Fin acct 3
During 2016, Roy Ltd. had a beginning inventory of $45,000, ending inventory of $88,000, and a cost of goods sold of $105,000. What was Roy's 2016 cost of goods purchased?
148,000
On August 1, 2018, Botore, Inc., sold equipment and accepted a six-month, 12%, $40,000 note receivable. How much interest does Botore expect to collect on the maturity date (February 1, 2019)? A. $2,400 B. $3,200 C. $4,800 D. $400
A. $2,400
Accounts Receivable has a debit balance of $2,800, and the Allowance for Uncollectible Accounts has a credit balance of $200. A $30 account receivable is written off. What is the amount of net receivables (net realizable value) after the write-off? A. $2,600 B. $2,770 C. $2,630 D. $2,570
A. $2,600
The income statement for Heritage Foods shows gross profit of $145,000, operating expenses of $125,000, and cost of goods sold of $216,000. What is the amount of net sales revenue? A. $361,000 B. $486,000 C. $270,000 D. $341,000
A. $361,000
Kolker Company uses thepercent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $150,000, and management estimates 3% will be uncollectible. The amount of expense to report on the income statement was $4,500. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $3,000. The balance of Allowance for UncollectibleAccounts, afteradjustment, will be A. $7,500. B. $1,500. C. $7,000. D. $4,500.
A. $7,500.
How is cost of goods sold classified in the financial statements? A. As an expense B. As a revenue C. As a liability D. As an asset
A. As an expense
On March 15, Maxwell Plush sold and shipped merchandise on account for $6,000 to Kittson Amusement Park, terms FOB shipping point, n/30. Maxwell's cost of goods sold is 40% of sales. How is Maxwell impacted by this sale on March 15? A. Its assets will increase, as will its equity. B. Its assets will increase, while its equity remains the same. C. Its assets will remain the same, while its equity decreases. D. Its assets will remain the same, while its equity increases.
A. Its assets will increase, as will its equity.
When does the cost of inventory become an expense? A. When inventory is delivered to a customer B. When payment is made to the supplier C. When cash is collected from the customer D. When inventory is purchased from the supplier
A. When inventory is delivered to a customer
If the adjusting entry to accrue interest on a note receivable is omitted, then A. assets, net income, and stockholders' equity are understated. B. liabilities are understated, net income is overstated, and stockholders' equity is overstated. C. assets are overstated, net income is understated, and stockholders' equity is understated. D. assets, net income, and stockholders' equity are overstated.
A. assets, net income, and stockholders' equity are understated.
Under the allowance method for uncollectible receivables, the entry to record uncollectible-account expense has what effect on the financial statements? A. Increases expenses and increases stockholders' equity B. Decreases net income and decreases assets C. Decreases assets and has no effect on net income D. Decreases stockholders' equity and increases liabilities
B. Decreases net income and decreases assets
An error understated Golden Flash Company'sDecember 31, 2018, ending inventory by $27,000. What effect will this error have on net income for 2019? A. Have no effect on it B. Overstate it C. Understate it
B. Overstate it
Corporation received a four-month 9%, $2,000 note receivable on March 1. The adjusting entry on March 31 will include A. a debit to Interest Receivable for $180. B. a credit to Interest Revenue for $15. C. a debit to Interest Receivable for $60. D. a debit to Cash for $180.
B. a credit to Interest Revenue for $15.
The word market as used in "the lower of cost or market" generally means A. liquidation price. B. net realizable value. C. retail market price. D. original cost.
B. net realizable value.
Fairmont Company has shipped goods to Willowbook Recreation FOB shipping point. Fairmont will recognize sales revenue when: A. the customer has paid the invoice. B. the goods leave Fairmont's shipping dock. C. Willowbrook has received the goods. D. Fairmont and Willowbrook agree that the revenue should be recognized.
B. the goods leave Fairmont's shipping dock.
Tee Corporation had beginning inventory of $28,000 and ending inventory of $36,000. Its net sales were $184,000 and net purchases were $76,000.Tee's gross profit for the period is A. $108,000. B. $184,000. C. $116,000. D. $100,000.
C. $116,000.
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be part of the cost of the candleholder inventory? A. Freight out B. Purchasing agent wages C. Freight in D. Advertising costs
C. Freight in
On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette's year-end is December 31. Which of the following accounts will Avonette credit in the journal entry at maturity on February 1, 2019, assuming collection in full? A. Cash B. Note Payable C. Interest Receivable D. Interest Payable
C. Interest Receivable
New Navy Stores Co. had Merchandise Inventories of $150,000 on January 1st. During the year, the company purchased $230,000. A count of the inventory on December 31st, found total inventories remaining of $105,000. What is the Cost of goods sold for the year?
$275,000
A company's beginning inventory is $60,000, net purchases total $460,000, and net sales are $700,000. With a normal gross profit rate of 60% of sales (cost of goods sold = 40%), how much is ending inventory?
240000
Elizabeth Baker Cosmetics ended the month of March with inventory of $22,000. Elizabeth Baker Cosmetics expects to end April with inventory of $15,000 after selling goods with a cost of $89,000. How much inventory must Elizabeth Baker Cosmetics purchase during April in order to accomplish these results? A. $82,000 B. $126,000 C. $96,000 D. $104,000
A. $82,000
Net credit sales total $1,885,000. Beginning and ending accounts receivable are $69,000 and $61,000, respectively. Calculate the days' sales outstanding. (Round interim calculations to two decimal places, XX.XX and the days' sales outstanding (DSO) up to the next whole day.) A. 13 days B. 12 days C. 10 days D. 19 days
A. 13 days
A company sells on credit terms of 2/10, n/30 and has days' sales in accounts receivable of 30.2 days. Its days' sales outstanding is A. about right. B. too low. C. too high. D. not able to be evaluated from the data given.
A. about right.
An understatement of ending inventory by $2 million in one period results in A. an overstatement of gross profit by $2 million in the next period. B. an overstatement of the beginning inventory by $2 million in the next period. C. an understatement of gross profit by $2 million in the next period. D. no effect on net income of the next period.
A. an overstatement of gross profit by $2 million in the next period.
On August 1, 2018, Botore, Inc., sold equipment and accepted a six-month, 12%, $50,000 note receivable. Botore's year-end is December 31. How much interest revenue should Botore accrue on December 31, 2018? A. $3,050 B. $2,500 C. $6,000 D. $3,000
B. $2,500
A company's sales are $500,000 and cost of goods sold is $360,000. Beginning and ending inventories are $28,000 and $32,000, respectively. How many times did the company turn its inventory over during this period? (Round your answer to one decimal place, X.X.) A. 5.0 times B. 12.0 times C. 16.7 times D. 4.7 times
B. 12.0 times
A company with net credit sales of $1,155,000, beginning net receivables of $80,000, and ending net receivables of $130,000, has days' sales outstanding closest to: (Round interim calculations to two decimal places, XX.XX and the days' sales outstanding (DSO) to the nearest whole day.) A. 43 days. B. 33 days. C. 39 days. D. 36 days.
B. 33 days.
What is the financial impact on a company when a customer returns a product for a refund? A. Sales revenue will decrease because sales revenue will be debited. B. Sales revenue will not be impacted because the company has already accrued for estimated refunds and returns. C. Sales revenue will increase because sales revenue will be credited. D. Returns expense will increase because returns expense will be debited.
B. Sales revenue will not be impacted because the company has already accrued for estimated refunds and returns.
Fisherman Company uses thepercent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $150,000, and management estimates 1% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $2,000. The amount of expense to report on the income statement will be A. $9,000. B. $3,500. C. $1,500. D. $1,000.
C. $1,500.
What is the maturity value of a $40,000, 5%, six-month note? A. $39,000 B. $42,000 C. $41,000 D. $40,000
C. $41,000
Which of the following is included in the calculation of the quick (acid-test) ratio? A. Inventory and prepaid expenses B. Inventory and short-term investments C. Cash and accounts receivable D. Prepaid expenses and cash
C. Cash and accounts receivable
The sum of ending inventory and cost of goods sold is A. gross profit. B. net purchases. C. cost of goods available (or cost of goods available for sale). D. beginning inventory.
C. cost of goods available (or cost of goods available for sale).
When a customer returns a product to Hartville Equipment that the customer purchased on account, Hartville will issue a __________ to authorize a credit to the customer's account receivable on Hartville's books: A. refund note B. return authorization C. credit memo D. manager approval
C. credit memo
On August 1, 2018, Avonette, Inc., sold equipment and accepted a six-month, 9%, $50,000 note receivable. Avonette's year-end is December 31. If Avonette fails to make an adjusting entry for the accrued interest on December 31, 2018, A. net income will be overstated and assets will be overstated. B. net income will be understated and liabilities will be overstated. C. net income will be understated and assets will be understated. D. net income will be overstated and liabilities will be understated.
C. net income will be understated and assets will be understated.
Which U.S. GAAP principle or rule would apply if the net realizable value of a company's inventory is below its original cost? A. Disclosure principle B. Historical cost principle C. Lower-of-cost-or-market rule D. Consistency principle
C. Lower-of-cost-or-market rule
A company's beginning inventory is $110,000, its net purchases are $270,000, and its net sales total $400,000. Its normal gross profit percentage is 40% of sales. Using the gross profit method, how much is ending inventory? A. $130,000 B. $160,000 C. $80,000 D. $140,000
D. $140,000
Palamino Corporation had beginning inventory of $26,000 and ending inventory of $34,000. Its net sales were $153,000 and net purchases were $80,000. Palamino's cost of goods sold for the period is A. $88,000. B. $65,000. C. $47,000. D. $72,000.
D. $72,000.
Washington Products offers credit terms of 3/10, n/45. Which of the following statements is correct? A. The customer can take a 3% discount if the bill is paid within 45 days of the invoice date. B. No discount is offered for early payment. C. The total amount of the invoice must be paid within 10 days of the invoice date. D. A discount of 3% can be taken if the invoice is paid within 10 days of the invoice date.
D. A discount of 3% can be taken if the invoice is paid within 10 days of the invoice date.
Two financial ratios that clearly distinguish a discount chain such as Walmart from a high-end retailer such as Gucci are the gross profit percentage and the rate of inventory turnover. Which set of relationships is most likely for Gucci? Gross profit percentage | Inventory turnover A. Low Low B. Low High C. High High D. High Low
D. High Low
Raider sold goods costing $40,000 to Waco Company FOB Destination on September 30. The goods shipped on October 4. The goods were received by Waco Company on October 8. Waco paid on October 25. Raider is responsible for the shipping charge. TRUE OR FALSE?
True
Mina Corp. has a policy of encouraging customers receiving goods that were in any way damaged in shipment to send them back to the company. Mina would refer to this type of transaction as a: a. Sales allowance. b. Sales discount. c. Sales return. d. Purchase discount. e. Purchase return
c. Sales return
Gap, Inc. received a request from a customer to reduce the invoice price of goods because the goods were damaged in shipment. This type of request is recorded as credit to Accounts Receivable and a debit to: a. Retained Earnings b. Cash c. Sales Revenues d. Sales Returns and Allowances e. Sales Discounts
d. Sales Returns and Allowances
Which of the following statements is FALSE? a. Because the allowance method results in better matching, accounting standards require its use rather than the direct write-off method, unless bad debts are immaterial. b. Allowance for doubtful accounts is a contra account that is used to reduce accounts receivable to its net realizable value. c. An aging schedule typically categorizes the various accounts by the length of time each invoice is outstanding. d. The reason the allowance method of recognizing bad debts is used is primarily because it recognizes higher amount of Accounts receivable on the balance sheet than the direct method. e. Bad Debts expense is debited and Allowance for doubtful accounts is credited at the end of the period to recognize bad debts under the allowance method.
d. The reason the allowance method of recognizing bad debts is used is primarily because it recognizes higher amount of Accounts receivable on the balance sheet than the direct method.
The Frodo Co. offers their customers a reduction in price for early payment. Frodo would refer to this reduction in price as a: a. Quantity discount. b. Sales return. c. Purchase allowance. d. Sales allowance. e. Sales discount.
e. Sales discount.
