Exam 2 Acc 284

On October 31 of the current year, unearned service revenue of $4,800 was recognized representing one year of services to be performed over the following 12 months. The adjusting entry on December 31 will include a(n) A)increase to unearned service revenue of $800. B)decrease to unearned service revenue of $4,000. C) increase to service revenue of $800. D)increase to service revenue of $4,000.

C) Increase to service revenue of $800

Which of the following statements is true? A) FIFO results in a lower net income than LIFO when costs are increasing. B) LIFO results in a higher net income than FIFO when costs are increasing. C) LIFO results in a lower net income than FIFO when costs are increasing. D) LIFO results in the same net income as FIFO when costs are increasing.

C) LIFO results in a lower net income than FIFO when costs are increasing.

Which of the following is not a subtotal on the multi-step income statement? A) Gross Profit B) Income before Tax C) Sales Revenue D) Income from operations

C) Sales Revenue

Which of the following is NOT true of a periodic inventory system? A)a purchases account is used B)a physical count of inventory is taken at the end of the period C)the inventory account is reduced for each sale D) there is a possibility of inventory shrinkage

C)the inventory account is reduced for each sale

Inventory is reported as a(n) ______ ?

Current asset on the balance sheet

Which of the following statements regarding cash and cash equivalents is correct? A) Cash equivalents are short-term investments with 3 or less months to maturity. B)Petty cash is accessible stored money utilized for small expenditures like pizza Friday. C) Cash and cash equivalents are one item presented on the balance sheet. D) all the above

D) all the above

In reconciling the checking account, PureLife Company noted the following items for the month of October: Ending bank balance $5,250 Deposits in transit $1,250 Outstanding checks $2,150 Ending book balance $4,500 NSF check $ 125 Bank service charges $ 25 What is the correct cash balance at the end of October? Group of answer choices A) $4,350 B) $4,425 C) $4,500 D) $4,725

D)$4,725

Cyclone Company recently updated its policies and procedures manual. One of the changes made is that only the office manager is allowed to place orders for office supplies. To which principle of control activities does this most closely relate? Segregate duties Restricted Access Document procedures Establish responsibility

Establish responsibility

Service companies sell services rather than ______?

Goods

When goods are sold to a customer with credit terms of 2/10, n/30, the customer will

Receive a 2% discount if they pay within 10 days

Which of the following items is NOT added to the balance of Cash that is reported on a company's Balance Sheet? Cash equivalents Petty Cash Restricted Cash Cash is not reported on BS

Restricted Cash

Southeastern Football Corp is holding goods on consignment from Roll Tide, Inc. The consignment inventory should be included in which company's balance sheet?

Roll Tide, Inc

Which of the following was recently enacted by the government to prevent more corporate accounting scandals? Federal Accounting Standards Board Act. Securities and Exchange Act. Sarbanes-Oxley Act. Clayton Act.

Sarbanes-Oxley Act

At the beginning of the quarter, World Company had supplies of $15,400 recorded. During the quarter, World purchased an additional $35,200 in supplies. At the end of the month, World had $13,900 of supplies on hand. The correct adjusting entry at the end of the quarter is:

Supplies expense +$36,700 Supplies -$36,700

Merchandise shipped FOB shipping point on the last day of the year should be included in

The inventory balance of the buyer

On February 1 ABC borrowed $11,000 and signed a note that promises repayment in a year. The interest rate was 7% annually. The adjusting entry on December 31 will include: a. Debit to Interest Expense of $706 b. Debit to Interest Payable of $675 c. Credit to Interest Expense of $706 d. Credit to Interest Payable of $11,000

a. Debit to Interest Expense of $706

In a period of rising prices, which accounting method will most likely have the highest COGS? a. Periodic LIFO b. Perpetual FIFO c. Periodic FIFO d. Weighted Average

a. Periodic LIFO

Tom's Clothing Store sends $12,000 worth of its $90,000 inventory to Bob's Consignment Store who has $13,000 of its own inventory. At the point in time when the inventory leaves the shipping point, what are the inventories of each store? a. Tom's: $90,000 and Bob's: $25,000 b. Tom's: $90,000 and Bob's: $13,000 c. Tom's: $78,000 and Bob's: $25,000 d. Tom's: $78,000 and Bob's: $13,000

b. Tom's: $90,000 and Bob's: $13,000

If ending inventory is understated in the current year,

cost of goods sold will be understated in the following year

. Orange LLC. utilizes a periodic weighted average inventory method. They make the following purchases and sales: May 2nd: Purchases 100 units at $15 per unit May 7th: Sells 75 units at $35 per unit May 12th: Purchases 125 units at $25 per unit May 25th: Sells 75 units at $45 per unit What was Orange LLC.'s COGS for the month of May assuming they did not have any initial inventory? a. $2,569.44 b. $4,111.11 c. $4,625.00 d. $3,083.33

d. $3,083.33

At the beginning of the quarter Precious Pets has $50,000 in inventory. During the quarter the company purchases $7,900 of new inventory. At the end of the quarter the balance in the Inventory account is $26,500. What is the cost of goods sold?

$31,400

Blue Inc. utilizes a periodic LIFO inventory method. They make the following purchases and sales: August 3rd: Purchases 100 units at $20 per unit August 10th: Purchases 150 units at $25 per unit August 15th: Sells 125 units at $45 per unit August 23rd: Purchases 50 units at $35 per unit August 30th: Sells 75 units at $55 per unit What is the value of Blue Inc.'s inventory at the end of August assuming they started with no inventory? a. $2,000 b. $3,000 c. $8,000 d. $2,500

A) $2,000

Samsung had a beginning inventory of $379,000, ending inventory of $124,000, and purchases of $200,000. What was their cost of goods available for sale (COGAFS) and cost of goods sold (COGS) for the year? COGAFS COGS a. $579,000 and $455,000 b. $455,000 and $579,000 c. $179,000 and $55,000 d. $579,000 and $179,000

A) $579,000 and $455,000

Which of the following is not one of the principles of control activities? A) Provide access B)Establish responsibility C)Document procedures D)Independently verified

A) Provide access

LOST, Inc.'s reported the following (selected) information on its most recent financial statements: Sales $800 Income Tax Expense $15 Interest Expense $6 Cost of Goods Sold $460 Salaries Expense $215 The company's gross profit percentage last period was 48%. Which of the following statements is TRUE in regard to the company's gross profit percentage? (GP % = Gross Profit / Sales Revenues) A) The company is earning 42.5 cents in gross profit on each dollar of sales. B) The company is earning 13 cents in gross profit on each dollar of sales. C) The company's gross profit percentage has increased from last period. D) Gross profit percentage cannot be calculated from the data provided.

A) The company is earning 42.5 cents in gross profit on each dollar of sales.

Failure to make an adjusting entry to recognize rent revenue receivable would cause? A) an understatement of assets, net income, and stockholders' equity. B) an overstatement of assets and stockholders' equity and an understatement of net income. C) no effect on assets, liabilities, net income, nor stockholders' equity. D) an overstatement of assets, net income, and stockholders' equity.

A) an understatement of assets, net income, and stockholders' equity.

Company ABC's bank statement dated Dec. 31, 2019 shows a balance of $802.68. The company's cash record on the same date shows a balance of $846.68. The following additional information is available: Checks Outstanding: No. 846 $300 No. 847 $50 Deposit in Transit $250 NSF Check $102 Service Fee $42 What is the proper adjusted cash balance in the book and bank statement? a. $702.68 b. $602.68 c. $452.68 d. $990.68

A)$702.68

Barnes & Noble begins 2019 with $45,000 of inventory, they have purchases of $350,000, and COGS of $325,000. What is their inventory turnover ratio? a. 5.65 b. 6.09 c. 7.22 d. 5.00

A)5.65

Which one of the following accounts would NOT be closed at the end of the accounting year? Rent expense Sales revenue Accounts payable Dividends

Accounts payable

How should sales discounts appear in the financial statement?

As a deduction in sales

The records of Iowa State University include the following as of June 1, 2010. The PP&E has a balance of $133,000. Depreciation for the month of June 2010 has been estimated at $12,500. What will the balance in the Accumulated Depreciation account be after the related adjustment is recorded on June 30, 2010? a. $120,500 b. $145,500 c. $587,500 d. $612,500

B) $145,000

Pink Co. purchases 40 units of inventory at $50 per unit. After having the inventory on hand for a period of time, they find the Net Realizable value of each unit to be $65. What will Pink Co. record for the total value of the inventory? a. $600 b. $2,000 c. $3,250 d. $2,600

B) $2,000

Auto Parts Inc. began the current month with inventory costing $40,000, then purchased inventory at a cost of $175,000. The perpetual inventory system indicates that inventory costing $120,000 was sold during the month for $160,000. If an inventory count shows that inventory costing $92,000 is actually on hand at month-end, what amount of shrinkage occurred during the month? A) $,1000 B) $3,000 C) $4,000 D) $ 55,000

B) $3,000

On July 1, 2012, Ryan Company paid the premium in advance on a one-year insurance policy on equipment in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. On December 31, 2012, the end of the accounting year, Ryan Company would be required to record an adjusting entry that would include a: A) $2,500 decrease to prepaid insurance. B) $3,000 increase to insurance expense. C) $3,000 increase to prepaid insurance. D) $2,500 increase to insurance expense.

B) $3,000 increase to insurance expense.

The Acme Corporation buys 300 units of merchandise in January at $4 each. Acme buys 500 units at $5 each in February and 200 units at $6 each in March. Acme sells 700 units during this quarter. Acme uses the periodic FIFO method. What is its cost of goods sold for the quarter? A)$3,500 B) $3,200 C)$2,800 D)$2,200

B) $3,200

On October 1, 2010, ABC co. paid $75,000 for its rent for five months from October 2010 through February 2011. The entire amount of the payment was recorded in the prepaid rent account. No adjustments have been recorded. If the company makes an adjustment as of December 31, 2010, what amount should be included in the adjusting entry? a. $30,000 b. $45,000 c. $60,000 d. $75,000

B) $45,000

Consider the following information: beginning inventory was $4,000. Ending inventory (physically counted) was $2,000. Purchases during the period totaled $10,000, and recorded cost of goods sold during the period totaled $9,000. What was the amount of shrinkage during the period? a. $1,000 b. $2,000 c. $3,000 d. $5,000

C) $,000

Target has $250,000 in net sales and a gross profit percentage of 30%. What was Targets COGS? A) $37,500 B) $180,000 C) $175,000 D) 212,500

C) $175,000

On April 1, 2012, Allen Company signed a $100,000, one-year, 6 percent note payable. At due date, March 31, 2013, the principal and interest will be paid. Interest expense and interest receivable should be reported on the income statement (for the year ended December 31, 2012) as A) 6000 B) 3000 C) 4500 D) 1500

C) 4500