ACT 205 Exam 2

The following information pertains to Julia & Company: INSERT CHART What is the ending inventory balance for Julia & Company assuming that uses FIFO?

$85

Consider the following inventory transactions for September: INSERT CHART for the month of September the company sold 35 units. what is cost of goods sold under the weighted average cost method (rounded the weighted average unit cost to four decimals and final answer to the nearest whole dollar? a. $121 b. $116 c. $124 d. $131

a. $121

the balance in the colt company's cash account on August 31 was 19,700, before the bank reconciliation was prepared. After examining the august bank statement and items included with it, the company's accountant found: Checks outstanding NSF checks Note collected by bank for the Colt Co Deposits outstanding Bank service fees what is the amount of cash that should be reported in the balance sheet as of august 31? a. $20,700 b. $17,200 c. $18,700 d. $22,200

a. $20,700

After preparing a bank reconciliation, the collection of a note by the bank on a company's behalf would be recorded with a: a. Credit to Notes Receivable b. Credit to Cash c. Debit to Notes Receivable d. Credit to Accounts Receivable

a. Credit to Notes Receivable

A company records a sales allowance from a credit customer. Indicate how this transaction would affect (1) assets, (2) stockholders' equity, and (3) revenues. a. Decrease, Decrease, Decrease b. Decrease, No effect, Decrease c. Decrease, Decrease, No effect d. No effect, No effect, No effect

a. Decrease, Decrease, Decrease

Which inventory cost flow assumption generally results in the highest reported amount for cost of goods sold when inventory costs are falling? a. FIFO b. LIFO c. Weighted-average cost d. Straight-line

a. FIFO

Barton health services provided care to a patient worth 1,200. because the patient was over the age of 65, barton granted the patient a 20% discount and the customer paid the correct amount in cash. how would barton record the service transaction? INSERT CHART a. Option A b. Option B c. Option C d. Option D

a. Option A

Cash equivalents refer to: a. Short-term investments that have a maturity date no longer than three months from the date of purchase b. Amounts receivable from customers that have a very high probability of collection c. Short-term investments that have increased in value since the date of purchase, and therefore have generated additional cash for the company d. The total amount of cash a company would have if all assets were sold

a. Short-term investments that have a maturity date no longer than three months from the date of purchase

Which of the following items would cause the balance of cash in the bank statement to be greater than the balance of cash in the accounting records? a. The company wrote checks that have not cleared the bank b. The company purchased supplies using a debit card c. The company has cash receipts that have not been deposited in the bank d. The company deposited a customer check that was found by the bank to insufficient funds

a. The company wrote checks that have not cleared the bank

Davis Hardware Company uses a perpetual inventory system. how should davis record the sale of inventory costing 620 for 960 on account? INSERT CHART a. Option A b. Option B c. Option C d. Option D

b. Option B

On July 1, 2018, Herzog Mining lends cash and accepts a 9,000 note receivable that offers 10% interest and is due in 9 months. how would herzog record the transaction on April 1, 2019, when the borrower pays herzog the correct amount owed? INSERT BIG CHART WITH OPTIONS a. Option A b. Option B c. Option C d. Option D

b. Option B

Which of the following would not be considered good internal control for cash receipts? a. Allowing customers to pay with a debit card b. Requiring the employee receiving cash from customers to also deposit the cash into the companys bank account c. Recording cash receipts as soon as they are received d. Allowing customers to pay with a credit card

b. Requiring the employee receiving cash from customers to also deposit the cash into the companys bank account

The act of collusions refers to: a. Top management and lower-level employees working together to share information necessary for effective internal controls b. Two or more people acting in coordination to circumvent internal controls c. Management working with an auditor to prevent occupational fraud d. Middle-level managers taking full responsibility for effective internal controls

b. Two or more people acting ing coordination to circumvent internal controls

On Dec 31 2018, larrys used cars had balances in accounts receivable and allowance for uncollectible accounts of 53,600 and 1,325, respectively. during 2019, larrys wrote off 1,465 in accounts receivable and determined that there should be an allowance for uncollectible accounts of 1,280 at december 31, 2019. Bad debt expense for 2019 would be: a. $1,200 b. $1,465 c. $1, 420 d. $1,140

c. $1, 420

Using the information below determine the ending inventory value applying the lower of cost and net realizable value INSERT CHART a. $13,300 b. $12,000 c. $11,600 d. $13,700

c. $11,600

The following information pertains to Julia & Company: INSERT CHART What is the cost of goods sold for Julia & Company assuming it uses LIFO? a. $125 b. $100 c. $110 d. $85

c. $110

On september 1, 2018, hartford construction lends $50,000 to a customer with 9% interest. the note and interest are due in 12 months. the note receivable is recorded for 50,000 on september 1 and the following year-end adjusting entry is made on dec 31 2018. at the end of 2018: Interest Receivable 4,500 Interest Revenue 4,500 Which of the following is true? a. Revenues are understated b. Liabilities are understated c. Assets are overstated d. All amounts are accurately states

c. Assets are overstated

Timkin: INSERT CHART Prior to adjusting entries, the allowance for uncollectible accounts has a debit balance of 500. the year end adjustment would include a: a. Credit to Allowance for Uncollectible Accounts for $1,200 b. Debit to Bad Debt Expense for $700 c. Debit to Bad Debt Expense for $1,700 d. Debit to Bad Debt Expense for $1,200

c. Debit to Bad Debt Expense for $1,700

Shupe Inc. estimates uncollectible accounts based on the percentage of accounts receivable. what effect will recording the estimate of uncollectible accounts have on the accounting equation? a. Increase liabilities and decrease stockholders' equity b. Decrease assets and decrease liabilities c. Decrease assets and decrease stockholders' equity d. Increase assets and decrease stockholders' equity

c. Decrease assets and decrease stockholders' equity

A companys plans to minimize theft and enhance the accuracy of accounting information are referred to as a. Corporate controls b. Security controls c. Internal controls d. general controls

c. Internal controls

In a period of rising costs, which inventory valuation method would a company likely choose if they want to have the lowest possible balance of inventory on the balance sheet? a. Weighted-average cost b. FIFO c. LIFO d. Periodic

c. LIFO

On May 1 Ace Bonding Company purchased inventory costing 2000 on account with terms 2/10, n/30. on May 8 ace pays for this inventory and records which of the following using a perpetual inventory system? INSERT CHART a. Option A b. Option B c. Option C d. Option D

c. Option C

Oswego clay pipe company provides services of 46,000 to southeast water district #45 on april 12 of the current year with terms 1/15, n/60. what would oswego record on April 23, assuming the customer made the correct payment on that date? INSERT CHART a. Option A b. Option B c. Option C d. Option D

c. Option C

LeGrand Corporation reported the following amounts in its income statement: INSERT CHART What was LeGrand's operating income? a. $120,000 b. $260,000 c. $110,000 d. $65,000

d. $65,000

When $2,500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method? a. A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts b. A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense c. A debit to Bad Debt Expense and a credit to Accounts Receivable d. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable

d. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable

A company is most likely to utilize the specific identification method if its inventory consists of: a. Unique products b. Very expensive products c. A relatively small number of products d. All of the other answers are reasons to utilize the specific identification method

d. All of the other answers are reasons to utilize the specific identification method

If the estimate of uncollectible accounts at the end of the current year is too high, which of the following is true in the following year? a. Cash collections from customers will be greater than expected b. The balance of Allowance for Uncollectible Accounts will be a credit prior to its year-end adjustment c. The amount reported for Bad Debt Expense d. All of the other answers are true in the following year

d. All of the other answers are true in the following year

The sarbanes oxley act (SOX) mandates which of the following? a. Increased regulations related to auditor-client relations b. Increased regulations related to internal control c. Increased regulations related to corporate executive accountability d. All of the other answers represent mandates of the Sarbanes-Oxley Act

d. All of the other answers represent mandates of the Sarbanes-Oxley Act

After preparing the bank reconciliation, an NSF check would result in which of the following when recording the adjustment to the company's cash balance? a. Debit to Service Fee Expense b. Credit to Accounts Payable c. Credit to Service Revenue d. Debit to Accounts Receivable

d. Debit to Accounts Receivable

Suppose Company A places an order with Company B on may 12. on may 14, Company B ships the ordered goods to Company A with terms FOB destination. The goods arrive at Company A on may 17. Company A begins selling goods to customers on May 19 and pays Company B on may 20. When would Company B record the sale of goods to Company A? a. May 12 b. May 14 c. May 19 d. May 17

d. May 17

A company collects an account receivable previously written off. indicate how this transaction would affect (1)assets, (2)stockholders equity, (3)revenues a. Increase, (2) Increase, (3) Decrease b. Increase, (2) Increase, (3) Increase c. Decrease, (2) Decrease, (3) Decrease d. No effect, (2) No effect, (3) No effect

d. No effect, (2) No effect, (3) No effect