Exam 2 Review

Garza Company had sales of $144,200, sales discounts of $2,175, and sales returns of $3,460. Garza Company's net sales equals:

$138565

Reimburse and record expense in Petty cash

( all are examples) Debit: Miscellaneous expense Debit: Merchandise Inventory Debit: Delivery expense Debit Office expense Credit: cash

Why would the physical count of inventory be different than what is shown in perpetual inventory records?

-Events such as loss -Events such as errors -Events such as theft -Events such as damage

What are the 3 aspects of job design?

1. A job's content - What you do. 2. The work methods or procedures to be used in its performance - How you do it. 3. How it is related to other jobs in the organization - Who you do it with.

Multiple-step income statements three main parts

1. Gross profit 2. Income from operations 3. Net income

Salmone Company reported the following purchases and sales for its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using LIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1Beginning Inventory250 units @ $10 5Purchase270 units @ $12 10Sales 190 units @ $20 15Purchase150 units @ $13 24Sales 140 units @ $21

4,110

Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals: 0.21. 4.51. 4.79. 76.1 days. 80.9 days.

4.79

Use the following information for Shafer Company to compute inventory turnover for year 2. Year 2 Year 1 Net sales $655,000 $584,400 Cost of goods sold 390,000 360,990 Ending inventory 79,200 80,880

4.87

Sandoval needs to determine its year-end inventory. The warehouse contains 37,000 units, of which 4,700 were damaged by flood and are not sellable. Another 3,700 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 5,700 units at a consignee's location. How many units should Sandoval include in its year-end inventory?

41,700

The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents$8,519 Accounts receivable 70,922 Merchandise inventories 60,862 Prepaid expenses 4,200 Accounts payable$15,050 Notes payable 87,138 Other current liabilities 9,600 If net sales for the current year were $611,000, the firm's days' sales uncollected for the year is: (Use 365 days a year.)

42.4 days

A company's net sales are $810,250, its costs of goods sold are $447,260, and its net income is $110,920. Its gross margin ratio equals:

44.8%.

Use the following information for Ephron Company to compute days' sales in inventory for Year 2. Year 2 Year 1 Net sales $ 547,500 $ 572,000 Cost of goods sold 348,500 370,840 Ending inventory 75,700 81,400

79.3

deposit in transit

A deposit recorded by the company but not yet by its bank.

Merchandise inventory includes

All goods that a company owns and holds for sale

Which statement(s) below correctly describe(s) the relationship of cost of goods sold and ending inventory? (Check all that apply.)

Cost of goods sold plus ending inventory will equal the total goods available for sale. Cost of goods available for sale must be allocated between cost of goods sold and ending inventory.

Petty cash record

DEBIT: Petty cash Credit: cash

What are the advantages of group decision making?

DELETE

What is the stepladder technique designed to prevent? Promote?

DELETE

In making decisions, do people pay more attention to descriptive, qualitative information or statistical, quantitative information?

Descriptive qualitative information.

The FIFO cost flow assumption assumes that the cost of items purchased ___ (earliest/latest) are the costs that will be transferred first to cost of goods sold on the ___ (balance sheet/income statement).

Earliest; income statement

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

LIFO method.

Fraud Triangle: Opportunity

The ability of a person to take actions that perpetrate a fraud. ex. unrestricted access to all functions of an accounts payable system enables an employee to generate false vendor payments

Check Register

The book in which you keep records of checks, deposits, debit card transactions, and ATM withdrawals.

What is task identity?

The extent to which employees do an entire or whole piece of work and clearly identify with the results of their effort. Whole Piece Of Work - "ENTIRE" OR "WHOLE" = Task Identity. Skill variety goes up - task Identity also increases. ***

What is autonomy?

The extent to which employees have a major say in scheduling their work, selecting the equipment and methods they will use, checking their own work (quality control), and deciding the procedures to be followed. Job Depth. The extent to which they are allowed to make important decisions regarding their jobs. Auto - Self Craftsmen - high autonomy Assembly line worker - low autonomy

What is task significance?

The extent to which the job and its performance exert a considerable impact on the lives of others. Does what you do matter to other people?

In synectics, what is the job of the facilitator? Technical expert?

The facilitator's job is to structure the problem and help lead the discussion away from the traditional ways of thinking. They help individuals overcome internal inhibitions. The technical expert is present to aid the group in the evaluation of the feasibility of ideas. Synectics is an actual company.

What are Operations Research (OR) techniques? What are they designed to do? What kind of data do they usually require? Are they an aid or substitute for managerial decision-making? What do managers need to think critically about when they use these techniques? Are they applicable to all decisions managers make?

The idea behind OR techniques is to reiterate a systematic way of evaluating alternatives. These are designed to be an aid/supplement to less systematic forms of decision making. These techniques generally require quantitative data. They can not replace the need for managers to think independently and to make judgments. Or techniques are not applicable to all decisions. Require quantitative date. Not ever gonna be used with uncertainty or certainty. Only risk. Most useful in Risk.

What is the reasoning behind the Delphi technique?

The idea of keeping the experts apart in the Delphi technique is to achieve results that are not influenced by social pressure or other psychological aspects of group behavior. Get rid of process losses. Improves creativity. First used in technological forecasting.

What is job enrichment? How is it different from job enlargement?

The intent of enriched jobs is to increase the meaningfulness of work and the experienced responsibility of work outcomes by increasing job content as opposed to just adding more boring or simple tasks (job enlargement). Provides more interesting work of which you can control. AUTONOMY. Breadth AND depth.

What is the relationship between specialization and coordination according to the specialization-coordination dilemma?

The more you specialize (the more I divide up the work between individuals and groups), the more difficult it is to coordinate the different work units. More jobs > more people > harder to coordinate Different departments have different goals Rely on this** If coordination goes UP, specialization goes DOWN. *Why do we specialize? Greater EFFICIENCY and greater technical EXPERTISE. But this creates coordination problems. *Why do we need to coordinate? To be able to change quickly in response to the ENVIRONMENT.

What does span of control mean?

The number of subordinates/people who report directly to a supervisor. You have 50 employees - you have a pretty large span of control (wide)

consignor

The owner of goods being sent to consignment (consignee). The company still owns the merchandise so must include in inventory

Which statement(s) below is(are) correct regarding the purpose of taking a physical inventory count? (Check all that apply.)

The physical count is used to adjust the Inventory account balance to the actual inventory available. The physical count is used to determine if there has been any theft, loss, damage or errors in inventory.

What is the representativeness heuristic? What's the problem with this heuristic?

The representativeness heuristic reflects the tendency of managers to assess the likelihood of an occurrence by matching it with a preexisting category (i.e. stereotype). The problem with this heuristic is that it is irrational and morally reprehensible. It can lead to prejudice and discrimination.

How does the role of the manager shift in network organizations?

The role of managers shifts in a network from that of command and control to more like that of a broker. Broker/managers serve several important boundary roles that aid network integration and coordination.

What is the optimal span of control?

There is no optimal span of control. There are a number of factors that influence how many people a manager can effectively supervise in any given situation. NONE

What is decision-making under conditions of risk?

This condition involves a lack of complete certainty regarding the outcomes of various alternatives, but an awareness of the probabilities associated with their occurrence. Thus, alternatives are known but outcomes are in doubt. This is the most common condition. Ex. Rolling dice. 6 possible outcomes, final outcome unknown. The key element in this condition is accurately determining the probabilities associated with each alternative.

Buyer returns good to seller- Revenue side - Seller Side

This impacts Sellers Revenue and Cost. Debit Sale return and allowance ( a contra revenue account) Credit Cash Assets (-) Equity (-)

Why do we make decisions as managers?

To achieve operative goals and overall organizational goals. To accomplish goals efficiently.

When does an organization need to decentralize?

When an organization grows in size because coordination problems force you to make others responsible/accountable for coordination. So you can change quicker and deal with problems on the spot. Bigger more dynamic environments - the more decentralized you need to become. *****When lower level managers are making more decisions - becoming decentralized. Enriching the job for lower level managers.

falling costs

When cost regularly declines the reverse happens with FIFO, LIFO

The conservatism constraint prescribes that: When multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used. A company use the same accounting methods period after period. Revenues and expenses are reported in the period in which they are earned or incurred. All items of a material nature are included in financial statements. All inventory items are reported at full cost.

When multiple estimates of amounts to be received or paid in the future are equally likely, then the least optimistic amount should be used.

retailer

a channel intermediary that sells mainly to consumers

What is considered current liabilities?

accounts payable wages payable, taxes payable, interest payable, and unearned revenue

Rank the following terms of decision making accuracy: group, average individual in the group, and best member in the group.

best member, group, average individual

Regardless of the inventory costing system used, the cost of goods available for sale must be allocated at the end of the period between

ending inventory and cost of goods sold

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between beginning inventory and net purchases during the period. ending inventory and beginning inventory. net purchases during the period and ending inventory. ending inventory and cost of goods sold. beginning inventory and cost of goods sold.

ending inventory and cost of goods sold.

An inventory error not only affects the current year's cost of goods sold, gross profit, net income, current assets and equity, but also the next period's statements because

ending inventory of one period is the beginning inventory of the next period.

Management at Work As the charge nurse at American Hospital, you are responsible for assigning nurses to their tasks every day. There are six tasks that must be done for the hospital to run efficiently, and these tasks require two levels of skills. At the lower skill level, nurses must bathe, turn, and feed patients. At the higher level, nurses can modify treatments, plan patient care, and order tests. You have decided to ask each nurse to assume responsibility for tasks at both levels of work. Your plan is to give each nurse complete responsibility for his or her own job. The nurses will make their own decisions about how to do their work, and they will be able to order the supplies they need. You can see an illustration of this assignment in the following figure. These employee assignments show a job design strategy of

enrichment

Merchandise

goods that a business purchases to sell

maintain adequate records

helps protect assets and ensures that employees use prescribed procedures

wholesale

in large quantity; less than retail in price

Determining Inventory Costs

include all expenditures necessary to bring an item to a salable condition and location. Invoice cost minus any discount, plus any other cost including shipping, insurance. import duties, storage

Supplementary records

information outside the usual accounting records

All of the following are inventory costing methods used under a periodic inventory system except:

last in, last out

The LIFO cost flow assumption assumes that the cost of items purchased ______ are the costs that will be transferred first to cost of goods sold on the ______ ______.

latest/income statement

What type of account is unearned revenue?

liability

The inventory costing method that results in the lowest taxable income in a period of rising costs is:

lifo Method

The formula to compute cost of goods sold is

merchandise available for sale minus ending inventory

Gross Profit /Gross margin

net sales less cost of goods sold

What i considered long-term liabilities?

notes payable, mortgage payable, bonds payable due in five years

What are considered long term (non-current) investments?

notes receivable, investments in stocks and bonds, land held for future expansion

preform regular and independent reviews

preferably by outside auditors

All of the following are safeguards for inventory except:

preventing risk

Financial accounting primary objective

serving external users

Managerial accounting primary objective

serving internal users

Bot networking

span and virus sent to your PC

Prentice Company had cash sales of $94,450, credit sales of $83,550, sales returns and allowances of $1,775, and sales discounts of $3,550. Prentice's net sales for this period equal:

$172,675.

A company's normal selling price for its product is $21 per unit. However, due to market competition, the selling price has fallen to $16 per unit. This company's current FIFO inventory consists of 210 units purchased at $17 per unit. Net realizable value has fallen to $14 per unit. Calculate the value of this company's inventory at the lower of cost or market.

$2940

A company uses the periodic inventory system and had the following activity during the current monthly period. November 1:Beginning inventory. 112 Units @ $20 November 5:Purchased 112 Units @ $22 November 8:Purchased 62 Units @ $23 November 16:Sold 174 Units @ $105 November 19:Purchased 75 Units @ $25 Using the weighted-average inventory method, the company's ending inventory would be:

$4,147

Cushman Company had $840,000 in sales, sales discounts of $12,600, sales returns and allowances of $18,900, cost of goods sold of $399,000, and $288,960 in operating expenses. Gross profit equals:

$409,500.

A company has sales of $698,400 and cost of goods sold of $279,400. Its gross profit equals:

$419,000.

Recall the formula for figuring Days' Sales in Inventory.

(Ending inventory/Cost of goods sold) x 365

What is the leveling effect?

***** Assembly affect and a process loss. Compromise in a group decision making. Compromise that takes place in group decision making that lowers the quality of the decision but increases acceptance. All of the above.

Storm Windows Company understated their ending inventory during their first year of operations by $2,000. What is the effect of this error at the end of the year?

-$2,000 understatement of net income. -$2,000 overstatement of cost of goods sold.

Which statement(s) below is(are) correct regarding the purpose of taking a physical inventory count?

-The physical count is used to determine if there has been any theft, loss, damage or errors in inventory. -The physical count is used to adjust the Inventory account balance to the actual inventory available.

cash account

-includes cash on hand, checks on hand, and deposits in bank

What are the four inventory cost flows?

1. FIFO 2. LIFO 3. Weighted average 4. Specific identification (know how to solve COGS and ending balances for these)

Financial statements are typically prepared in the following order

1. Income statement 2. Statement of retained earnings 3. Balance sheet

What are the disadvantages of job enrichment?

1. Some employees may not want greater demands or added responsibility. 2. Workers may not have the skills even if they want the enriched jobs. 3. Employees may want more pay 4. Unions don't like this as enrichment typically leads to layoffs. 5. Supervisors may become unhappy with this as their employees will no longer need them. 6. Benefits may not offset technological costs. 7. Poor employee performance is only one factor in productivity. You may have to change something other than job performance (production methods, tools, materials, etc.)

A company's current assets are $30,920, its quick assets are $16,890 and its current liabilities are $12,970. Its acid-test ratio equals:

1.30.

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

2$ cash discount if the amount is paid within 10 days, or the full balance due in 30 days

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale? $304 $296 $288 $280 $276

276

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to the ending inventory using FIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1Beginning Inventory160 units @ $11 5Purchase225 units @ $13 10Sales 145 units @ $21 15Purchase105 units @ $14 24Sales 95 units @ $22

3,355

Giorgio had cost of goods sold of $9,553 million, ending inventory of $2,221 million, and average inventory of $2,097 million. Its inventory turnover equals:

4.56.

merchandiser

A business that sells merchandise, or goods, to customers.

The kind of business that would use the specific identification method of inventory costing includes:

A car dealership

debit memorandum

A decrease in a bank account.

What is the superhero technique?

A fantasy technique using superhero's powers to solve a problem because not bound to rules that we are.

bank reconciliation

A report that accounts for the differences between the bank statement and a checkbook balance

Internal Control System

All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Control of Cash

An effective system of internal control that protects cash and cash equivalents should meet three basic guidelines

Complete the following table by selecting the term that best matches each given example A doctor who can decide what medications a patient will be given is high on this dimension, whereas a nurse who must follow a doctor's orders is low.

Autonomy

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is: A. The ending inventory amount. B. The beginning inventory amount. C. Equal to the cost of goods sold. D. Equal to the cost of goods purchased. E. Equal to the gross profit.

B. The beginning inventory amount.

Inventory System

Beginning inventory + Net purchase = Merch avail for sale Ending inventory = cost of goods

Record Inventory Shrinkage

Beginning of the year: $13,600 Purchased: $42,200 Sold: $35,400 Year-end count: $14,600 1st: 42,200 + 13,600 - 35,400 -14,600= 5800 Record: Debit Cost of goods sold 5800 Credit Merch Inv. 5800 Assets (-) Equity (-)

A company decides which inventory amounts to record to cost of goods sold and which amounts remain in ending inventory:

By selecting one of four possible inventory costing methods.

Grays Company has inventory of 30 units at a cost of $11 each on August 1. On August 3, it purchased 40 units at $12 each. 32 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 32 units that were sold?

Cost of Goods Sold (32) = (30x11)+(2x12) COGS=354

Method Advantage (LIFO)

Cost of goods sold approximates its current cost: it also better matches current cost with revenue

Which of the following costs is not included in the Merchandise Inventory account?

Damaged inventory that cannot be sold

Costs included in the Merchandise Inventory account can include all of the following except: Invoice price minus any discount. Transportation-in. Storage. Insurance. Damaged inventory that cannot be sold.

Damaged inventory that cannot be sold.

Goods sold on credit terms

Debit Account receivable Credit Sales Assets (+) Equity (+)

Sending a return to a Seller (Return to Macy's) jornal transaction

Debit Accounts payable for return amount Credit Merch Inventory for return amount

At the end of the day, the cash register's record shows $1,260, but the count of cash in the cash register is $1,250. The correct entry to record the cash sales is

Debit Cash $1,250; debit Cash Over and Short $10; credit Sales $1,260.

A company had $62 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:

Debit Cash Over and Short for $62.

Jornal FOB shipping point

Debit Merch Inventory for shipping cost Credit Cash for shipping cost (paid for freight , transportation out, freight out) Assets (+ ) (-)

Goods Purchased on credit

Debit Merchandise Inventory Credit Accounts Receivable Equity (+) Equity (+)

Purchase Returns (Buyer)

Debit Merchandise Inventory for full purchase amount ( 250 no discount) Credit Accounts Payable for full balance (250) Return Debit Accounts payable for return amount (50) Credit Merch Inventory for return amount (50) Discount for paying early Debit Accounts payable ( original cost 250- the return items 50 = 200) Credit Merch Inventory for discount ( 200 * .04= 4) Credit Cash for the amount after the return and discount ( 200 * .96= 196) Asset (+ 250, - 50, - 196, -4) = Liabilities ( +500, - 50, -200) + Equity

Merchandising company (Buying from Macy's) jornal transaction

Debit Merchandise Inventory for full purchase amount ( no discount) Credit Accounts Payable for full balance

Havermill Co. establishes a $300 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $78 for Office Supplies, $147 for merchandise inventory, and $27 for miscellaneous expenses. The fund has a balance of $48. On October 1, the accountant determines that the fund should be increased by $60. The journal entry to record the establishment of the fund on September 1 is:

Debit Petty Cash $300; credit Cash $300.

Purchase with allowance (buyer)

Debit accounts payable Credit merchandise inventory Equity (-) (-)

On September 12, Vandelay Company sold merchandise in the amount of $8,000 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,100. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18 and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:

Debit accounts payable 8000 Credit purchase discounts 160 Credit cash 7840

IF a Merchant (Macys) doesn't pay within the discount timeframe then you would:

Debit accounts payable for full amount Credit Cash for full amount

Saddleback Company paid off $44,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Debit accounts payable: 44000 (liability decrease) Credit cash: 44000 (asset decrease)

If Dallas Company billed a client for $24,000 of consulting work completed, the accounts receivable asset increases by $24,000 and:

Debit accounts receivable: 24000 (asset increase) Credit revenue: 24000 (equity increase)

If cash received is less than recorded cash sales

Debit cash Debit cash over or short Credit sales

Collection of Note

Debit: Cash Credit: Notes Receivable

Inventory shrinkage: A. Refers to the loss of inventory. B. Is determined by comparing a physical count of inventory with recorded inventory amounts. C. Is recognized by debiting Cost of Goods Sold. D. Can be caused by theft or deterioration. E. All of these.

E. All of these.

Merchandising companies must account for: A. Sales. B. Sales discounts. C. Sales returns and allowances. D. Cost of merchandise sold. E. All of these.

E. All of these.

Which of the following accounts would be closed with a credit? A. Sales Discounts. B. Sales Returns and Allowances. C. Cost of Goods Sold. D. Operating Expenses. E. All of these.

E. All of these.

How do you calculate ending retained earnings?

Ending Retained earnings = Beginning retained earnings balance - net loss - dividends

Estimates of inventory are not usually required when a company uses a (FIFO/LIFO/periodic/perpetual) inventory system because they would presumably have updated inventory data.

Estimates of inventory are not usually required when a company uses a *PERPETUAL* inventory system because they would presumably have updated inventory data.

Use the following information for the Quick Study below (Static) [The following information applies to the questions displayed below.]Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a periodic inventory system. Also, on December 15, Monson sells 15 units for $20 each. Purchases on December 710 units @ $ 6 cost Purchases on December 1420 units @ $12 cost Purchases on December 2115 units @ $14 cost (Static) Periodic: Inventory costing with LIFO LO P1 Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.

Explanation LIFO—Periodic (10 × $6) + (20 × $12) ($300) (15 × $14) ($210) Ending Inventory $300 Cost of Goods Sold $210

Inventory costs LO C1 A car dealer acquires a used car for $8,000, with terms FOB shipping point. Compute total inventory costs assigned to the used car if additional costs include $190 for transportation-in. $120 for shipping insurance. $1,000 for car import duties. $180 for advertising. $1,400 for sales staff salaries. $160 for trimming shrubs. How many total units should Emma include in her company's period-end inventory?

Explanation The $180 advertising cost, the $1,400 cost for sales staff salaries, and the $160 trimming costs are included in operating expenses—they are not part of inventory costs. Those three costs are not necessary to get the vehicle in a place and condition for sale.

Use the following information for the Quick Study below (Static) Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a periodic inventory system. Also, on December 15, Monson sells 15 units for $20 each. Purchases on December 710 units @ $ 6 cost Purchases on December 1420 units @ $12 cost Purchases on December 2115 units @ $14 cost (Static) Periodic: Inventory costing with weighted average LO P1 Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Amounts to be deducted should be indicated with a minus sign. Round cost per units to 2 decimals.)

Explanation Weighted Average—Periodic ($510 / 45 = $11.33 cost per unit) (30 × $11.33) (15 × $11.33) Ending Inventory $339.90 Cost of Goods Sold $169.95

In which organizational design type, is it most difficult to replace the CEO from within the organization? Why is this the case?

Functional design

divide responsibility for related transactions

Good internal control divides responsibility for a transaction or a series of related transactions between two or more individuals or departments so it can be checked

What is accomplished by accounting

Identifies, records, and communicates + helps people make better decisions

Identify the safeguards that companies implement to protect their inventory. (Check all that apply.)

Implement security measures, such as cameras.Restrict access to inventory.Control access to inventory records.Match inventory received with purchase orders.

To record a check amount error

In the bank reconcililiation: Under book - add check info and debit the difference in amounts

What's the problem with synectics?

It is costly and time-consuming. Synectics is more appropriate for complex and technical problems. If first idea is eliminated after review - you have to start over. You don't separate idea generation.

cash receipts by mail

Keep a triplicate account and Preferably, two people are assigned the task of opening the mail; the cashier deposits the money in the bank; The recordkeeper records the amounts received in the accounting records;

Recount the methods used to assign costs to inventory and cost of goods sold under both a perpetual and a periodic system. (Check all that apply.)

Last-in, first-out Specific identification Weighted average First-in, first-out

Recount the methods used to assign costs to inventory and cost of goods sold under both a perpetual and a periodic system. (Check all that apply.)

Last-in, first-out. Weighted average. First-in, first-out. Specific identification

What job design is least prevalent today? Most prevalent?

Least prevalent - Craft jobs Most prevalent - Specialized jobs

Which organizational design accommodates growth readily?

Matrix or Product

What's the difference between mechanistic and organic organizations?

Mechanistic organizations tend to be formal, focused on efficiency, with many rules and low interdependence of employees while Organic organizations tend to be informal, focused more on flexibility, with more commitment to the organization and depending on employees to utilize personal judgment.

Determining Inventory Items

Merchandise inventory includes all goods that a company owns and holds for sale, regardless of where the goods are located when inventory is counted. Pay special attention to: Goods in transit, consignment, and damaged

What in NGT does one try to eliminate to improve the decision-making process?

NGT tries to eliminate communication between decision-makers to generate more ideas. Negative aspects of the group process - "Process Losses"

Net Income Equation

Net Income = Revenues - Expenses

Garza Company had sales of $141,000, sales discounts of $2,100, and sales returns of $3,385. Garza Company's net sales equals:

Net sales: sales - discounts and returns 141,000 - (2,100 + 3,385) = 135,515

Can inhibitions be totally eliminated in brainstorming sessions?

No - may be able to eliminate verbal inhibitions but not personal unspoken.

What does the irrational/implicit favorite model of decision-making say about decision-making?

Once the implicit "favorite" is chosen, the rest of the alternatives are evaluated against it. This model assumes that the decision maker simply goes through the motions of generating and evaluating more alternatives as a way to justify their initial choice.

The consistency concept: Prescribes a company use the same accounting method of inventory valuation, an exception being when a change from one method to another will improve its financial reporting. Requires a company to use one method of inventory valuation exclusively. Requires that all companies in the same industry use the same accounting methods of inventory valuation. Is also called the full disclosure principle. Is also called the matching principle.

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

Principals of internal control

Principles prescribing management to establish responsibility, maintain records, insure assets, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, and perform reviews.

Pharming

Reroutes requests for legitimate websites to false websites

Computing Income from a service company

Revenues - expenses = Net income

When purchase costs are (rising/declining) ___ , FIFO will report the lowest cost of goods sold yielding the highest gross profit and net income.

Rising

On February 3, Smart Company sold merchandise in the amount of $4,600 to Kennedy Company, with credit terms of 3/10, n/30. The cost of the items sold is $3,175. Smart uses the perpetual inventory system and the gross method. Kennedy pays the invoice on February 8 and takes the appropriate discount. The journal entry that Smart makes on February 8 is:

Sales Discounts = $4,600 × 0.03 = $138 Cash = $4,600 − $138 = $4,462 Debit cash 4462 Debit sales discounts 138 Credit accounts receivable 4600

What two characteristics does job enlargement increase?

Scope and Breadth. Skill variety and Task Identity*

FOB destination

Seller pays for the shipping cost

How do you close a retained earnings account?

Services - Expenses = Closing retained earnings amount Credit this amount

What is job rotation?

Shifting workers through a set of jobs in planned sequence. Purpose to break up the boredom and provide more skill variety and task identity. They also eventually get boring.

Which is more efficient: group or individual decision making? (consider both short term and long term efficiency)

Short term - individual Long term - Group

Are the motivational benefits of job enlargement short-lived or long-lived?

Short-lived Increases amount of more boring things to do every day.

cash equivalents

Short-term (three months) , highly liquid investments that can be readily converted to a specific amount of cash and which are relatively insensitive to interest rate changes. US treasury bill

What type of motivation is best suited to specialized jobs? Enriched jobs?

Specialized - INSTRUMENTAL - An employee who views the job as a means to a paycheck. Enriched - EXPRESSIVE - An employee who sees the job as a means to get personal fulfillment, recognition, etc.

Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?

Specific identification and FIFO

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the: Weighted average inventory method. First-in, first-out method. Last-in, first-out method. Specific identification method. Retail inventory method.

Specific identification method.

One application of internal control when taking a physical count of inventory is the use of pre-numbered inventory tickets. True False

T

The reliability of the gross profit method depends on a good estimate of the gross profit ratio. True False

T

Which of the following statements correctly explains what the inventory turnover ratio assesses.

The inventory turnover ratio assesses how quickly a company is selling its merchandise, so that it can generate cash to pay debts.

What is a devil's advocate?

The job of criticizing ideas. A method for encouraging different views.

Review the statements below and select the ones that are correct regarding the days' sales in inventory ratio. (Check all that apply.)

The ratio is often viewed as a measure of the buffer against out-of-stock inventory. The ratio reveals how much inventory is available in terms of the number of days' sales. The ratio estimates how many days it will take to convert inventory into accounts receivable or cash. The ratio is useful in evaluating liquidity of inventory.

How does standardization and formalization improve coordination?

The rules and regulations apply to most situations. Standardization - When organizations coordinate activities by establishing routines and standard operating procedures that remain in place over time. Formalization - The presence of rules and regulations governing how people in the organization interact.

Fraud Triangle

The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization.

What is the basic purpose of a brainstorming session?

To help generate alternatives. This idea is designed to generate ideas, not evaluate them.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.

Total Sale Units = 240 units + 190 units =>430 units. According to FIFO policy, the items which are first purchased will be sold off first. Accordingly out of 430 units sold. 350 units will be from beginning inventory @ $20 =>350 * $20 =>$7,000 Remaining units = (430 - 350 units) =>80 units from May 5 purchase =>80 units * $22 =>$1,760. Total cost of goods sold =>$7,000 + 1760 =>$8,760.

True or false: If Dogs R Us overstates ending inventory on the balance sheet, then total equity on the balance sheet will be overstated as well.

True

What is decision-making under conditions of uncertainty? When do these conditions occur most? What is the most common case for this type of decision-making?

Under this condition, managers don't know alternatives, their potential outcomes, or the probability of outcomes occurrence. These decisions are the most difficult. These decisions generally occur in cases where there is no historical data available from which to infer probabilities or in instances that are so novel and complex it's impossible to make comparative judgments. The most common case for this type of decision making involves the introduction of new technology. **** How do you tell the difference between risk, certainty, and uncertainty - situational question.

What is meant by the term "confirmatory bias" in decision-making?

We want to find information that gives us good feedback. We want to hear the positives. We want to hear that we are right and sometimes neglecting the negatives.

There are advantages to using each of the four inventory costing methods. Identify the statements below that are correct regarding these advantages. (Check all that apply.)

Weighted average tends to smooth out erratic changes in costs. FIFO assigns an amount to inventory on the balance sheet that approximates its current cost.

When purchase costs are (rising/declining) , FIFO will report the lowest cost of goods sold yielding the highest gross profit and net income.

When purchase costs are *RISING*, FIFO will report the lowest cost of goods sold yielding the highest gross profit and net income.

What is the product design? How are activities grouped?

With this design, each major product line is administered through a separate and semi-autonomous division. This allows both responsiveness to the environment and efficient coordination of a large number of specialized units. So, specialists are grouped together to perform all the duties necessary to produce an individual good or service. Your specialization is second to the importance of the product. Who does all the coordination? Multiple people with common goals. Coordination is getting done faster. BUT specialization goes down. So, so does efficiency and expertise. :(

Income statement: Cost of Goods sold understated / overstated

Year 1: Overstated/Understated Year 2 Understated / Overstated

Income statement: Ending Inventory understated / overstated

Year 1: Understated / Overstated Year 2: Overstated/Understate

Income statement: Net Income understated / overstated

Year 1: Understated / Overstated Year 2: Overstated/Understated

An advantage of the LIFO method is that it best matches

current costs with revenues

NSF check

debit accounts receivable, credit cash

Management at Work As the charge nurse at American Hospital, you are responsible for assigning nurses to their tasks every day. There are six tasks that must be done for the hospital to run efficiently, and these tasks require two levels of skills. At the lower skill level, nurses must bathe, turn, and feed patients. At the higher level, nurses can modify treatments, plan patient care, and order tests. You have decided to assign each nurse to several job tasks within one level of work at the same time. You can see an illustration of this assignment by clicking "Job Assignment" in the following figure. These employee assignments show a job design strategy of

enlargement

What is considered plant assets?

equipment, land currently being used, machinery, building

What is bounded rationality? What three things bind one's rationality?

"Administrative Man" as opposed to "Economic Man." Managers are unable to grasp the full complexity of managerial decisions due to both their (1) limited mental capacity and (2) emotions, and (3) the uncertainty of future events. **** WHAT WILL LIMIT YOUR RATIONALITY?

A company has beginning inventory of 32 units at a cost of $12.00 each on October 1. On October 5, it purchases 22 units at $13.00 per unit. On October 12 it purchases 32 units at $14.00 per unit. On October 15, it sells 66 units. Using the FIFO periodic inventory method, what is the value of the inventory at October 15 after the sale?

$280

A company's inventory records report the following in November of the current year.Beg nov 1- 5 units at $20Purchase nov 2- 10 units at $22Purchase nov 12- 6 units at $25On nov 8- it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what amount of gross profit was earned from the 12 units sold?

$388 Sales = 12*$54=$648 Cogs= (10$22)+(2$20)=$260 Gross profit=$648-$260=$388

Cash management strategies

1. Encourage early collection of receivables 2. Delay payment of Liabilities 3. Keep only necessary assets 4. Plan expenditures 5. Invest excess cash

Beckenworth had cost of goods sold of $10,321 million, ending inventory of $2,989 million, and average inventory of $2,055 million. Its days' sales in inventory equals: (Use 365 days a year.)

105.7 days.

What are the disadvantages of group decision making?

??

Assume that the custodian of a $450 petty cash fund has $56.30 in coins and currency plus $389.00 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

A credit to Cash for $393.70.

Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $500. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts: December 4Freight charge for merchandise purchased$51 December 7Delivery charge for shipping to customer$75 December 12Purchase of office supplies$40 December 18Donation to charitable organization$59 If, in addition to these receipts, the petty cash fund contains $262.75 of cash, the journal entry to reimburse the fund on December 31 will include:

A credit to Cash of $237.25.

Assume that the custodian of a $645 petty cash fund has $127.50 in coins and currency plus $499.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

A debit to Cash Over and Short for $18.00.

What is the Yerkes-Dodson law? (arousal and performance are related in what manner)

A moderate level of arousal that leads to high performance. Curvilinear.

Assuming purchase costs are rising in a periodic inventory system, determine which of the statements below are correct regarding the cost of goods sold under FIFO, LIFO and weighted average cost flow methods. (Check all that apply.)

Companies using FIFO will report the smallest cost of goods sold.Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold.Companies using FIFO will report the highest gross profit and net income.Companies using FIFO will pay higher taxes than companies using LIFO, assuming all else being equal.

If ending inventory at the end of the year is understated, what is the effect on cost of goods sold and net income?

Cost of goods sold will be overstated and net income will be understated.

What is on the right side of a T-account

Credit

Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO.

Determine the cost assigned to the cost of goods sold under Last in, First out. (185 * $21 = $3,885) + (135 * $22 = $2,970) = $6,855

Buyer granted allowance ( seller gives a discount) Seller side

Discount given to customer to entice them to keep product Debit sales return and allowance Credit accounts receivable Asset (-) Equity (-)

invoice approval

Document containing a checklist of steps necessary for approving the recording and payment of an invoice; also called check authorization.

Sales returns and allowances: A. Can provide useful information about dissatisfied customers and the possibility of lost future sales. B. Are recorded in a separate contra-revenue account. C. Are rarely disclosed in published financial statements. D. Are closed to the Income Summary account. E. All of these.

E. All of these.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.

Ending Inventory= (170 * $18 = $3,060) + (130 * $19 = $2,470) = $5,530

Explain what lower of cost or market means in regards to reporting merchandise inventory on the balance sheet.

Inventory should be reported at the current market value of replacing it when lower than cost.

An asset created by prepayment of an insurance premium is

Recorded as a debit to Prepaid Insurance

Days' sales in inventory:

Shows the buffer against out-of-stock inventory.

If a check correctly written and paid by the bank for $472 is incorrectly recorded in the company's books for $407, how should this error be treated on the bank reconciliation?

Subtract $65 from the book balance.

What is the paradox of managerial control as it relates to span of control?

That narrow spans of control allow managers tighter control over their subordinates but this loosens the overall control from top to bottom in the organization because there are now more managerial levels.

Physical Count Of Inventory

The counting of inventory used to verify the balance of inventory

Determine which of the following statements is correct regarding the relationship of ending inventory and beginning inventory.

The ending inventory of the previous period is the beginning inventory of the current period.

What research is NGT (Nominal Group Technique) based on?

This technique was inspired by research that discovered that more and better ideas are discovered by several persons working alone/separately than by the same persons working in an interacting group.

What step in the redesign process is the most important?

Vertical Loading

weighted average aka average cost

Yields results between FIFO and LIFO Requires that we use the AVG cost per unit of inventory at the end of the period.

COSO Risk Assessment

analyze, identify and manage risk factors

COSO Control Activities

establishes policies, procedures and controls to reduce risk of loss

Complete the following table by selecting the term that best matches each given example A person in a one-man band who plays guitar, drums, and harmonica is higher on this dimension than a musician who plays only the piano.

skill variety

Cushman Company had $836,000 in sales, sales discounts of $12,540, sales returns and allowances of $18,810, cost of goods sold of $397,100, and $287,585 in operating expenses. Net income equals:

$119,965.

Determine cost of goods sold for X-mart, assuming that beginning inventory was $5,000. Net purchases were $20,000 and ending inventory was $9,000.

$16,000

Bedrock Company reported a December 31 ending inventory balance of $415,500. The following additional information is also available: The ending inventory balance of $415,500 included $73,900 of consigned inventory for which Bedrock was the consignor. The ending inventory balance of $415,500 included $25,800 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information, the correct balance for ending inventory on December 31 is:

$389,700

A company had the following purchases and sales during its first year of operations: Purchases Sales January:10 units at $155 7 units February:20 units at $160 5 units May:15 units at $165 9 units September:12 units at $170 8 units November:10 units at $175 11 units On December 31, there were 27 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

$4,365.

A company has beginning inventory of 17 units at a cost of $23 each on February 1. On February 3, it purchases 33 units at $25 each. 22 units are sold on February 5. Using the FIFO periodic inventory method, what is the cost of the 22 units that are sold?

$516

A company had inventory on November 1 of 5 units at a cost of $28 each. On November 2, they purchased 18 units at $30 each. On November 6 they purchased 14 units at $33 each. On November 8, 16 units were sold for $63 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

$620

Demonstrate how inventory costs are treated both as assets and expenses by selecting the correct statement(s) below.

-Inventory items retained at the end of the period are considered part of Merchandise Inventory on the balance sheet. -Inventory costs are treated as an expense when they are sold. -Inventory items sold are considered part of cost of goods sold on the income statement.

XYZ Company made a mistake in counting its ending inventory. Determine which of the items below will be affected by this error.

-Net income -Current assets -Cost of goods sold

Sparky's incorrectly included inventory that was on consignment in its ending inventory count. Consequently, the ending inventory was overstated on the balance sheet. Explain how this error will affect this year's income statement.

-This year's cost of goods sold will be too low -This year's net income will be too high

Q-mart failed to include inventory that was kept in a separate warehouse in its end-of-the-period inventory count. Explain how this error will affect this year's balance sheet.

-This year's total assets will be understated. -This year's total equity will be understated.

What are the 4 rules in brainstorming?

1. Criticism is prohibited 2. "Freewheeling" is welcomed-free association, the more off the wall idea, the better. 3. Quantity is wanted; don't worry about quality 4. Combination and improvement is sought

How is NGT different from brainstorming and synectics?

1. It does not rely on free association of ideas. 2. It purposely restricts verbal interaction. Decisions are made individually. Very structured.

Using the following year-end information for Bauman, LLC, calculate the current ratio and acid-test ratio: Cash$51,770 Short-term investments10,800 Accounts receivable44,500 Inventory249,000 Prepaid expenses11,430 Accounts payable93,500 Other current payables25,000

3.10 and 0.90.

What is a modular network organization (i.e., virtual corporation)?

A very flexible version of the network organization. It arranges among partners that can be assembled and reassembled to adapt to the environment. They are suited to organizations in which much of the work can be done interdependently by experts.

What is an assembly effect? Process loss?

Assembly effect - Positive effect Process Loss - negative effect

Merchandise Inventory

Balance sheet with current assets. Inventory includes cost to buy goods (to sell), shipping, and any other costs to get product ready to sale

COSO

Committee of Sponsoring Organizations of the Treadway Commission

COSO Monitoring

Evaluates effectiveness of ERM Program

After companies apply one of the four costing methods, inventory is reviewed to ensure it is reported at the:

Lower of cost or market

Which type of manager has no formal authority in the matrix design?

Project

All of the following statements regarding the financial statement impact of inventory costing are true except.

Selected costing method does not impact net income.

FOB shipping point

The buyer becomes responsible for the shipping cost of the goods they bought

What is skill variety?

The degree to which a job requires the employees to perform a wide range of operations in their work and/or the degree to which employees must use a variety of equipment and procedures in their work. Wide range of tasks - Wide range of skills. Prestige and Salary go up.

How do managers handle high information processing demands in dynamic environments, in terms of both general strategies and specific techniques?

To cope, organizations must acquire, process, and respond to the huge information flow from the external environment to the organization and back. To function effectively, organizations need to develop structures for processing information.

What types of decisions are made irrationally?

Uncertain. Especially non-programmed.

How do unions feel about any attempt from management to redesign jobs?

Unions generally resist job design efforts. They see them as schemes to get more work out of fewer employees. No matter what the change is, they are always going to resist.

The inventory valuation method that tends to smooth out erratic changes in costs is: FIFO. Weighted average. LIFO. Specific identification. WIFO.

Weighted average.

Goods in transit are included in a purchaser's inventory:

When the goods are shipped FOB shipping point.

Which of the costs below would be included in the recorded cost of merchandise inventory? (Check all that apply.)

storage, invoice, and insurance cost

The current period's ending inventory is

the next periods beginning inventory

Hull Company reported the following income statement information for the current year: Sales$416,000 Cost of goods sold: Beginning inventory$141,000 Cost of goods purchased 279,000 Cost of goods available for sale 420,000 Ending inventory 150,000 Cost of goods sold 270,000 Gross profit$146,000 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $26,000. Given this information, the correct gross profit would be:

$120,000.

A company purchases merchandise with a catalog price of $21,500. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?

$13,696.

J ammer Company uses a weighted average perpetual inventory system and reports the following: August 2 Purchase 12 units at $12.50 per unit. August 18 Purchase 14 units at $18.00 per unit. August 29 Sale 24 units. August 31 Purchase 17 units at $15.50 per unit. What is the per-unit value of ending inventory on August 31? (Round your per unit answers to 2 decimal places.)

$15.50

A buyer of $7,600 in merchandise inventory failed to take advantage of the vendor's credit terms of 2/15, n/45, and instead paid the invoice in full at the end of 45 days. By not taking advantage of the cash discount, the buyer lost the discount of:

$152.

On December 31 of the current year, Plunkett Company reported an ending inventory balance of $212,000. The following additional information is also available: Plunkett sold and shipped goods costing $37,400 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $212,000. Plunkett purchased goods costing $43,400 on December 29. The goods were shipped FOB destination and were received by Plunkett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $212,000. Plunkett's ending inventory balance of $212,000 included $14,400 of goods being held on consignment from Carole Company. (Plunkett Company is the consignee.) Plunkett's ending inventory balance of $212,000 did not include goods costing $94,400 that were shipped to Plunkett on December 27 with shipping terms of FOB destination and were still in transit at year-end. Based on the above information, the amount that Plunkett should report in ending inventory on December 31 is:

$154,200

Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales: August 2 10 units were purchased at $12 per unit. August 18 15 units were purchased at $14 per unit. August 29 12 units were sold. What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)

$158.40

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:Beginning inventory, January 1: $4,100Net sales: $70,000Net purchases: $68,000The company's gross margin ratio is 20%. Using the gross profit method, the estimated ending inventory value would be:

$16100

Big Box Store has operated with a 30% average gross profit ratio for a number of years. It had $104,000 in sales during the second quarter of this year. If it began the quarter with $18,400 of inventory at cost and purchased $72,400 of inventory during the quarter, its estimated ending inventory by the gross profit method is:

$18,000

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 11 units that were sold?

$2,215.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO. DateActivitiesUnits Acquired at CostUnits Sold at RetailMay 1Beginning Inventory150 units @ $10.00 5Purchase220 units @ $12.00 10Sales 140 units @ $20.0015Purchase100 units @ $13.00 24Sales 90 units @ $21.00

$2,590

Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales: January 1 150 units were purchased at $9 per unit. January 17 120 units were sold. January 20 160 units were purchased at $11 per unit. January 29 150 units were sold. What is the value of cost of goods sold?

$2,730.

A company purchased $2,300 of merchandise on July 5 with terms 1/10, n/30. On July 7, it returned $250 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

$2030

A company has net sales of $803,100 and cost of goods sold of $580,100. Its net income is $29,780. The company's gross margin and operating expenses, respectively, are:

$223,000 and $193,220

A company has sales of $385,800 and its gross profit is $162,300. Its cost of goods sold equals:

$223,500.

Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales: August 22. 6 units were purchased at $7 per unit. August 18. 31 units were purchased at $9 per unit. August 29. 28 units were sold. What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)

$226.52

Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $26,025. Clayborn's May bank statement shows $23,000 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit$7,900 Outstanding checks$6,400 Bank service fees, not yet recorded by company$115 A NSF check from a customer, not yet recorded by the company$1,410 The adjusted cash balance should be:

$24,500

Grays Company has inventory of 22 units at a cost of $10 each on August 1. On August 3, it purchased 32 units at $12 each. 24 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 24 units that were sold?

$244

A company's inventory records report the following in November of the current year: Beginning November 1 5 units @ $20 Purchase November 2 10 units @ $22 Purchase November 12 6 units @ $25 On November 8, it sold 12 units for $54 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?

$260

A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale? $304 $296 $288 $280 $276

$276 Units available = 5 + 10 + 6 = 21 unitsUnits in inventory = 21 - 8 units = 13 unitsCost of inventory = (5 x $20) + (8 x $22) = $276

Ryan Company deposits all cash receipts on the day they are received and makes all cash payments by check. Ryan's June bank statement shows $26,361 on deposit in the bank. Ryan's comparison of the bank statement to its cash account revealed the following: Deposit in transit3,050 Outstanding checks1,269 Additionally, a $38 check written and recorded by the company correctly, was recorded by the bank as a $83 deduction.The adjusted cash balance per the bank records should be:

$28,187

Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: year 1 year 2 Beginning inventory. $124,500 $130,900 Cost of goods purchased 250,900 279,500 Cost of goods available for sale 375,400 410,400 Ending inventory 130,900 135,900 Cost of goods sold $244,500 $274,500 Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,900 and 2) ending inventory at the end of Year 2 was overstated by $6,900. Given this information, the correct cost of goods sold figure for Year 2 would be:

$297,300

A company had the following purchases and sales during its first year of operations: Purchases Sales January: 10 units at $120 6 units February: 20 units at $125 5 units May: 15 units at $130 9 units September: 12 units at $135 8 units November: 10 units at $140 13 units On December 31, there were 26 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

$3,270.

Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

$3,445.

McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, what is the value of inventory after the October 4 sale?

$3,485

A company had the following purchases and sales during its first year of operations: Purchases Sales January: 10 units at $120 6 units February: 20 units at $125 5 units May: 15 units at $130 9 units September: 12 units at $135 8 units November: 10 units at $140 13 units

$3,540.

A company purchased $3,600 worth of merchandise. Transportation costs were an additional $315. The company returned $250 worth of merchandise and then paid the invoice within the 3% cash discount period. The total cost of this merchandise is:

$3,564.50.

A company has net sales of $906,000 and cost of goods sold of $601,000. Its net income is $108,400. The company's gross margin and operating expenses, respectively, are:

$305,000 and $196,600

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:Beginning inventory, January 1: $4,500Net sales: $45,000Net purchases: $46,000The company's gross margin ratio is 15%. Using the gross profit method, the cost of goods sold would be:

$38,250

Eastview Company uses a perpetual LIFO inventory system, and has the following purchases and sales: January 1 150 units were purchased at $9 per uni t.January 17 120 units were sold. January 20 160 units were purchased at $11 per unit. January 29 150 units were sold. What is the value of ending inventory?

$380.

Buffalo Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available: The ending inventory balance of $412,000 did not include goods costing $48,000 that were purchased by Buffalo on December 28 and shipped FOB destination on that date. Buffalo did not receive the goods until January 2 of the following year. The ending inventory balance of $412,000 included damaged goods at their original cost of $38,000. The net realizable value of the damaged goods was $10,000. Based on this information, the correct balance for ending inventory on December 31 is:

$384,000

A flood destroyed a company's warehouse contents on September 12. The following information was the only information that was salvaged: Inventory, beginning: $29,900 Purchases for the period: $18,900 Sales for the period: $56,900 Sales returns for the period: $890 The company's average gross profit ratio is 21%. What is the estimated cost of the lost inventory using the gross profit method?

$4,552.10.

In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information: Cash balance per company books on January 30$6,025 Deposits in transit at month-end$2,060 Outstanding checks at month-end$650 Bank service charges$38 EFT automatically deducted monthly, not yet recorded by Maxi$640 An NSF check returned on a customer account$395 The adjusted cash balance per the books on January 31 is:

$4,952

Cushman Company had $814,000 in net sales, $356,125 in gross profit, and $203,500 in operating expenses. Cost of goods sold equals:

$457,875.

Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June 1Beginning inventory 20 units at $20 each June 15Sale of 12 units for $50 each June 29Purchase 12 units at $25 each The cost of the ending inventory is:

$460

A company had the following purchases and sales during its first year of operations: Purchases Sales January: 10 units at $120 6 units February: 20 units at $125 5 units May: 15 units at $130 9 units September: 12 units at $135 8 units November: 10 units at $140 13 units On December 31, there were 26 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)

$5,400.

A company had the following purchases during its first year of operations: Purchases January:14 units at $124 February:24 units at $134 May:19 units at $144 September:16 units at $154 November:14 units at $164 On December 31, there were 46 units remaining in ending inventory. These 46 units consisted of 6 from January, 8 from February, 10 from May, 8 from September, and 14 from November. Using the specific identification method, what is the cost of the ending inventory?

$6,784.

A company's inventory records report the following: August 1Beginning balance. 33 units @ $23 August 5Purchase. 28 units @ $22 August 12Purchase 32 units @ $23 On August 15, it sold 66 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?

$621

Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $67,209. Easton's June bank statement shows $63,949 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit$5,900Outstanding checks$2,625Check printing fee, not yet recorded by company$29Interest earned on account, not yet recorded by the company$44 The adjusted cash balance should be:

$67,224

A company purchased $8,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $640 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it was entitled to. The cash paid on June 24 equals:

$7,139.

A company's inventory records report the following in November of the current year: BeginningNovember 1. 4 units @ $5 PurchaseNovember 2. 11 units @ $7 PurchaseNovember 12. 7 units @ $9 On November 8, it sold 13 units for $35 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 13 units sold?

$87

A company had beginning inventory of 11 units at a cost of $26 each on March 1. On March 2, it purchased 11 units at $46 each. On March 6 it purchased 5 units at $31 each. On March 8, it sold 25 units for $74 each. Using the FIFO perpetual inventory method, what was the cost of the 25 units sold?

$885

Fragment Company leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,150. Fragment collected the entire $9,200 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made on December 31 would be:

$9,200 × 3/8 = $3,450 earned by December 31 A debit to Unearned Revenue and a credit to Rent Revenue for $3,450.

A company purchased $10,300 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $650, was added to the invoice amount. On June 20, it returned $1,040 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

$9,725.

What are the steps in NGT?

**** Gonna be given these steps with one that is incorrect and will be asked to identify it. 1. FAMILIARIZE - 7-9 members of varying backgrounds are brought together and presented with a problem. 2. GENERATE - Working silently and alone, each member generates a list of solutions to the problem. 3. SHARE - After a short period, each member presents their ideas one at a time while a facilitator records them. 4. EVALUATE - Each recorded idea is discussed in the group and ideas are re-worded, deleted, combined, or added. 5. CHOOSE/VOTE- The group members vote on the recorded ideas in ranking. The most-preferred alternative is selected.

How does the framing of a decision affect decision-making? Positive framing? Negative framing?

***** Positive frame frames what you can gain. Negative frames what you will lose. The pleasure associated with gaining $20 is far less than the pain of losing $20. If you lose a lot, you will take more risk.

What are the factors that narrow span of control? Widen span of control?

****** Which of the following would be the narrow (or wide) span of control? -New supervisor with no experience - narrow -Supervising people who are inexperienced and lack training how many people can you train? narrow -Dynamic environment rapidly changing? Narrow - fewer people easier to coordinate -Stable environment - wide -Administrative assistant who does all your paperwork - Widen because more time to manage. Narrow if she got fired.

What is satisficing? How does it differ from maximizing? Is it Irrational?

****Satisficing - Managers select the 1st alternative that meets a minimally acceptable standard rather than going through and evaluating all the alternatives and selecting the best one (maximizing). Definitely not rational. To maximize you have to consider everything. When you satisfice you just settle on the first best alternative can lead to maximizing (if you pick the best one first).

What is the relationship between span of control and organizational height?

****The narrower the span of control, the taller the organization and the wider (management wise) the span of control, the flatter the organization. ***If you widen span's control what do you do to management levels? YOu decrease. and vice versa

What is the availability heuristic? What factors cause you to overestimate the frequency of an event? Underestimate the frequency of an event?

***The availability heuristic is used when managers assess the frequency of an event by the degree to which those instances of tat event are recalled in memory. Events that evoke emotion can lead to the overestimating of event frequency (something that is vivid is remembered more strongly even if it is not frequent) and events that are bland or dull can lead to the underestimating of event frequency (dull, bland, easy to forget even if it happened frequently). Judging an event by how frequently something comes to memory.

Falling Costs- LIFO

+ Reports the highest cost of goods sold- yielding the lowest gross profit and income. * Last Inventory purchased is sold first- using the price of merchandise purchased last to calculate the cost of merchandise sold first *Tax: LIFO results in the lowest income taxes (because of lower net income) during times of rising prices- IRS requires if this is used for tax reporting that it is also used for financial reporting

Which of the statements below explain why LCM is used?

-Accounting principles require conservatism when reporting financial information. -Assets are not shown at an inflated value on the balance sheet, but rather at lower of cost or replacement cost. -Companies never want to report inventory on a balance sheet that is higher than replacement cost. -LCM allows companies to recognize a loss in value of an asset in the period the loss occurs.

Assuming purchase costs are rising in a periodic inventory system, determine which of the statements below are correct regarding the cost of goods sold under FIFO, LIFO and weighted average cost flow methods.

-Companies using FIFO will report the smallest cost of goods sold. -Companies using FIFO will pay higher taxes than companies using LIFO, assuming all else being equal. -Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold. -Companies using FIFO will report the highest gross profit and net income.

Assuming purchase costs are declining and a periodic inventory system is used, determine the statements below which correctly describe what is happening to cost of goods sold under FIFO, LIFO and weighted average cost flow methods.

-Companies using LIFO will report the highest ending inventory on their balance sheets, as compared to companies using FIFO or weighted average. -Companies using LIFO will pay higher taxes than companies using FIFO, assuming all else being equal. -Companies using LIFO will report the smallest cost of goods sold. -Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold.

Identify the safeguards that companies implement to protect their inventory.

-Control access to inventory records. -Match inventory received with purchase orders. -Implement security measures, such as cameras. -Restrict access to inventory.

Which statement(s) below correctly describe(s) the relationship of cost of goods sold and ending inventory?

-Cost of goods available for sale must be allocated between cost of goods sold and ending inventory. -Cost of goods sold plus ending inventory will equal the total goods available for sale.

Recount the methods used to assign costs to inventory and cost of goods sold under both a perpetual and a periodic system.

-First-In, First-Out -Last-In, First-Out -Weighted average -Specific identification

Which of the costs below would be included in the recorded cost of merchandise inventory?

-Insurance Costs -Invoice Costs -Storage Costs

Identify the ways in which lower of cost or market can be applied to merchandise inventory.

-It can be applied to each item individually. -It can be applied to major categories of items. -It can be applied to the inventory as a whole.

Q-mart failed to include inventory that was kept in a separate warehouse in its 12/31 end-of-the-period inventory count. Consequently, the ending inventory on 12/31 was understated on the balance sheet. Explain how this error will effect the income statement.

-The current year's net income will be too low. -The current year's cost of goods sold will be too high.

There are advantages to using each of the four inventory costing methods. Identify the statements below that are correct regarding these advantages.

-Weighted average tends to smooth out erratic changes in costs. -FIFO assigns an amount to inventory on the balance sheet that approximates its current cost.

The FIFO cost flow assumption assumes that the cost of items purchased _____ are the costs that will be transferred first to cost of goods sold on the _____.

-earliest -income statement

The LIFO cost flow assumption assumes that the cost of items purchased ______ are the costs that will be transferred first to cost of goods sold on the ______ ______.

-latest -income statement

If goods are shipped FOB shipping point, then the _____ is responsible for paying freight charges and the _____ will not include the merchandise in their inventory.

-purchaser -seller

KLM Corporation's quick assets are $6,123,000, its current assets are $13,440,000 and its current liabilities are $8,144,000. Its acid-test ratio equals:

0.75.

A company's current assets are $20,060, its quick assets are $11,220 and its current liabilities are $12,900. Its quick ratio equals:

0.87.

Problem 5-7A (Static) Periodic: Alternative cost flows LO P1 Seminole Co. began the year with 23,000 units of product in its January 1 inventory costing $15 each. It made four purchases of its product during the year as follows. The company uses a periodic inventory system. On December 31, a physical count reveals that 40,000 units of its product remain in inventory. Mar. 730,000 units @ $18 each May 2539,000 units @ $20 each Aug. 123,000 units @ $25 each Nov. 1035,000 units @ $26 each Required:1. Compute the number and total cost of the units available for sale during the year. 2. Compute the amounts assigned to ending inventory and the cost of goods sold using (a) FIFO, (b) LIFO, and (c) weighted average.

1. Number and total cost of units available for sale: 23,000 units in beginning inventory @ $15= $345,000 30,000 units purchased @ $18=540,000 39,000 units purchased @ $20=780,000 23,000 units purchased @ $25= 575,000 35,000 units purchased @ $26= 910,000 150,000 units available for sale = $3,150,000 2. (a) FIFO periodic Total cost of 150,000 units available for sale = $3,150,000 Less ending inventory on a FIFO basis 35,000 units @ $26= $910,000 5,000 units @ $25 = 125,000 910,000 + 125,000 = 1,035,000 Cost of units sold $2,115,000 (b) LIFO periodic Total cost of 150,000 units available for sale $3,150,000 Less ending inventory on a LIFO basis 23,000 beginning inventory units @ $15= $345,000 17,000 units @ $18 = 306,000 345,000 + 306,000 = 651,000 Cost of units sold $2,499,000 (c) Weighted average periodic Total cost of 150,000 units available for sale= $3,150,000 Less ending inventory at weighted average ($3,150,000 / 150,000) × 40,000 = 840,000* Cost of units sold $2,310,000* *Amount can slightly vary due to differences in rounding.

What are the disadvantages of product design?

1. Coordination between product areas is difficult due to it being across boundaries. 2. It duplicates specialists. 3. Less expertise is developed than in the functional design. 4. Loses economies of scale. Not as efficient as the functional design. 5. A change in product line can be disastrous because the specialists have not kept up to date their technical areas.

What are the disadvantages of a functional design?

1. Coordination process takes longer due to it occurring at higher levels of the organization. 2. No common concern for the overall mission of the organization. 3. Interdepartmental cooperation is a problem due to having different values and goals 4. Cost of coordination can be high. 5. Employees identify with specialty only. 6. Preparation of broadly trained managers is limited. 7. Client satisfaction may be lower because of the coordination problems 8. Slow to respond to environmental change 9. Slow to innovate.

What are the advantages of matrix design?

1. Extremely flexible and responsive. 2. High rate of new product innovation. 3. Achieves specialization without suffering great losses in coordination. 4. Establishes responsibility for all matters relating to a project through the project manager. 5. Minimizes duplication of specialists. 6. Integration of project completion requires lower levels where people have the right information and the expertise to complete the project-achieves coordination. 7. Sets up career paths for both experts (functional managers) and broadly trained managers (project managers). This achieves specialization. SPECIALIZATION AND COORDINATION AT THE SAME TIME.

What are the 5 steps in redesigning a job so it will be enriched? What happens at each step and what task characteristics are increased?

1. Form Natural Work Units - People are grouped together to form a work unit that is given continuous responsibility. Should increase task identity and task significance. 2. Combining Tasks - Combine several tasks into a larger job requiring a broader range of skills. Attempt to increase skill variety and task identity. 3. Establishing Client Relationships - Employees are put in contact with people who use their product or service such as customers. Designed to increase skill variety, task significance, autonomy, and feedback. 4. Vertical Loading - MOST IMPORTANT - Employees are given more latitude in and responsibility for their jobs. Increases autonomy. 5. Performance Feedback- Employees are provided with increased feedback by opening up the communication channels. This helps them provide their own feedback. KNOW THE ORDER OF THESE ** "What step would this scenario be.." "If i eliminate vertical loading... what do I have?" I don't have enrichment - if it's eliminated it is just JOB ENLARGEMENT (combining tasks) ***

What are the advantages of specialized jobs?

1. Less skilled employees = less pay. 2. Jobs take less time to learn - reduced training costs. 3. Repetition leads to limited expertise which increases productivity. 4. More opportunities for utilizing the primary talents of the employee. 5. Work is performed quickly - no shifting tasks. 6. Dependence on particular employee skills is minimized. *EFFICIENCY*, PRODUCTIVITY GOES WAY UP, TRAINING COSTS DECREASE.

Review the steps below that apply LCM to individual items of inventory. Place them in the correct order of occurrence.

1. List the number of units of each product 2. List the cost of each item 3. List the market price of each item 4. Compute total cost and total market value for each item 5. Compare recorded cost of each inventory item with its replacement cost. List lower of cost or market. 6. Adjust inventory downward when market is less than cost

What are the disadvantages of a matrix design?

1. Lose command of control. Top management loses control over activities. 2. Multiple authority roles. Unity of command principle is lost. 3. Personal stress and strain due to ambiguity and reporting to two supervisors. 4. Places a premium on teamwork. 5. Power struggles within the organization between functional and project managers. 6. Employee allegiance is difficult to obtain. 7. Very expensive in terms of communication and control costs. 8. Line-staff separation is blurred. No such thing as a free lunch. Human meat grinder. What kind of employees do you need? Experts who are stress resistant and work well in groups. Very rare and very expensive. Violates Unity of Command on purpose.

What are the advantages of a functional design?

1. Lots of specialization provides best expertise because of its emphasis on functional interest within specialized departments. 2. Efficient use of resources. 3. Provides a simple communication network 4. Simplifies training of specialists 5. Gives status to major functional areas 6. Preserves strategic control at the top management levels. 7. Provides career paths for specialists.

What are the disadvantages of specialized jobs?

1. Low employee motivation 2. Low job satisfaction 3. Low quality job performance 4. High absenteeism 5. High turnover (job quitting) 6. Sabotage and strikes 7. Alcohol and drug abuse THESE OCCUR WHEN YOU HAVE A BAD PERSON JOB-MATCH. NOT THE RIGHT ABILITY OR MOTIVATION FOR THE JOB. These don't happen all the time. What suffers? Quality*

What are the benefits of decentralized organizations?

1. Lower level managers can deal with problems on the spot. 2. It provides opportunity for lower level managers to develop their decision making skills. (Employee Development) 3. Motivation of lower level managers is boosted when they're entrusted to make decisions rather than just always following orders. Jobs are enriched. 4. It spreads the organization's work load out and allows top managers more time for strategic planning.

What are the signs that one's organization is becoming decentralized?

1. More decisions are being made by lower levels of management. 2. More important decisions are made by lower levels of management. 3. More flexibility is allowed for lower level managers in interpreting policies. 4. More autonomy is allowed for lower level managers in decision making.

What are the advantages of product design?

1. Problems get pin-pointed more quickly because you get measures of performance in a shorter time. 2. Develops broadly trained managers. 3. It focuses on client needs and provides greater customer service and satisfaction due to its focus on product. 4. It facilitates coordination for rapid responses because individuals now identify with their product more than their specialty. 5. Shared concern for the task of the organization.

COSO Control Activities (policies and procedures)

1. Selects and develops control activities to mitigate risks 2. Selects and develops information technology general controls 3. Deploys controls through policies and procedures

Why do managers resist delegating authority?

1. The manager feels like they lack trained subordinates. 2. The manager feels like they is only capable of doing the work. 3. the manager may fear that the subordinates will make costly mistakes. 4. The manager may fear that if the subordinate handles the task well then the subordinate could become a competitor. Might get "shown up" 5. The manager may believe that delegating makes them look lazy. 6. The manager may find that it is easier to do it themselves. 7. Fear of losing control.

When does one use the product design?

1. When you have a highly uncertain environment that requires rapid adaptation. 2. When the organization is large. 3. When the organization has multiple product lines. 4. When the goals of the organizations are external effectiveness and adaptation, multiple products, and client satisfaction. Prospector**

When does one use the functional design?

1. When you have a stable environment. 2. When you have one or few product lines. 3. When efficiency and quality are your goals. 4. When the organization is small to medium size. SMALL, ONE PRODUCT, STABLE, EFFICIENT. ***"Who is the only general manager in functional design?" THE CEO - Have to go outside for a replacement.

When does one use the matrix design?

1. When you have technologically sophisticated products or services. (You need experts but you have to be responsive to the environment) 2. When you have a dynamic, uncertain environment that exerts pressure for technical quality and different and new products. 3. When creativity and innovation needs to be balanced against completion deadlines. Very complex, Very large, Many products, Dynamic environment, PROSPECTOR. Product is Prospect in low tech - Matrix is prospect in high tech. Hardest job is the project manager in the matrix (entrepreneurs that operate inside the business) no formal authority.

A company recorded 2 days of accrued salaries of $1,500 for its employees on January 31. On February 9, it paid its employees $7,200 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

1/31 Debit salaries expense: 1500 Credit salaries payable: 1500 2/9 Debit salaries expense: 5700 Debit salaries payable: 1500 Credit cash: 7200

On April 24 of the current year, The Memphis Pecan Company experienced a tornado that destroyed the company's entire inventory. At the beginning of April, the company reported beginning inventory of $228,150. Inventory purchased during April (until the date of the tornado) was $199,200. Sales for the month of April through April 24 were $643,900. Assuming the company's typical gross profit ratio is 50%, estimate the amount of inventory destroyed in the tornado.

105,400

Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:

11.9.

Ulrich had cost of goods sold of $6.7 million, ending inventory of $2.2 million, and average inventory of $1.9 million. Its days' sales in inventory equals:-120.-180.-35.-60.-104.

120Days' Sales in Inventory = Ending Inventory/Cost of Goods Sold * 365Days' Sales in Inventory = $2.2/$6.7 * 365 = 120 days

Grays Company has inventory of 10 units at a cost of $10 each on August 1. On August 3, it purchased 20 units at $12 each. 12 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? $120. $124. $128. $130. $140.

124

Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? Aug. 1 Beginning inventory 10 units @ $10=$100 Aug. 3 Purchase 20 units @ $12=$240 Aug. 6 Sales 12 units sold

124

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1 Beginning Inventory160 units @ $11 5 Purchase225 units @ $13 10 Sales 145 units @ $21 15 Purchase105 units @ $14 24 Sales 95 units @ $22

2,940

Using the following year-end information for Calvin's Clothing, calculate the current ratio and acid-test ratio for the business: Cash$51,680 Short-term investments 8,000 Accounts receivable 46,000 Inventory 150,000 Prepaid expenses 8,520 Accounts payable 102,000 Other current payables 30,100

2.00 and 0.80

Sandoval needs to determine its year-end inventory. The warehouse contains 20,000 units, of which 3,000 were damaged by flood and are not sellable. Another 2,000 units were purchased from Markor Company, FOB shipping point, and are currently in transit. The company also consigns goods and has 4,000 units at a consignee's location. How many units should Sandoval include in its year-end inventory? 29,000 26,000 19,000 23,000 21,000

20,000 - 3,000 + 2,000 + 4,000 = 23,000

Franklin Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on August 31, its Cash account shows a debit balance of $20,662. Franklin's August bank statement shows $20,237 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit$6,750 Outstanding checks$5,400 Bank service fees, not yet recorded by company$125 The bank collected on a note receivable, not yet recorded by the company$1,050 The adjusted cash balance should be:

21,587

The following information is available for Fenton Manufacturing Company at June 30: Cash in bank account$7,955 Inventory of postage stamps$89 Money market fund balance$13,900 Petty cash balance$500 NSF checks from customers returned by bank$1,017 Postdated checks received from customers$766 Money orders$1,757 A nine-month certificate of deposit maturing on December 31 of current year$9,500 Based on this information, Fenton Manufacturing Company should report Cash and Cash Equivalents on June 30 of:

24,112

A company's gross profit (or gross margin) was $126,910 and its net sales were $494,200. Its gross margin ratio is:

25.7%.

A company purchased $2,700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $295 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

2700 - 295 = 2405 2405 x 0.02 = 48.1 2405 - 48.1 = 2356.9

A company purchased $2,700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $650 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:

2700 - 650 = 2050 2050 x .02 = 41 2050 - 41 = 2009 Debit account payable 2050 Credit merchandise inventory 41 Credit cash 2009

A company had net sales of $788,500 and cost of goods sold of $562,260. Its net income was $25,640. The company's gross margin ratio equals:

28.7%

Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: Year 1 Year 2 Beginning inventory $ 120,000 $ 130,000 Cost of goods purchased 250,000 275,000 Cost of goods available for sale 370,000 405,000 Ending inventory 130,000 135,000 Cost of goods sold $ 240,000 $ 270,000 Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,000 and 2) ending inventory at the end of Year 2 was overstated by $6,000. Given this information, the correct cost of goods sold figure for Year 2 would be:

291,000, If ending inventory for Year 1 was reported at $130,000 but was understated by $15,000, the correct ending inventory figure for Year 1 was $145,000. That amount becomes the beginning inventory for Year 2. Add to that amount the $275,000 of cost of goods purchased in Year 2 and you get cost of goods available for sale of $420,000. Finally, the reported ending inventory figure for Year 2 of $135,000 was overstated by $6,000. Thus, the correct ending inventory figure for Year 2 was $129,000. Subtracting ending inventory of $129,000 from cost of goods available for sale of $420,000 yields cost of goods sold of $291,000.

The following information is available for Birch Company at December 31: Money market fund balance$2,830 Certificate of deposit maturing June 30 of next year$15,400 Postdated checks from customers$1,575 Cash in bank account$22,831 NSF checks from customers returned by bank$690 Cash in petty cash fund$240 Inventory of postage stamps$22 U.S. Treasury bill purchased on December 15 and maturing on February 28 of following year$10,400 Based on this information, Birch Company should report Cash and Cash Equivalents on December 31 of:

36,301

Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available: 1. The ending inventory balance of $412,000 include $72,000 of consigned inventory for which Bedrock was the consignor. 2. The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year. Based on this information the correct balance for ending inventory on December 31 is

390,000

Salmone Company reported the following purchases and sales for its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using LIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1Beginning Inventory190 units @ $14 5Purchase240 units @ $16 10Sales 160 units @ $24 15Purchase120 units @ $17 24Sales 110 units @ $25

4,430

A company had net sales of $30,200 and ending accounts receivable of $4,000 for the current period. Its days' sales uncollected equals: (Use 365 days a year.)

48.34 days

What is the optimal size for a decision making group?

5 or 7 - want an odd number - smaller assembly effect.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to ending inventory using LIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1Beginning Inventory290 units @ $14 5Purchase290 units @ $16 10Sales 210 units @ $24 15Purchase170 units @ $17 24Sales 160 units @ $25

5,500

Use the following information for Davis Company to compute inventory turnover for Year 2. Year 2 Year 1 Cost of goods sold 279,500 291,800 Ending inventory 47,700 49,350

5.76

Jefferson Company has sales of $311,000 and cost of goods available for sale of $271,100. If the gross profit ratio is typically 30%, the estimated cost of the ending inventory under the gross profit method would be:

53,400

In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information: Cash balance per company books on April 30$6,200 Deposits in transit at month-end$1,450 Outstanding checks at month-end$770 Bank charge for printing new checks$120 Note receivable and interest collected by bank on Donahue's behalf$620 A check paid to Donahue during the month by a customer is returned by the bank as NSF$630 The adjusted cash balance per the books on April 30 is:

6,070

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1Beginning Inventory310 units @ $16 5Purchase300 units @ $18 10Sales 220 units @ $26 15Purchase180 units @ $19 24Sales 170 units @ $27

6,400

On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available: Beginning inventory, January 1: $4,000 Net sales: $80,000 Net purchases: $78,000 The company's gross margin ratio is 25%. Using the gross profit method, the cost of goods sold would be: $60,000. $20,000. $58,500. $63,000. $19,500.

60,000

Mega Skateboard Supplier had net sales of $4.1 million, its cost of goods sold was $1.6 million, and its net income was $0.7 million. Its gross margin ratio equals:

61%.

A company's net sales were $735,000, its cost of goods sold was $245,490 and its net income was $66,550. Its gross margin ratio equals:

66.6%.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO. Date. Activities Units Acquired at CostUnits Sold at Retail May 1. Beginning Inventory 310 units @ $16 5 Purchase300 units @ $18 10. Sales 220 units @ $26 15. Purchase180 units @ $19 24. Sales 170 units @ $27

7,380

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO. DateActivitiesUnits Acquired at CostUnits Sold at Retail May 1 Beginning Inventory. 330 units @ $18 5 Purchase310 units @ $20 10 Sales 230 units @ $28 15 Purchase190 units @ $21 24 Sales 180 units @ $29

7,540

On September 1 of the current year, Scots Company experienced a flood that destroyed the company's entire inventory. Because the company had not completed its month end reporting for August, it must estimate the amount of inventory lost using the gross profit method. At the beginning of August, the company reported beginning inventory of $216,150. Inventory purchased during August was $192,810. Sales for the month of August were $543,900. Assuming the company's typical gross profit ratio is 40%, estimate the amount of inventory destroyed in the flood.

82,620

Determine which of the following statements are correct regarding the difference between physical flow and the cost flow of inventory. (Check all that apply.)

A business may adopt any cost flow assumption when accounting for perishable items. Physical flow is focused on the actual movement of goods. Perishable items must have an actual physical flow of FIFO. Cost flow is an assumption about which goods/items are sold.

What is a network organization?

A collection of independent, mostly single-function firms that collaborate to produce a good or service.

perpetual inventory system

A detailed inventory system in which a company maintains the cost of each inventory item, and the records continuously show the inventory that should be on hand. - timely info to managers -gives immediate info on inventory -adjusting needed due to inventory shrinkage records cost of goods sold for each sales transaction

What is the functional organizational design? How are activities grouped?

A functionally designed organization groups its activities into separate units or departments in which each undertakes a distinctive function e.g. marketing, production, etc. (think Dominoes) So you have a specialized and focused concentration of functional activities. Grouped in relation to function/expertise area. Divide up the labor. More and more specialists in each department to achieve more specialization (Efficiency and Expertise!). However, their expertise becomes too narrow. Difficult to coordinate. GOOD specialization BAD coordination

What is a matrix design? How are activities grouped?

A product design overlaid onto a functional design. It is structured to reap the benefits of both these designs while avoiding the disadvantages associated with each. Born out of necessity - multiple high tech products with short product lives. Produce quickly to reduce obsolescence. ** Need EXPERTS as employees. Need someone who can COORDINATION. COMBINATION OF FUNCTIONAL AND PRODUCT DESIGN.

What is the primitive/agency organizational design? What are its advantages/disadvantages?

A structure that consists of one boss and a few employees. This strategy is quite flexible but breaks down under conditions of complexity because of the limited information-processing capacity of the boss. The boss' job becomes impossible eventually. Pre-Industrial revolution when the owner did all the organizing.

What is dialectic and how is it used in decision-making?

A structured debate between two conflicting courses of action. These can be useful before making a strategic decision. Ex. One team might present the case for acquiring a firm while another team advocates not making the acquisition.

A company has net sales and cost of goods sold of $752,000 and $543,000, respectively. Its net income is $17,530. The company's gross margin and operating expenses are ________ and ____________, respectively. A. $209,000; $191,470 B. $191,470; $209,000 C. $525,470; $227,000 D. $227,000; $525,470 E. $734,000; $191,470

A. $209,000; $191,470

Sales returns: A. Refer to merchandise that customers return to the seller after the sale. B. Refer to reductions in the selling price of merchandise sold to customers. C. Represent cash discounts. D. Represent trade discounts. E. Are not recorded under the perpetual inventory system until the end of each accounting period.

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

What task characteristic is job depth similar to?

AUTONOMY.

What employee factors should be taken into consideration when designing jobs?

Ability and Motivation

Which of the statements below explain why LCM is used? (Check all that apply.)

Accounting principles require conservatism when reporting financial information. Companies never want to report inventory on a balance sheet that is higher than replacement cost. Assets are not shown at an inflated value on the balance sheet, but rather at lower of cost or replacement cost. LCM allows companies to recognize a loss in value of an asset in the period the loss occurs.

What is the key element to making good decisions under risk?

Accurately determining the probabilities associated with each alternative.

If a check correctly written and paid by the bank for $327 is incorrectly recorded in the company's books for $372, how should this error be treated on the bank reconciliation?

Add $45 to the book balance.

bank reconciliation adjustment: Bank Balance adjustment

Add deposit in transit Subtract outstanding check add or subtract corrections of bank errors

bank reconciliation adjustment: Book Balance adjustment

Add interest earned and unrecorded cash receipts Subtract bank fees and NSF checks Add or subtract corrections of book errors

bank reconciliation: Book Statement recording

Add: Items already added to the bank balance, but not yet added to the book statement Deduct: Items already subtracted from the bank balance but not yet subtracted from the book balance

bank reconciliation: Bank Statement recording

Add: Items already added to the book balance, but not yet added to the bank statement Deduct: Items already subtracted from the book balance but not yet subtracted from the bank balance

What are the advantages and disadvantages of wide spans of control?

Advantages - It can lead to substantial payroll savings by eliminating managerial jobs and it can improve overall communication from the top to the bottom of the organization. Disadvantages - It can decrease managerial control and supervisor-subordinate communication on each managerial level. It can also increase career gridlock. DELETE

What is the gambler's fallacy?

After a series of unfortunate events you think that success is right around the corner. Probability is still the same.

Merchandise inventory includes: All goods owned by a company and held for sale. All goods in transit. All goods on consignment. Only damaged goods. Only non-damaged goods.

All goods owned by a company and held for sale.

credit memorandum

An increase in a bank account- notifies the owner

What can you expect as a result of your job design strategy? Check all that apply. Increased long-term employee satisfaction An initial increase in employee stimulation Increased flexibility when scheduling jobs Increased worker autonomy

An initial increase in employee stimulation Increased flexibility when scheduling jobs Increased worker autonomy Your job design strategy is rotation: moving people back and forth between jobs. Job rotation allows people to learn a job and become efficient at it, but it also gives them some variety in their work. However, because employees are doing the same level of jobs, they can still become bored. Managers use job rotation because it gives them flexibility in scheduling. When many people know many jobs, it is easier to make sure that every job is covered.

periodic inventory system

An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period. -records goods in a purchase account

An understatement of ending inventory will cause An overstatement of assets and equity on the balance sheet. An understatement of assets and equity on the balance sheet. An overstatement of assets and an understatement of equity on the balance sheet. An understatement of assets and an overstatement of equity on the balance sheet. No effect on the balance sheet.

An understatement of assets and equity on the balance sheet.

Damaged and obsolete goods that can be sold: Are never counted as inventory. Are included in inventory at their full cost. Are included in inventory at their net realizable value. Should be disposed of immediately. Are assigned a value of zero.

Are included in inventory at their net realizable value

Physical counts of inventory: Are not necessary under the perpetual system. Are necessary to adjust the Inventory account to the actual inventory available. Must be taken at least once a month. Requires the use of hand-held portable computers. Are not necessary under the cost-to benefit constraint.

Are necessary to adjust the Inventory account to the actual inventory available

Interim financial statements: Are required by the Congress. Are necessary to achieve full disclosure about a business's operations. Are statements prepared for periods of less than one year. Require the use of the perpetual method for inventories. Cannot be prepared if the company follows the conservatism principle.

Are statements prepared for periods of less than one year.

insure assets and bond key employees

Assets are adequately insured against casualty and that employees handling large amounts of cash and easily transferable assets are bonded

What is delegation of authority? Why do managers delegate authority?

Authority is the right to exact action from others or to command. Delegation is the process in which authority passes from one level to another. It allows a manager to identify and utilize employee talents. Giving the employee the freedom to succeed. Power to make a decision, power to perform a task, etc. because you can't do everything yourself.

Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals: A. $5,200. B. $129,800. C. $133,000. D. $135,000. E. $140,200.

B. $129,800. $135,000 - $2,000 - $3,200 = $129,800

Benson Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700, and sales discounts of $3,475. Benson's net sales for this period equal: A. $94,275. B. $172,550. C. $174,250. D. $176,025. E. $177,725.

B. $172,550. $94,275 + $83,450 - $1,700 - $3,475 = $172,550

A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and credit Accounts Receivable $1,500. This means that a customer has taken a ___ cash discount for early payment. A. 1% B. 2% C. 5% D. 10% E. 15%

B. 2% $30/$1,500 = 2% discount

Multiple-step income statements: A. Are required by the FASB. B. Contain more detail than a simple listing of revenues and expenses. C. Are required for the perpetual inventory system. D. List cost of goods sold as an operating expense. E. Can only be used in perpetual inventory systems.

B. Contain more detail than a simple listing of revenues and expenses.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable: A. Reflects an increase in amount due from a customer. B. Recognizes that a customer returned merchandise and/or received an allowance. C. Requires a debit memorandum to recognize the customer's return. D. Is recorded when a customer takes a discount. E. All of these.

B. Recognizes that a customer returned merchandise and/or received an allowance.

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a: A. Balanced income statement. B. Single-step income statement. C. Multiple-step income statement. D. Combined income statement. E. Simplified income statement.

B. Single-step income statement.

Inventory Relation

Beginning Inventory + Net Purchases - Ending Inventory = Cost of Goods Sold

A company had beginning inventory of 11 units at a cost of $26 each on March 1. On March 2, it purchased 11 units at $46 each. On March 6 it purchased 5 units at $31 each. On March 8, it sold 25 units for $74 each. Using the FIFO perpetual inventory method, what was the cost of the 25 units sold?

Beginning Inventory : 11 Units @ 26 each 2 march Purchased cost : 11 Units @ 46 each 6 March Purchased cost : 3 Units @ 31 each (Actual purcahsed is 5 units but sold 3 out those 5) Cost of goods Sold for 25 Units : 11*$26 + 11*$46 + 3*$31 = $885

Explain the inventory and cost of goods sold relationship by selecting the correct formula below.

Beginning inventory + Net purchases - Ending inventory = Cost of goods sold.

When someone is hyper-sensitive to their environment, what type of job design should they be given? Why?

Best suited to a specialized job because the environment provides very little stimulation. Very sensitive to their environment - little stimulation creates moderate arousal in the brain.

When someone is hypo-sensitive to their environment, what type of job design should they be given? Why?

Best suited to an enriched job because it provides them with a lot of stimulation and challenge. Insensitive to their environment. Need a lot of stimulation.

What do adjusting entries affect?

Both income statement and balance sheet accounts

Tax Effects

Both inventory and net income are higher when companies use FIFO in a period of inflation. LIFO results in the lowest income taxes (because of lower net income) during times of rising prices- IRS required if this is used for tax reporting that it is also used for financial reporting

Raleigh Co. has the following products in its ending inventory. Compute the lower of cost or market total for inventory applied separately to each product. Product Quantity Cost per unit Market per unit Jelly 150 $2.00 2.15 Jam 370 $2.65 2.50 Marmalade 260 $3.10 3.05 A) $2,040.50. B) $2,109.00. C) $2,018.00. D) $2,086.50. E) $2,053.50.

C) $2,018.00. Jelly = 150 * $2.00 = $300 Jam = 370 * $2.50 = $925 Marmalade = 260 * $3.05 = $793 Lower of cost or market value = $2,018

Sales less sales discounts less sales returns and allowances equals: A. Net purchases. B. Cost of goods sold. C. Net sales. D. Gross profit. E. Net income.

C. Net sales.

Expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers are: A. General and administrative expenses. B. Cost of goods sold. C. Selling expenses. D. Purchasing expenses. E. Nonoperating activities.

C. Selling expenses.

commitee of sponsoring organizations

COSO Control Environment Risk assessment Control Activities Info and communications Monitoring

On February 3, Smart Company sold merchandise in the amount of $4,100 to Truman Company, with credit terms of 2/10, n/30. The cost of the items sold is $2,830. Smart uses the perpetual inventory system and the gross method. Truman pays the invoice on February 8, and takes the appropriate discount. The journal entry that Smart makes on February 8 is:

Cash 4,018 Sales discounts 82 Accounts receivable 4,100

A company purchased $3,900 worth of merchandise. Transportation costs for the buyer were an additional $340. The company returned $270 worth of merchandise and then paid the invoice within the 3% cash discount period. The total cost of this merchandise is:

Cash Paid = [$39,000 - $270) x 0.97] + $340 = $3.861.10

Over-the-Counter Cash Receipts

Cash register with locked-in record of transactions. Compare cash register record with cash reported. Custody over cash is separate from recordkeeping.

Merchandisers operating cycle

Cash to by product Product is Merch Inventory Credit sales Account Receivables Cash collection

Is decision-making a function of management?

Categorically, NO. Yes. Decision-making is a key activity to every levels of management and is most closely associated with the planning function.

What do the terms "centralized" and "decentralized" mean as they pertain to delegation of authority?

Centralized is the extent to which authority isn't delegated, but concentrated at higher levels of management. Decentralized is the extent to which authority is delegated. These terms are RELATIVE. There is no absolute centralized or decentralized. The more authority delegated to lower level managers - more decentralized. More at the top - centralized. Most centralized - functional Most decentralized - matrix

Under what decision-making condition do decisions get made in the traditional economic model?

Certainty. Descriptive or Prescriptive model? Prescriptive

What is scalar chain or chain of command? What functions does it serve? What structural mechanism does one use to bypass the strict chain of command in organization?

Chain of command exists whenever one individual reports to or is made subordinate to another. A "gangplank" is often used to bypass the strict chain of command. It provides for quicker coordination. Management pyramid. Formal communication network. Where do we bypass the strict chain of command the most? The matrix design. Organized chaos. Where is it bypassed the least? Functional.

cancelled checks

Checks that the bank has paid and deducted from the depositor's account.

What step in the redesign process is job enlargement?

Combining tasks

Assuming purchase costs are rising in a periodic inventory system, determine which of the statements below are correct regarding the cost of goods sold under FIFO, LIFO and weighted average cost flow methods. (Check all that apply.)

Companies using FIFO will report the highest gross profit and net income. Companies using FIFO will report the smallest cost of goods sold. Companies using FIFO will pay higher taxes than companies using LIFO, assuming all else being equal. Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold.

Sarbanes-Oxley Act (SOX)

Companies whose stocks are traded on an exchange- public exchange: Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports. 25 years for not

What does the traditional economic model assume about decision-makers?

Completely rational and you know all alternatives 1. Managers seek to maximize benefits (or minimize costs) 2. Managers are completely rational

Identify the safeguards that companies implement to protect their inventory. (Check all that apply.)

Control access to inventory records. Implement security measures, such as cameras. Restrict access to inventory. Match inventory received with purchase orders.

Where is it more difficult to coordinate within departments or between departments? Why?

Coordination across boundaries is where problems occur due to different values, goals, training, etc. BETWEEN different departments. Different goals going in different directions.

Determine which of the following statements are correct regarding the difference between physical flow and the cost flow of inventory. (Check all that apply.)

Cost flow is an assumption about which goods/items are sold. A business may adopt any cost flow assumption when accounting for perishable items. Perishable items must have an actual physical flow of FIFO. Physical flow is focused on the actual movement of goods.

The inventory turnover ratio is calculated as: Cost of goods sold divided by average merchandise inventory. Sales divided by cost of goods sold. Ending inventory divided by cost of goods sold. Cost of goods sold divided by ending inventory. Cost of goods sold divided by ending inventory times 365.

Cost of goods sold divided by average merchandise inventory

Which statement(s) below correctly describe(s) the relationship of cost of goods sold and ending inventory? (Check all that apply.)

Cost of goods sold plus ending inventory will equal the total goods available for sale. Cost of goods available for sale must be allocated between cost of goods sold and ending inventory.

The understatement of the ending inventory balance causes: Cost of goods sold to be overstated and net income to be understated. Cost of goods sold to be overstated and net income to be overstated. Cost of goods sold to be understated and net income to be understated. Cost of goods sold to be understated and net income to be overstated. Cost of goods sold to be overstated and net income to be correct.

Cost of goods sold to be overstated and net income to be understated.

Cake Mart understated its ending inventory in the current year by $5,00. Cost of goods sold will be too high by $5,000, and this caused net income to be understated by $5,000.0. The company incorrectly reported net income of $100,000. Determine the effect of the error on the financial statements.

Cost of goods sold will be too high by $5,000, and this caused net income to be understated by $5,000.

Cake Mart understated its ending inventory in the current year by $5,000. The company incorrectly reported net income of $100,000. Determine the effect of the error on the financial statements.

Cost of goods sold will be too high by $5,000, and this caused net income to be understated by $5,000.

Guns R Us overstated its ending inventory in the current year by $5,000. The company incorrectly reported $100,000 of net income. Explain the consequences of this error on the current period's income statement.

Cost of goods sold will be too low by $5,000.

A company had the following purchases and sales during its first year of operations: On December 31, there were 38 units remaining in ending inventory. Using the perpetual LIFO inventory costing method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Cost of the ending inventory: From January1520=(20-12)*190 From February3510=(30-12)*195 From May1800=(25-16)*200 From September615=(22-15-4)*205 Cost of the ending inventory $7,445

Spencer Co. has a $300 petty cash fund. At the end of the first month the accumulated receipts represent $53 for delivery expenses, $167 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $58. The journal entry to record the reimbursement of the account includes a:

Credit to Cash for $242.

The assets section of a classified balance sheet usually includes the subgroups

Current assets, long-term investments, plant assets, and intangible assets

In applying the lower of cost or market method to inventory valuation, market is defined as: Historical cost. Current replacement cost. Current sales price. FIFO. LIFO.

Current replacement cost

Decisions management must make in accounting for inventory cost include all of the following except: Costing method. Perpetual or periodic inventory system. Customer demand for inventory. Use of market values or other estimates. Items included in inventory and their costs.

Customer demand for inventory.

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: A. $3,725.00. B. $3,925.00. C. $3,995.00. D. $4,000.50. E. $4,075.00.

D. $4,000.50. [($4,000 - $275) x .98] + $350 = $4,000.50

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the buyer lost the equivalent of ____________ annual interest on the amount of the purchase. A. 12.2% B. 16.2% C. 18.9% D. 24.3% E. 24.5%

D. 24.3% (365 / [45-15]) x .02 = 24.3%

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called: A. Cost of goods sold. B. Selling expenses. C. Purchasing expenses. D. General and administrative expenses. E. Nonoperating activities.

D. General and administrative expenses.

What is the stepladder technique?

DELETE

Goods Damaged or Obsolete

Damaged or obsolete goods are not reported in inventory if they cannot be sold. Damaged or obsolete goods which can be sold are included in inventory at net realizable value. Net realizable value = sales price minus selling costs. Loss is recorded when damage or obsolescence occurs. Damaged and obsolete (and deteriorated) goods are not reported in inventory if they cannot be sold. If these goods can be sold at a reduced price, they are included in inventory at net realizable value. Net realizable value is sales price minus the cost of making the sale. The period when damage or obsolescence (or deterioration) occurs is the period when the loss in value is reported.

What is on the left side of a T-account

Debit

Adjusting entries from bank reconciliation NSF checks

Debit : accts receivable name Credit cash

Payment within discount period (Buyer)

Debit Account payable (200) Credit Merchandise Inventory (discount 10.00) Credit Cash ( pymnt minus discount) (190) Asset (-190) Asset (- 10) Liability (-200)

Payment sent after discount period

Debit Accounts Payable Credit Cash Equity (- ) (-)

A company purchased $2,700 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $650 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:

Debit Accounts Payable $2,050; credit Merchandise Inventory $41; credit Cash $2,009.

Record a discount due to payment during the discount timeframe ( 5/10 n60), record payment less discount ( Macys)

Debit Accounts payable ( original cost 1100- the return items 500 = 600) Credit Merch Inventory for discount ( 600 * .05= 30) Credit Cash for the amount after the return and discount ( 600 * .95= 570)

(SELLER) Sales with Cash Discount transaction ( get payment early)

Debit Accounts receivable (1000) Credit Sales (1000) Debit Cost of goods sold (300) Credit Merchandise Inventory (300) Assets (+ 1000), Equity (+ 1000) Assets ( - 300) Equity (-300)

At the end of the day, the cash register tape shows $1,180 in cash sales, but the count of cash in the register is $1,235. The proper entry to account for this excess is:

Debit Cash $1,235; credit Sales $1,180; credit Cash Over and Short $55.

Purchase without a discount

Debit Merchandise Inventory Credit Cash Equity ( + ) and (-)

If cash received is more than record cash

Debit cash Debit cash over or short Credit sales

Adriana Graphic Design receives $1,700 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction?

Debit cash: 1700 (asset increase) Credit accounts receivable: 1700 (asset decrease)

Sara's Studio provided $390 of dance instruction and rented out its dance studio to the same client for another $220. The client paid cash immediately. Identify the general journal entry below that Sara's Studio will make to record the transaction.

Debit cash: 610 (asset increase) Credit instruction revenue: 390 (equity increase) Credit rental revenue: 220 (equity increase)

Goods sold transaction

Debit cost of goods sold Credit merchandise inventory Assets (-) Equity (-)

Harrod Company paid $4,900 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $4,900, and no adjustments had been made previously. The adjusting entry required on December 31 is:

Debit insurance expense 2450 Credit prepaid insurance 2450

If a company uses $1,350 of its cash to purchase supplies, the effect on the accounting equation would be:

Debit supplies: 1350 (asset increase) Credit cash: 1350 (asset decrease)

A company wants to decrease its $200.00 petty cash fund to $100.00. The entry to reduce the fund is:

Debit to Cash $100.00; credit Petty Cash $100.00.

Havermill Co. establishes a $320 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $80 for Office Supplies, $151 for merchandise inventory, and $29 for miscellaneous expenses. The fund has a balance of $60. On October 1, the accountant determines that the fund should be increased by $64. The journal entry to record the reimbursement of the fund on September 30 includes a:

Debit to Office Supplies for $80.

Check Printing

Debit: Miscellaneous Credit: Cash

bank service charge

Debit: Miscellaneous Expense Credit: Cash

Increasing petty cash after reimbursement

Debit: Petty cash Credit : cash

Adjusting entries from bank reconciliation Bank fees

Debit: miscellaneous expense Credit cash

During the month of July, Clanton Industries issued a check in the amount of $756 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should:

Deduct the check amount from the bank balance.

Under what decision-making conditions do decisions get made in the behavioral model?

Descriptive, Risk, and Uncertainty. Non-programmed decisions. Very irrational behavior. In this model, the decision-maker has already made up their mind on a decision but proceeds to make it appear as if they had not. It sets up the outcome they had already chosen and is therefore a waste of time and money.

What are the different ways managers can coordinate?

Designer - broker serves as a network architect who envisions a set of groups or firms whose collective expertise could be focused on a particular good or service. Process engineering role - the broker serves as a network cooperator who takes the initiative to lay out the flow of resources and relationships and makes certain that everyone shares the same goals, standards, payments, and the like. Nurturing Role - The broker serves as a network developer who nurtures and enhances the network (like team building) to make certain the relationships are healthy and mutually beneficial.

On December 31 of the current year, Hewett Company reported an ending inventory balance of $215,000. The following additional information is also available:• Hewett sold goods costing $38,000 to Trump Enterprises on December 28 and shipped the goods on that date with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $215,000 because they were not in Hewett's warehouse.• Hewett purchased goods costing $44,000 on December 29. The goods were shipped FOB destination and were received by Hewett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $215,000.• Hewett's ending inventory balance of $215,000 included $15,000 of goods being held on consignment from Rumsfeld Company. (Hewett Company is the consignee.)• Hewett's ending inventory balance of $215,000 did not include goods costing $95,000 that were shipped to Hewett on December 27 with shipping terms of FOB destination and were still in transit at year-end.Based on the above information, the correct balance for ending inventory on December 31 is: $194,000 $209,000 $200,000 $171,000 $156,000

E. tart with beginning inventory of $215,000. The information in the first bullet point was handled correctly, although the explanation for why is incorrect. No adjustment. For the second bullet point, the $44,000 of goods should not have been included in ending inventory since the goods were shipped FOB destination. Subtract $44,000. For the third bullet point, ending inventory should not include goods held on consignment from another company. Subtract $15,000. The information in the fourth bullet point was handled correctly. No adjustment. $215,000 - $44,000 - $15,000 = $156,000.

An account used in the periodic inventory system that is not used in the perpetual inventory system is A. Merchandise Inventory B. Sales C. Sales Returns and Allowances D. Accounts Payable E. Purchases

E. Purchases

Where is unity of command violated? In what organizational design type is unity of command violated to the greatest extent?

EVERYWHERE. In every organization managers will bypass chain of command. Where is violated on purpose (the most)? Matrix.

What is a profit center and what are its benefits?

Each product in an organization is a profit center that has expenses and revenues. Each product can be monitored to help make decisions. Gives you feedback but also establishes accountability. Not all the responsibility relies on the CEO.

perpetual transaction recording

Each sales transaction for a merchandiser (cash or on credit) must have 2 entries. One for Revenue, One for cost * Revenue received ( asset increased) from customer * Cost of goods sold ( assets decreased) to the customer

What are the advantages of job enrichment?

Employees have greater freedom and self-discretion and the opportunity to perform more interesting and challenging work. Enriched jobs load high on all job characteristics. Higher motivation, Higher *QUALITY* performance. Opposite of the disadvantages of job specialization.

Days' sales in inventory is calculated as: Ending inventory divided by cost of goods sold. Cost of goods sold divided by ending inventory. Ending inventory divided by cost of goods sold times 365. Cost of goods sold divided by ending inventory times 365. Ending inventory times cost of goods sold

Ending inventory divided by cost of goods sold times 365

Why would the physical count of inventory be different than what is shown in perpetual inventory records? (Check all that apply.)

Events such as theft Events such as errors Events such as loss Events such as damage

net realizable value

Expected selling price (value) of an item minus the cost of making the sale.

Use the following information for the Quick Study below (Static) Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a periodic inventory system. Also, on December 15, Monson sells 15 units for $20 each. Purchases on December 710 units @ $ 6 cost Purchases on December 1420 units @ $12 cost Purchases on December 2115 units @ $14 cost Required:Determine the costs assigned to the December 31 ending inventory based on FIFO method

Explanation FIFO—Periodic (15 × $12) + (15 × $14) (10 × $6) + (5 × $12) Ending Inventory $390 Cost of Goods Sold $120

QS 5-25 (Algo) Analyzing inventory LO A3 Endor Company begins the year with $110,000 of goods in inventory. At year-end, the amount in inventory has increased to $130,000. Cost of goods sold for the year is $500,000. Compute Endor's inventory turnover and days' sales in inventory. Assume there are 365 days in the year.

Explanation Inventory turnover= Cost of goods sold / Average merchandise inventory = $500,000 / [($110,000 + $130,000) / 2] = 4.17 times Days' sales in inventory= Ending inventory / Costs of goods sold × 365 =($130,000 / $500,000) × 365 = 94.90 days

Identifying income tax effect of FIFO vs. LIFO LO A1 Blue Sky Co. is considering either FIFO or LIFO. Determine which method results in the lowest income tax expense in the current year when (a) inventory costs are rising and (b) when inventory costs are falling. The income tax rate is 22%, and is calculated as a percentage of net income.

Explanation a. LIFO When inventory costs are rising, LIFO results in higher cost of goods sold and lower net income. This results in a temporary tax advantage. b. FIFO When inventory costs are falling, FIFO results in higher cost of goods sold and lower net income. This results in a temporary tax advantage.

LIFO and FIFO TOGETHER 2

Explanation (a)FIFO (195 × $28.80) + (145 × $23.80)= ending inventory $9,067 (295 × $13.80) + (480 × $18.80) + (350 × $23.80) = cost of goods sold $21,425 (b)LIFO (295 × $13.80) + (45 × $18.80)= ending inventory $4,917 (195 × $28.80) + (495 × $23.80) + (435 × $18.80)= cost of goods sold $25,575 (c) FIFO Gross profit Sales revenue (1,125 units sold × $43.80 selling price)= $49,27 Less: FIFO cost of goods sold 21,425 Gross profit$27,850 LIFO Gross profit Sales revenue (1,125 units sold × $43.80 selling price)$49,275 Less: LIFO cost of goods sold 25,575 Gross profit $23,700

What are slack resources and how do they relate to reducing the need for information?

Extra resources that organizations can rely on in a pinch. For example, a company that carries inventory does not need as much information about sales demand or lead time. Part-time and temporary employees are another type of slack resource because using them helps employers get around perfectly forecasting sales peaks.

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. Weighted average. LIFO. Specific identification. Lower of cost or market.

FIFO

There are advantages to using each of the four inventory costing methods. Identify the statements below that are correct regarding these advantages. (Check all that apply.)

FIFO assigns an amount to inventory on the balance sheet that approximates its current cost. Weighted average tends to smooth out erratic changes in costs.

During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is: Specific identification method. Average cost method. Weighted-average method. FIFO method. LIFO method.

FIFO method

Which of the following lists the four methods used to assign costs to inventory and to cost of goods sold?

FIFO, LIFO, weighted average and specific Identification

Complete the following table by selecting the term that best matches each given example. The student who knows almost immediately how well he or she did on a test is high on this dimension, but the employee who hasn't talked to his or her boss for a year is probably low.

Feedback

The Securities and Exchange Commission (SEC) has given the task of setting GAAP to the

Financial Accounting Standards Board (FASB)

Sometimes companies must estimate ending inventory. Review the reasons given below for estimating inventory and choose all of the correct responses. (Check all that apply.)

Fire destroyed the inventory warehouse. Interim financial statements need to be prepared. The store was flooded.

Where do you have greater creativity: five individuals generating ideas alone or those same five individuals generating ideas in a group?

Five alone - research behind NGT.

Fraud Triangle: Rationalization

Fraud perpetrators need to rationalize their action as acceptable (for example, I'm doing it for the good of the company).

Which of the following statements is correct regarding goods in transit?

Goods shipped FOB shipping point will be included in the buyer's inventory.

Consignment goods are:

Goods shipped by the owner to the consignee who sells the goods for the owner.

Consignment goods are: Goods shipped by the owner to the consignee who sells the goods for the owner. Reported in the consignee's books as inventory. Goods shipped to the consignor who sells the goods for the owner. Not reported in the consignor's inventory since they do not have possession of the inventory. Always paid for by the consignee when they take possession.

Goods shipped by the owner to the consignee who sells the goods to the owner

Cushman Company had $832,000 in sales, sales discounts of $12,480, sales returns and allowances of $18,720, cost of goods sold of $395,200, and $286,210 in operating expenses. Gross profit equals:

Gross Profit (Margin) = $832,000 − $12,480 − $18,720 − $395,200 = $405,600

Which leads to greater acceptance of the decision and better implementation of the decision: individual or group decision making?

Group Optimal size for a group 7-9

What is groupthink?

Groupthink occurs when people choose not to disagree or raise objections because they don't want to break up positive team spirit.

What is a heuristic? What are the advantages and disadvantages of heuristics?

Heuristic - a labor saving device, a short cut, or a rule of thumb. Mental shortcut we use in making decisions. Best judge of future behavior is past behavior. Heuristics help us cope with complex environments by simplifying them. Advantages of heuristics are 1) time savings and 2) they may produce more good decisions than bad decisions. The major drawback of heuristics is that they implicitly guide our judgment which can lead to us over-relying on them which then can lead us to errors and faulty conclusions (called biases). SATISFICING IS A HEURISTIC.

The process to go from transactions and events to financial statements begins with

Identifying 1. Identify 2. Analyze 3. Record 4. Post 5. Prepare

If goods are shipped FOB shipping point, then the _____ (purchaser/seller) is responsible for paying freight charges and the _______________ (purchaser/seller) will not include the merchandise in their inventory.

If goods are shipped FOB shipping point, then the *PURCHASER is responsible for paying freight charges and the *SELLER will not include the merchandise in their inventory.

How do economic factors affect redesigning of jobs?

If you redesign one job, you probably have to redesign every other job associated with it which can be extremely expensive and time consuming.

What is the discounting the future bias and how does it affect decision-making?

In evaluating alternatives, weighing short-term costs and benefits more heavily than longer-term costs and benefits. This is similar to general procrastination. Avoiding short-term costs or seeking short-term rewards yields problems in the long term.

A company's inventory records report the following: August 1 Beginning balance 31 units @ $21 August 5 Purchase 26 units @ $20 August 12 Purchase 30 units @ $21 On August 15, it sold 62 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?

In the FIFO method, the goods which were purchase first will be sold first. So after the sale of 62 units, the goods left is (31 + 26 + 30 - 62) = 25 Units Value of the ending inventory = (25 * 21) = $525

What are the characteristics of the Delphi technique?

In this technique, all of the experts are kept separate and anonymous. They never meet. No group process at all.

What can you expect as a result of your job design strategy? Check all that apply. Increased job variety Increased job challenge Increased long-term employee satisfaction Increased worker autonomy

Increased job variety Increased job challenge Increased long-term employee satisfaction Increased worker autonomy Your job design strategy is enrichment. Job enrichment involves giving employees the opportunity to learn higher-level skills so that they can grow and develop. More importantly, enriched jobs also contain key motivators such as autonomy and control. As a result, employees experience more satisfaction, commitment, and motivation, which leads to lower turnover and higher performance.

What can you expect as a result of your job design strategy? Check all that apply. Increased worker autonomy Increased job variety Increased job challenge Increased long-term employee satisfaction

Increased job variety Increased job challenge Your job design strategy is enlargement: giving people more of the same level of tasks that they are currently doing. Job enlargement provides skill variety and challenge for employees. If employees feel underworked, this can increase their satisfaction, but it can be stressful if employees feel overworked.

What is group decision making a function of?

Individual contributions + assembly effect - conflict/process losses

When does a manager (under what conditions) use individual decision making rather than group decision making?

Individual.

What is instrumental motivation? Expressive motivation?

Instrumental - Sees work as a means to an end such as a paycheck Expressive - Sees work as an end in itself such as wants to grow through his/her work or wants personal fulfillment and satisfaction from the work itself. CREATIVE FREEDOM - AUTONOMY

Method Advantage (FIFO)

Inventory approximates its current cost: it also follows actual flow of goods for most businesses

Given the following information, determine the cost of the inventory at June 30 using the LIFO perpetual inventory method. June 1 Beginning inventory 20 units at $20 each June 15 Sale of 12 units for $50 each June 29 Purchase 12 units at $25 each The cost of the ending inventory is:

Inventory at the beginning = 20 x $20 = $400 Inventory on 15th June after sale = (20-12) x $20 = $160 Inventory on 30th June = (8 x $20) + (12 x $25) = $460

Expense Recognition Principle

Inventory costs are expensed as cost of goods sold when inventory is sold. Dictates that the recognition of expenses is related to net changes in assets and earning revenues, that is, "let the expense follow the revenues."

Recall the formula for figuring a company's inventory turnover ratio.

Inventory turnover = Cost of goods sold/Average inventory

What is mutual adjustment and when does one use it?

Involves feedback and discussions to jointly figure out how to approach problems and devise solutions that are agreeable to everyone. Very effective when problems are novel and cannot be programmed in advance with rules, procedures, or plans.

Lower of cost or market:

Is applied to each individual item, major categories of items, or the whole inventory.

LCM ( lower cost of market)

Is replacement cost for LIFO, but net realizable value for the other three (FIFO, Weighted, SI) A decline in market means a loss of value in inventory. When this happens it is documented. When market value increases there is no documentation. Debit: Cost of goods sold for difference ( was 11,00 now its 10,000 so 1000 is notes) Credit: Merchandise Inventory

What is job breadth and job depth?

Job Breadth - the number of tasks that a jobholder performs. Horizontal - can go from narrow to wide. Job Depth - The amount of discretion that an individual has to decide job activities and job outcomes. Vertical - can go from high to low.

What are the different aspects of the job characteristics model?

Job core dimensions, Critical psychological states, and personal and work outcomes. DELETE.

What are the 3 moderators that influence effectiveness of job enrichment? How do they influence it?

Job core dimensions, Critical psychological states, and personal and work outcomes. ***** Moderator Box. 1. Knowledge and skill of the employee 2. Growth, need, strength 3. Context satisfaction. 1. Need to have enhanced education - they become their own boss. Putting someone who is not prepared on a job they aren't prepared for - eaten alive. 2. Work for a paycheck vs. working for fulfillment. 3. Make sure they are satisfied with their work environment - pay, benefits, conditions, etc. 1.Able to do it 2.Motivated to do it 3. Work environment doesn't detract ****

QS 5-23 (Algo) Applying LCM to inventories LO P2 Ames Trading Co. has the following products in its ending inventory. Product 1. Mountain bikes 2.Skateboard 3.Gliders Quantity 1. 24 2. 10 3. 30 Cost per Unit 1. 700 2. 200 3. 730 Market per Unit 1. 650 2. 280 3. 670 Compute lower of cost or market for inventory applied separately to each product.

LCM applied to each market: is the lower amount between Cost and Market. EXAMPLE: Mountain bike is 16800 cost, and 15600 Market cost. Put 15600

A company's inventory records report the following in November of the current year: Beginning November 1 4 units @ $14 Purchase November 2 11 units @ $16 Purchase November 12 7 units @ $18 On November 8, it sold 13 units for $44 each. Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 13 units sold?

LIFO (last-in, first-out) COGS= 11*16 + 2*14= $204

A company sells garden hoses and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during September were as follows September 1: beginning balance of 18 units at $13 eachSeptember 12: purchased 30 units at $14 eachSeptember 19: sold 24 units at $30 selling price eachSeptember 20: purchased 24 units at $17 eachSeptember 27: sold 27 units at $30 selling price each If the ending inventory is reported at $276, what inventory method was used?

LIFO method.

The inventory valuation method that results in the lowest taxable income in a period of inflation is: LIFO method. FIFO method. Weighted-average cost method. Specific identification method. Gross profit method.

LIFO method.

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to ending inventory using LIFO.

Last In, First Out 80 comes from the difference of (255-220) + (220-175) = 80 10 comes from the difference of (135-125) = 10 Ending Inventory = (220 * $17 = $3,740) + (80 * $19 = $1,520) + (10 * $20 = $200) = $5,460

Recall the four inventory costing methods used to assign costs to inventory and cost of goods sold under the periodic inventory system. (Check all that apply.)

Last-in, first-out First-in, first-out Weighted average Specific identification

Generally accepted accounting principles require that the inventory of a company be reported at: Market value. Historical cost. Lower of cost or market. Replacement cost. Retail value.

Lower of cost or market

What is the job of a project manager in the matrix design?

Make sure you are coordinated.

Method Advantage (SI)

Matches the cost of items with the revenue they generate

Retail Inventory Method

Method for estimating ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail. 1. Goods available for retail sale - Net sales at retail = Ending Inventory at retail 2. Goods at available at sale cost / Goods available for sale at retail = cost to retail ratio 3. Ending Inventory at retail x Cost to retail ratio = Estimated ending inventory at cost

When are standardization and formalization appropriate and inappropriate to use?

Most appropriate in situations that are relatively stable and unchanging. Inappropriate in times when rules and procedures prevent timely action to address a problem.

Which decision-making condition is most common? Least common? Most difficult?

Most common - Risk Least common (and easiest) - Certainty Most difficult - Uncertainty How do you tell the difference? Probabilities.

gross profit calculations

Net sales - Cost of goods = Gross profit

Computing Income from a merchandiser

Net sales- cost of goods = Gross profit Gross Profit - expenses = Net income

If a period-end inventory amount is reported in error, it can cause a misstatement in all of the following except:

Net sales.

What does the behavioral model assume about decision makers?

Opposite of traditional economic. Bounded in your rationality and you satisfice. Select the first alternative that is just good enough. Descriptive model. Risk and occasionally uncertainty. The rarity is certainty.

What function of management is concerned with job design and organizational design?

Organizing - Division of Labor and Coordination.

What is considered intangible assets?

Patents, trademarks, copyrights, franchises, and goodwill

In making decisions, people often violate the law of large numbers. What does that mean and why does it occur?

People tend to think they know better than others. Small samples are less accurate and less reliable. Your decision is going down.

The full disclosure principle: Prescribes that the notes to the financial statements report the change from one inventory valuation method to another. Requires that companies use the same accounting method for inventory valuation period after period. Is not subject to the consideration of materiality. Is only applied to retailers and manufacturers. Is also called the consistency principle.

Prescribes that the notes to the financial statements report the change from one inventory valuation method to another.

What's the difference between programmed and non-programmed decisions?

Programmed decisions are specific procedures that have been developed for repetitive and routine problems while Non-programmed decisions are novel, unique, and specific to management problems. Non-programmed decisions deserve special treatment as they are complex or extremely important and have not arose previously. NEW DIFFERENT COMPLEX = non-program. Specialized, Enlarged, Enriched - Where do you make the most programmed decisions? Enlarged. Non-programmed? Specialized.

Do managers make more programmed or non-programmed decisions in general?

Programmed.

What is the job of a functional manager in the matrix design?

Providers of scarce resources (quality employees) that different project managers desire. Make sure people are experts in their area.

RECAP: Macy buys merchandise and has a return and gets discount:

Purchase Debit Merchandise Inventory for full purchase amount ( 1100 no discount) Credit Accounts Payable for full balance (1100) Return Debit Accounts payable for return amount (500) Credit Merch Inventory for return amount (500) Discount for paying early Debit Accounts payable ( original cost 1100- the return items 500 = 600) Credit Merch Inventory for discount ( 600 * .05= 30) Credit Cash for the amount after the return and discount ( 600 * .95= 570)

Show your understanding of the ownership of goods in transit by completing the following statement. If goods are shipped FOB shipping point, then the ___ (purchaser/seller) is responsible for paying freight charges and the ___ (purchaser/seller) will not include the merchandise in their inventory.

Purchaser; seller

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Purchases

What task characteristic(s) is job breadth similar to?

Ranges from few to many different tasks SKILL VARIETY.

The main purpose of adjusting entries is to

Recognize transactions and events that are not yet recorded (internal transactions)

typo squatting

Redirecting a user to a fictitious website based on a misspelling of the URL. Also called URL hijacking.

What is unity of command? Why does one try not to violate this principle of organizing?

Refers to the fact that subordinates should report to one and only one boss. Violation of this principle occurs to varying degrees but most greatly in the matrix design. Every employee should report to one and only one boss.

Rising Cost- FIFO (first in, first out)

Reports the lowest cost of goods sold- yielding the highest gross profit and income. Method of using the fist bought to be first sold. The cost from the recent purchase are in the ending inventory

cash payment control procedure

Require all payments be made by EFT or check, (exception small pymnts made from petty cash) Keep records of people who can sign checks

What cannot be delegated when a manager delegates authority?

Responsibility. When managers delegate they don't reduce their accountability, they remain responsible for their own actions and the actions of their subordinates. Still accountable - still responsible.

Acceptable methods of assigning specific costs to inventory and cost of goods sold include all of the following except: LIFO method. FIFO method. Specific identification method. Weighted average method. Retail method.

Retail method

The inventory turnover ratio:

Reveals how many times a company sells its merchandise inventory during a period.

Which of the costs below would be included in the recorded cost of merchandise inventory? (Check all that apply.)

Storage costs Insurance costs Invoice cost

How does strategy influence job design?

Strategy of the organization should drive the design of jobs. Thus, different job design strategies will be needed for different strategies. Examples: Prospector strategy - would give an enriched job. Efficient strategy - specialized.

What's required for network organizations to be successful?

Successful networks potentially offer flexibility, innovation, quick responses to threats and opportunities, and reduced costs and risk. The firm must chose the right specialty, the firm must choose collaborators that also are excellent at what they do, the firm must make certain that all parties fully understand the strategic goals of the partnership, and each party must be able to trust all the others with information.

What two creativity techniques does synectics use in helping the group to generate better ideas?

Synectics - the connecting together of diverse elements. This idea uses 1) fantasy and 2) analogy to facilitate creative idea generation and encourages new ways of looking at the problem. What analogy is used? Pringles.

Complete the following table by selecting the term that best matches each given example. A baker who designs, bakes, and frosts her own cakes is high on this dimension, but the assembly line worker who installs door handles all day is low.

Task identity

Complete the following table by selecting the term that best matches each given example. Teachers who believe that they can change the world one child at a time are high on this dimension.

Task significance

The _____ principle states that inventory costs are expensed as cost of goods sold when inventory is sold.

The *EXPENSE RECOGNITION* principle states that inventory costs are expensed as cost of goods sold when inventory is sold.

The FIFO cost flow assumption assumes that the cost of items purchased _______________ (earliest/latest) are the costs that will be transferred first to cost of goods sold on the _______________ (balance sheet/income statement).

The FIFO cost flow assumption assumes that the cost of items purchased *EARLIEST* are the costs that will be transferred first to cost of goods sold on the *INCOME STATEMENT*

One identical unit is purchased on each of the following three dates and at the respective costs: June 1 at $10 June 2 at $15 July 4 at $20 The company sells two units during the period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the FIFO cost flow assumption.

The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory.

Assume that three identical units are purchased separately on the following three dates and at the respective costs: June 1 at $10 June 2 at $15 July 4 at $20 The company sells two units during the period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the LIFO perpetual cost flow assumption.

The June 2 at $15 and the July 4 at $20 are both sold; the June 1 at $10 remains in ending inventory.

Cost of Good Sold (COGS)

The cost of raw materials for operations, typically the second line of the income statement.

What is feedback?

The degree to which employees, as they are working, receive information that reveals how well they are performing on the job. Feedback can come from co-workers, supervisors, subordinates, clients, or even the job itself. It can also come from performance appraisal, awards and promotions, and personal evaluations of one's own feelings. Can come from anywhere - Self generated feedback is most important.

What are some problems that can be encountered when using the Delphi technique?

The design of the questionnaire can limit the results obtained, it can be extremely time-consuming even more so than the other techniques (several days or weeks may elapse between steps), and member interest motivation may decline if too much time passes between steps.

How does technology affect job redesign efforts?

The more the design is influenced by technology the less job design flexibility exists. The more technology it takes to do a job, the harder it is. *****"You're hypo-sensitive, put on a specialized job, what would happen to you?" Too little arousal *****"...Hyper.... on an enriched job" Too much arousal

Which statement(s) below is(are) correct regarding the purpose of taking a physical inventory count? (Check all that apply.)

The physical count is used to adjust the Inventory account balance to the actual inventory available. The physical count is used to determine if there has been any theft, loss, damage or errors in inventory.

What is a specialized job and how does it load on the five task characteristic?

This type of job was the result of the industrial revolution. Specialization results from the diversion of an activity into smaller and smaller task elements. This division of labor in turn leads to specialists who have a limited area of expertise. Loads low on every job characteristic except feedback (medium to high). You do one or few tasks repeatedly. Very low autonomy. Shallow and Narrow. Everything is low except FEEDBACK ****

Sparky's incorrectly included inventory that was on consignment in its ending inventory count. Consequently, the ending inventory was overstated on the balance sheet. Explain how this error will affect this year's income statement. (Check all that apply.)

This year's cost of goods sold will be too low. This year's net income will be too high.

Buyer returns good to seller- Cost side- Seller side

To be resold Debit Merchandise Inventory Credit cost of good sold Asset (+) Equity (-)

What is the purpose of job enlargement?

To make the job more of a challenge (and keep employees from getting bored so quickly) by allocating a wider variety of similar tasks (requiring the same skill level). It broadens job scope/breadth. Increasing skill variety > task identity > more things to do > more challenging. Breadth increases but depth remains shallow.

How do programmed/non-programmed decisions and the different decision-making conditions relate?

Uncertainty 2 types - best case and worst case. Easiest to program - Certainty

Balance sheet: Ending Inventory understated / overstated

Understated / Overstated

Balance sheet: assets understated / overstated

Understated / Overstated

Balance sheet: equity understated / overstated

Understated / Overstated

apply technological controls

Use of technology to improve internal controls such as cash registers, check protectors, time clocks, and personal identification scanners.

Block Chain

Viewed as a new more secure tech - A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

WI-phishing

WI networks set up by crooks in hopes you'll use it

What is decision-making under conditions of certainty?

When the managers know all the available alternatives and the outcomes associated with each. This is an ideal but rare occurrence with no element of chance.

Goods in transit are included in a purchaser's inventory: At any time during transit. When the purchaser is responsible for paying freight charges. When the supplier is responsible for freight charges. If the goods are shipped FOB destination. After the half-way point between the buyer and seller.

When the purchaser is responsible for paying freight charges.

The journal entry for a sale on account under the periodic inventory system includes:

a debit to accounts receivable and a credit to sales

receiving report

a document that records details about each delivery, including the date received, shipper, supplier, quantity received

purchase requisition

a form used to request the responsible person or department to purchase merchandise or other property

separate recordkeeping from custody of assets

a person who controls or has access to an asset must not keep that asset's accounting records

LIFO and FIFO TOGETHER Hemming Co. reported the following current-year purchases and sales for its only product. Date 1. Jan 1- Beginning Inventory: 295 units at 13.80 =4071 2. Jan 10 - sales: UNITS sold at retail: 240 @ 43.80 3. Mar.14- Purchase 480 units@ $18.80= 9,024 4. Mar.15 - Sales 420 units@ $43.80 5. July 30- Purchase 495 units@ $23.80= 11,781 6. Oct.5- Sales 465 units@ $43.80 7. Oct.26- Purchase 195 units@ $28.80= 5,616 Totals: 1,465 units acquired at cost= $30,492 1,125 units sold at retail Required:Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross profit for each method.

also see LIFO and FIFO TOGETHER 2

establish responsibility

assign each task to only one employee- incase of issues you'll know who to talk to

Gross Profit Ratio

calculated by subtracting direct expenses or cost of goods sold (COGS) from net sales (gross revenues minus returns, allowances, and discounts). That number is divided by net revenues, then multiplied by 100% to calculate the gross profit margin ratio

liquid assets

cash and items that can be quickly converted to cash ( reported fist on balance sheet) Less liquid reported last

What are considered current assets?

cash, short-term investments, accounts receivable, short-term notes receivable, merchandise inventory, prepaid insurance

cash equivalent types

coins, cash in checking, cash in safe

Liduidity

companies ability to pay for liabilities

COSO: Control Environment

company structure, ethics, and integrity for internal control

Interest earned

debit cash, credit interest revenue

Adjusting entries from bank reconciliation Collection of note

debit: cash Credit note receivables

Decreasing Petty cash

debit: cash Credit: petty cash

Adjusting entries from bank reconciliation Interest earned

debit: cash credit: Interest Revenue

petty cash unexplained shortage

debit: miscellaneous expense Debit: cash over and short Credit: cash

When purchase costs are _____ , LIFO will report the lowest cost of goods sold yielding the highest gross profit and net income.

declining

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between beginning inventory and net purchases during the period. ending inventory and beginning inventory. net purchases during the period and ending inventory. ending inventory and cost of goods sold. beginning inventory and cost of goods sold.

ending inventory and cost of goods sold.

Days sales uncollected

estimated on how long it will take for acct receivables is recd in cash Accounts receivable/ Net sales x 365

Why would the physical count of inventory be different than what is shown in perpetual inventory records? (Check all that apply.)

events such as errors, damage, theft, and loss

The _____ principle states that inventory costs are expensed as cost of goods sold when inventory is sold.

expense recognition

When costs to purchase inventory regularly decline, which method of inventory costing will yield the lowest cost of goods sold?

lifo

Bank report

report of beginning and end balances/ transactions during stmnt period

COSO Info and communications

reports to internal and external parties

When purchase costs are _____ , FIFO will report the lowest cost of goods sold yielding the highest gross profit and net income.

rising

Management at Work As the charge nurse at American Hospital, you are responsible for assigning nurses to their tasks every day. There are six tasks that must be done for the hospital to run efficiently, and these tasks require two levels of skills. At the lower skill level, nurses must bathe, turn, and feed patients. At the higher level, nurses can modify treatments, plan patient care, and order tests. You have decided to assign each nurse to a particular job level. Nurses will do one job for a week and then move to another job within their level. You can see an illustration of this assignment by clicking "Job Assignment" in the following figure. These employee assignments show a job design strategy of

rotation

Method Advantage ( Weighted)

smoothes out erratic changes in cost

A company had inventory on November 1 of 5 units at a cost of $23 each. On November 2, they purchased 13 units at $25 each. On November 6 they purchased 9 units at $28 each. On November 8, 10 units were sold for $58 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

the following table shows the calculation: opening inventory ($23 * 5 units) $115 add:purchases ($25*13 units) november 2$325 add:purchases ($28*9 units) on november 6$252 less: cost of good sold: as per LIFO the last units purchased will be sold off first, accordingly 9 units purchased on november 6 and 1 unit purchased on novemnber 2 will be forming the 10 units sold off [($28* 9)+($25*1)](277) value of ending inventory $415

Specific Identification

the inventory costing method that identifies the cost of the specific item that was sold common for custom made inventory.