipping point, they should be included in the inventory count of ?

the buyer

Cost of goods sold is equal to

the cost of merchandise purchased plus transportation-in costs plus beginning inventory minus purchase returns and allowances and purchase discounts minus ending inventory

How will the payee of the promissory note record the note on its books?

the promissory note will be recorded as an asset