Accounting Study

Mountain Made started the month with 3 quilts in its BI that cost $200 each. During the month Mountain Made purchased 7 more quilts for $210. At the end of the month, Mountain Made counted its inventory and found that 2 quilts remained unsold. If Mountain Made uses periodic weighted average cost, its CGS for the month is?

(3x$200)+(7x$210)= $2070/10=207 * 8 = $1,656

An understatement of the 2019 ending inventory will effect ?

-2020 beginning inventory -2019 CGS -2020 CGS

Using a perpetual inventory system, when a company records a sale of merchandise, it must also record

-a decrease in inventory -cost of goods sold, which will be reported in income statement

The Sarbanes Oxley Act aims to reduce fraud by

-counteracting incentives -encourage honest employees -reducing opportunities

the journal entry to record the payment for merchandise previously purchased on account includes a

-credit to cash -debit to accounts payable

In a perpetual system the entry to record the sale of merchandise to a customer on account would include

-credit to inventory -debit to cost of goods sold

In a periodic system the entry to transfer beginning inventory and purchases into cost of goods sold includes a

-debit to CGS -credit to purchases -credit to inventory(beginning balance)

Which of the following are typical reconciling items on the book side of a reconciliation because the company didn't know about them until it got the bank statement?

-electronic funds transfer -interest income -service charges

sales on account

-increase assets and stockholders equity -increase accounts receivable on the balance sheet and sales revenue on the income statement

The gross profit percentage measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold. The ratio is used to ?

-make comparisons over time -compare one company with another

Which of these will require a credit to the inventory account in the perpetual inventory system?

-selling inventory for cash -selling inventory on account

In a perpetual inventory system, which are true?

-the seller should record freight-in as an asset, inventory -the seller should record freight out as a selling expense

on may 1, beginning inventory consists of 10 items at a cost of $10 each. On may 3, 10 items are purchased at $12 each. On may 8, 12 items are sold. On may 15, 10 items are purchased at at $14 each. Using perpetual FIFO, the cost of goods sold for the month ended may 31 equals?

10x$10=100 + 2x$12=$24 ==124$

Acme, Inc. had cost of goods sold of $2,000. If beginning inventory was $2,100 and ending inventory was $500, Acme's purchases must have been $______.

BI+P-CGS=EI --> *P=EI+CGS-BI* 500+2,000-2,100=$400

The income statement for ABC company shows gross profit of $144,000; operating expenses of $130,000; and cost of goods sold of$216,000. What is net sales revenue?

NSR=Gross profit+CGS --> 144,000+216,000=360,000

Gross profit percentage

Net sales - CGS / Net sales * 100

What causes LIFO and Weighted Average Cost methods to differ when using perpetual vs periodic?

The periodic method assumes all purchases during the period occurred before all sales during the period

what does the gross profit % tell you

a higher ratio means that more is available to cover operating expenses

an EFT cash receipt from a customer is

added to the cash balance

deposits in transit have already been

added to your cash balance per your books but not the bank balance

Using the allowance method, bad debt expense is recorded

as an estimate in the period of the related credit sales

deposits in transit are added to the ______ side of the bank reconciliation

bank

In a bank reconciliation, interest revenue on the bank account balance is added to the __________ balance.

book

NSF checks from customers should be subtracted from the _______ balance on a bank reconciliation

book

in a periodic system, the end of period adjustment that adjusts cost of goods sold for the amount in the ending inventory requires a _____ to CGS

credit

Assuming sales remain unchanged if cost of goods sold increases then gross profit...

decreases

outstanding checks written by the company should be a __________ on the company's bank reconciliation

deduction from the bank balance

a bank service charge should be a _______ on a bank reconciliation

deduction from the book balance

Blog Inc. has sales of $50,000, cost of goods sold of $30,000, and selling expenses of $5,000. Its gross profit is ______

gross profit= sales-CGS -->$50,000-$30,000=20,000

Which inventory system requires that the purchases of merchandise be debited to purchases?

periodic

Which inventory system requires that the inventory account be updated at the time merchandise is sold

perpetual

cost of goods sold equals beginning inventory plus _______ minus ending inventory

purchases CGS=BI+P-EI

The journal entry to record the the payment for merchandise previously purchased on account will cause stockholders equity to

remain unchanged

a _________ system is the process for approving and documenting all purchases and payments made on account

voucher