ACCOUNTING EXAM 2

Each of the following items is considered a cash equivalent except

180-day note issued by a local government

Transportation-in is

Part of the net cost of purchases

Which of the following is a transposition error?

writing $89 as $98

A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?

2800

Parlato Corp. has an inventory turnover rate of 8 times. Calculate the company's average days to sell inventory.

45.625

Refer to the information provided for Pham Enterprises. What is the company's average-days-to-sell inventory measure?

59.76

Each of the following documents is used in the control of cash disbursements except

Bank credit memos

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

Bank credit memos

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

FIFO

Refer to the information provided for Aaron Corporation. Calculate the Cost of Goods Sold.

$105500

What is Irwin Company's correct inventory balance on January 31, 2019?

$177000

On June 30, a company had $1,924 in its cash account according to its general ledger. This included a deposit of $174 that was in transit on June 30th. The June 30th bank statement contained the following information:

$2014

Refer to the information provided for Tedder Co. If the company uses FIFO inventory costing, how much is cost of goods sold for January?

$230

Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?

$232

Refer to the information provided for Aaron Corporation. Calculate net income.

$65500

Refer to the information provided for Eli Company. If the customer pays the invoice on March 31, 2013, how much sales discount will Eli Company recognize?

-0-

Refer to the information provided for Klump Co. If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is:

1823.75

Refer to the information provided for Eli Company. If the customer pays the amount of the invoice for its purchase on March 14, 2019, how much cash will Eli Company receive?

1980

If a company erroneously records a $50 check received from a customer as $500 in its records, which of the following must occur when reconciling its bank statement?

The company must decrease the balance per its records by $450

Having one employee prepare company checks and sign those checks relates to which internal control activity?

a violation of proper segregation

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the bank statement?

Deposits in transit

During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?

LIFO

A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n)

NFS check

Which of the following is a reconciling item on the bank side of a bank reconciliation?

Outstanding Checks

While preparing a bank reconciliation, which of the following items would be added to the bank statement balance?

Outstanding Checks

Refer to the information provided for Aaron Corporation. Calculate gross margin.

$144500

Refer to the information provided for Tedder Co. If the company uses the LIFO inventory method, how much is inventory on the balance sheet at the end of January?

50

Refer to the information provided for Pham Enterprises. What is the company's inventory turnover ratio for the year ended December 31?

6.108

A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases?

Accounts receivable

In the reconciliation of a bank statement, deposits in transit should be

Added to the unadjusted bank statement balance

Dietz, Inc. sells merchandise on credit. If a customer pays its balance due within the discount period, what is the effect of the payment on Dietz's accounting equation?

Assets and stockholders' equity decrease

If the amount assigned to ending inventory is incorrect,

Both the balance sheet and income statement are affected

Which of the following items would not be a reconciling item on a bank reconciliation?

Canceled Checks

Checks presented for payment and paid by the bank are known as

Canceled checks

Which of the assets listed below is considered the most liquid?

Cash

Which of the following statements best describes the act of collusion?

Collusion is an intentional act of two or more employees to accomplish theft of company assets.

Which inventory cost flow method assigns the cost of the most recent items purchased to cost of goods sold?

LIFO

While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?

Outstanding Checks

Which of the following is not a sound internal control procedure for cash disbursements?

Paying with petty cash to expedite the payment process

Which of the following is the correct entry to establish a petty cash fund in the amount of $300?

Petty Cash Fund $300 Cash: $300

Which of the following entries is necessary for recording the replenishment of the fund?

Postage Expense 48 Office Supplies Expense 146 Delivery Expense 35 Petty Cash 229

Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30?

Purchases 270.00 Accounts payable 270.00

A physical count of inventory is required even though the company uses the perpetual inventory system. This is an example of which of the following internal control activities?

Safeguarding of assets and records

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

The buyer

If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?

The company must increase the balance per its records by $450

At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of

The seller

All of the following would be considered internal control weaknesses except

it takes two days to get a check written because of the approvals required.

The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of

providing management with more complete information from which to control inventories

The operating cycle is the elapsed time between the

purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods.

Cost of goods sold is equal to

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