Accounting Final

A company borrowed $10,000 by signing a 180 day promissory note at 11%. The maturity value of the note is:

$10,550

Bob company has inventory of 10 units at a cost of $10 each on June 1. On June 3 they purchased 20 units at $12 each. 12 units are sold on June 5. using the fifo periodic inventory method, what is the cost of the 12 units that were sold?

$124

Peach Company had sales of $135,000; sales discounts of $2,000 & sales returns of $3,200. Peach Company's net sales equals:

$129,800

Jack and Jill corp. uses a weighted average perpetual inventory system Aug. ,10 units were purchased at $12 per unit Aug. 18, 15 units were purchased at $14 per unit. Aug. 29, 12 units were sold What was the amount of the cost of goods sold for this sale?

$158.40

Andy company normally sells its products for $20 per unit. However the selling price has fallen to $15 per unit. This company current inventory cosist of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. Calculate the value of this company inventory at the lower of cost or market

$2,600

Nile Inc. had sales of $375,000 & its gross profit was $157,500. Its cost of goods sold equal:

$217,500

Given the following information: What is the amount that needs to be reimbursed?

$373.79

Ticket company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using the lifo perpetual inventory method, what was the cost of the 18 units sold?

$410

Larry company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise & paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is:

$6,482.00

The credit terms 2/10, n/30 are interpreted as:

2% cash discount if the amount is paid within 10 days, with the balance due in 30 days

The entry necessary to establish a petty cash fund should include:

A debit to Petty cash & a credit to Cash

On October 1, Zale company sold merchandise in the amount of $5,800 to Jay, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Zale uses the perpetual inventory system. The journal entry or entries that Zale will make on October 1 is:

Accounts Receivable 5,800 Sales 5,800 Cost of goods sold 4,000 Merchandise Inventory 4,000

An analysis that explains any differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a:

Bank reconciliation

An income statement account that is used to record cash overages and cash shortages arising from petty cash transactions or from errors in making change is titled:

Cash over and Short.

Cash, not including cash equivalents, includes:

Coins, currency, and checking accounts

A company wrote a check on September 30 that did not appear on the bank statement dated September 30 bank reconciliation, the company should:

Deduct the check from the bank statement balance

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Deducted for the book balance of cash

Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses?

FIFO

Credit card expense is not recorded by the seller? True or False

False

Is fair market value a relevant factor in computing depreciation? True or false

False

Management decisions in accounting for inventory cost include customer demand for inventory? True or false

False

The costs of goods pruchase will vary under the different inventory methods of specific identification, FIFO, LIFO, Weighted Average? True or False

False

Sale less sales discounts less sales returns & allowances equals:

Net sales

The impact of technology on internal controls include:

Reduced processing errors

The impact of technology on internal controls includes which of the following:

Reduced processing errors

ABC company has sales of $1,500,000; sales discounts of $102,000; sales returns & allowances of $123,000; shipping charges of $15,000; sales commissions of $34,000; net income totaled $263,500; & COGS of $420,000. What is the net sales amount for the period?

$1,275,000

Luke Inc. purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

$1,568

Legacy company had cash sales of $94,275; credit sales of $83,450; sales returns & allowances of $1,700 & sales discounts of $3,475. Legacy's net sales for this period equal:

$172,550

Carl Company's accountant made an entry that included the following items: debit postage expense $12.42; debit office supplies expense $27.33, debit ti cash over/short $2.19. If the original amount in petty cash is $320, how much is in petty cash before the reimbursement?

$272.06

Roberts company had sales of $695,000 & its cost of goods sold of $278,000. Its gross margin equals:

$417,000

Yellow pepper corp. uses a LIFO perpetual inventory system. Aug. 2, 25 units were purchased at $12 per unit Aug. 5, 10 units were purchased at $13 per unit Aug. 15, 12 units were sold at $25 per unit Aug. 18, 15 units were purchased at $14 per unit 7What was the amount of the ending inventory for the month of August?

$486.00

Melos tires had the following purchases during the current year January 10 units at $120 February 20 units at $130 May. 5 units at $140 September. 12 units at $150 November. 10 units at $160

3800

Cole company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise & paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

4,000.50

Janko corp. uses a fifo perpetual inventory system. Aug. 2, 25 units were purchased at $12 per unit Aug. 5, 10 units were purchased at $13 per unit What was the amount of the ending inventory for the month of August?

496.00

The entry necessary to establish a petty cash fund should include:

A debit to petty cash and a credit to cash.

Merchandise inventory includes:

All goods owned by a company and held for sale.

Accounts receivable information for specific customers is important because it reveals: A) How much each customer has purchased on credit. B) How much each customer has paid. C) How much each customer still owes. D) The basis for sending bills to customers. E) All of these.

All of these

Salvage value is: A) Also called residual value B) Also called scrap value C) An estimate of the asset's value at the end of its benefit period. D) A factor relevant to determining depreciation. E) All of these

All of these

Sellers allow customers to use credit cards: A) To avoid having to evaluate a customer's credit standing B) To lessen the risk of extending credit to customers who cannot pay. C) To speed up receipt of cash from the credit sale. D) To increase total sales volume. E) All of these.

All of these.

Damaged and obsolete goods that can be sold:

Are included in inventory at their net realizable value.

Physical inventory counts.

Are necessary to measure and adjust for inventory shrinkage

Interim statements:

Are usually monthly or quarterly statements prepared in between the traditional, annual statement dates

Multiple step income statements:

Contains more detail than a simple listing of revenues & expenses

At the end of the day, the cash register's record shows $1,000 but the count in the register is $1,035. The proper entry to record this excess includes a:

Credit to Cash Over and Short for $35

In applying the lower of cost or market method to inventory valuation, market is defined as

Current replacement cost

Hancko accepts all major bank credit cards, including omni bank's, which assesses a 4% charge on sales for using its card. On June 28, Hancko ad $3,500 on Omni Card credit sales. What entry should Hancko make on June 28 to record the deposit?

Debit Cash $3,640; debit credit card expense $140; Credit sales $3,500.

On October 1, a customer's account balance of $2,300 was deemed to be uncollectible. What entry should be recorded on October 1 to record the write-off assuming the company uses the direct write-off method?

Debit bad debt expense $2,300; credit Accounts Receivable $2,300.

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period. As a result, in preparing the period's reconciliation, the amount of the check should be:

Deducted for the bank balance of cash.

On a bank reconciliation, an unrecorded debit memorandum for printing checks is:

Deducted from the book balance of cash

Is the process of allocating the expense of the cost of a plant asset.

Depreciation

Failure by a promissory note's maker to pay the amount due at maturity is known as:

Dishonoring a note.

A merchandising company:

Earns net income by buying & selling merchandise

The main principles that can internal control include which if the following:

Establish responsibilities

The principles of internal control include:

Establish responsibilities

When two clerks share the same cash register, which internal control principles is violated?

Establish responsibilities

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:

FIFO

Whether purchase cost are rising or falling, FIFO always yields the highest gross profit and net income? True or False

False

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

For safety, only one person should open the mail & that person should immediately deposit the cash received in the bank

Expenses that support the overall operations of a business & include the expenses relating to accounting, human resource management & financial management are called:

General & administrative expenses

Are good shipped by the owner to the consignee who sells the goods for the owner.

Goods on consignment.

Which if the following is the most serious limitation of internal controls?

Human fraud or human error

A check:

Involves the maker, the payee, & the bank

Merchandise inventory:

Is a current asset

A promissory note received from a customer in exchange for an account receivable:

Is a note receivable for the recipient.

A promissory note:

Is a written promise to pay a specified amount of money at a certain date.

Cost of Goods Sold (COGS):

Is the term used for the cost of buying & preparing merchandise for sale

An error in the period-end inventory causes an offsetting error in the next period and therefore

It is sometimes said to be self correcting

A 90 day note issued on April 10 matures on:

July 9

During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is:

LIFO method

The inventory valuation method that results in the lowest taxable income in a period of inflation is

LIFO method

The person who signs a note receivable and promises to pay the principal and interest is the:

Maker

Beginning inventory plus net cost of purchase is:

Merchandise available for sale

A company's internal control system:

Monitors & controls business activities

A company's internal control system:

Monitors company and employee performance

The document that the purchasing department prepares & sends the vendor to place an order is the

Purchase order

Sales returns:

Refer to merchandise that customers return to the seller after the sale

The consistency principle

Requires a company to consistently use the same accounting method of inventory valuation unless a change will improve financial reporting

The full disclosure principle

Requires that when a change in inventory valuation method is made, the notes to the financial statements reports the type of change, why it was made and its effect on net income

Which of the following accounts would be closed out with a debit?

Sales

An income statement that includes cost of goods sold as another expense & shows only one subtotal for total expenses is a:

Single - step income statement

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:

Specific identification method

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the

Specific identification method

Which of the following are risks of e-commerce?

Stolen credit card numbers, computer viruses and impersonation

Tangible assets used in the operation of a business that have a useful life of more than one accounting period:

Tangible assets

A bank statement includes:

The beginning and ending balance of the depositor's account.

States that an amount can be ignored if its effect on financial statements is unimportant to user's business decisions.

The concept of materiality

Prescribes a company to consistently apply the same accounting method inventory valuation, an exception being when a change from one method to another will improve its financial reporting.

The consistency approach

A check involves three parties:

The maker, the payee, and the bank.

The current period's ending inventory is:

The next period's beginning inventory

Te matching principle prescribes:

The use of allowance method of accounting for bad debts.

Companies which use LIFO for tax reporting must also use it for financial reporting purposes, according to IRS requirements? True or False

True

Goods in transit are not automatically included in inventory? True or False

True

The choice of an inventory valuation method can have a major impact of gross profit and cost of sales? True or False

True

A good system of internal control:

Urges adherence to prescribed managerial policies

A set of procedures & approvals that is designed to control cash disbursements and the acceptance of obligations is referred to as a:

Voucher system

The inventory valuation method that tends to smooth out erratic changes in costs is

Weighted average

The inventory valuation method that tens to smooth out erratic changes in cost is:

Weighted average

Outstanding checks refer to checks that have been:

Written, recorded on the company books, sent to the payee, but have not yet been paid by the bank.

Outstanding checks refer to checks that have been:

Written, then recorded on the company books & sent to the customer, supplier, or creditor, but have not yet been paid by the bank