MGT 11a Midterm 1 Questions

A) $304

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

E) $276

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

A) sales: 136,000; gross profit 111,000

A company has expenses other than COGS of $51,000. Determine sales and gross profit given COGS was $25,000 and net income was $60,000. ** A) sales: 136,000; gross profit 111,000 B) sales: 136,000; gross profit 85,000 C) sales: 85,000; gross profit 136,000 D) sales: 111,000; gross profit 136,000 E) sales: 60,000; gross profit 25,000

B) $1,275,000

A company has sales of $1,500,000; sales discounts of $102,000; sales returns and allowances of $123,000; shipping charges of $15,000; sales commissions of $34,000; net income totaled $263,500; and COGS of $420,000. What is the net sales amount for the period? A) $1,500,000 B) $1,275,000 C) $1,725,000 D) $1,521,000 E) $1,479,000

B) $2600

A company normally sells its products for $20/unit. However, the selling price has fallen to $15/unit. This company's current inventory consists of 200 units purchased at $16/unit. Replacement cost has now fallen to $13/unit. Calculate the value of this company's inventory at the lower of cost or market. A) $2550 B) $2600 C) $ 2700 D) $3,000 E) $3200

B) debit salaries expense $400 and credit salaries payable $400

A company pays each of its two office employees each Friday at the rate of $100/day each for a five-day week that begins on Monday. If the monthly accounting period ends on a Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: A) Debit unpaid salaries $600 and credit salaries payable $600 B) debit salaries expense $400 and credit salaries payable $400 C) debit salaries expense $600 and credit salaries payable $600 D)debit salaries payable $400 and credit salaries expense $400 E) debit salaries expense $400 and credit cash $400

B) $6482

A company purchased $7500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is: A) $6479.60 B) $6482 C) $7275 D) $7355 E) $6680

A) 3250

A company purchased a new truck at a cost of $42,000 on July 1 2014. The truck is estimated to have a useful life of 6 years and a salvage value of $3000. Using the straight-line method, how much depreciation expense will be recorded for the truck for the year ended December 31 2014? ** A) 3250 B) 3500 C) 4000 D) 6500 E) 7000

D) payment of the account payable and recognition of a cash discount taken

A company using the perpetual inventory system recorded the following entry: Debit accounts payable 2500 Credit merchandise inventory 50 Credit cash 2450 The entry reflects a: A) purchase B) return C) sale D) payment of the account payable and recognition of a cash discount taken E) purchase and recognition of a cash discount taken

D)net purchases 6,000; ending inventory 7,000

A company's cost of goods sold was $4,000. Determine net purchase and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000. A) net purchases: 15,000; ending inventory 7000 B) net purchases 10,000; ending inventory 15,000 C) net purchases 9,000; ending inventory 6,000 D)net purchases 6,000; ending inventory 7,000 E) net purchases 16,000; ending inventory 20,000

B)$486

A corporation uses a LIFO perpetual inventory system. Aug. 2 25 units purchased @ $12/unit Aug. 5 10 units purchased @ $13/unit Aug. 15 12 units sold @ $25/unit Aug. 18 15 units purchased @ $14/unit What was the amount of the ending inventory for the month of August? A) $496 B) $486 C) $492.57 D) $300 E) $510

A) is a legal entity separate and distinct from its owners

A corporation: A) is a legal entity separate and distinct from its owners B) must have many owners C) has shareholders who have unlimited liability for the acts of the corporation D) is the same as a limited liability partnership E) does not have to pay taxes

C) an increased in an unearned revenue account

A credit is used to record: A) an increase in an expense account B) an increase in an asset account C) an increased in an unearned revenue account D) a decrease in a revenue account E) a decrease to retained earnings

D) chart of accounts

A list of all accounts used by a company and the identification number assigned to each account is called a: A) ledger B) journal C) trial balance D) chart of accounts E) general journal

D) note payable

A written promise to pay a definite sum of money on a specific future date is a(n): A) unearned revenue B) prepaid expense C) credit account D) note payable E) account receivable

D) credit to rent earned for 2400

ABC Co. leased a portion of its store to another company for eight months beginning on Oct. 1 2014 at a monthly rate of $800. This other company paid the entire $6400 cash on Oct. 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year-end on December 31, 2014 would include a: A) debit to rent earned for 2400 B) credit to unearned rent for 2400 C) Debit to cash for 6400 D) credit to rent earned for 2400 E) debit to unearned rent for 4000

B) contra account

An account balance linked with another account has an opposite normal balance and that is subtracted from the balance of the related account is a(n): A) accrued expense B) contra account C) accrued revenue D) intangible asset E) adjunct account

E) purchases

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

B) something the company owns

An asset is: A) only acquired with cash B) something the company owns C) only contributed by stockholders D) a company's obligation to pay E) is also called contributed capital

D) general and administrative expenses

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) non-operating activities

E) $50.75

Given the following information, determine the cost of ending inventory at December 31 using the FIFO perpetual inventory method: Dec. 2: 5 units purchased @ $7/unit Dec. 9: 10 unites purchased @ $9.40/unit Dec. 11 12 units sold @ $35/unit Dec. 15: 20 units purchased @ $10.15/unit Dec. 22: 18 units sold @ $35/unit A) $51.75 B) $83.22 C) $41.30 D) $94.00 E) $50.75

E) 4500

Given the following items and costs as of the balance sheet date, determine the value of Faltron Company's Merchandise Inventory: --$1,000 goods sold by Faltron to another company. The goods are in transit and shipping terms are FOB destination --$2000 goods sold by another company to Faltron. The goods are in transit and shipping terms are FOB destination --$3000 owned by Faltron but in the possession of another company, the consignee. --Damaged goods owned by Faltron that originally cost $4,000 but now have a $500 net realizable value A) 10,000 B) 6500 C) 5500 D) 5000 E) 4500

B) when the purchaser is responsible for paying freight charges

Goods in transit are included in a purchaser's inventory: A) at any time during transit B) when the purchaser is responsible for paying freight charges C) when the supplier is responsible for freight charges D) if the goods are shipped FOB destination E) after the halfway point between the buyer and seller

$129800

Herald Company had sales of $135000, sales discounts of $2000 and sales returns of $3200. Harald Company's net sales equal: A) $5200 B) $129800 C) $133000 D) $135000 E) $140200

B) Debit dividends, credit cash

Jones Hardware, Inc. paid a cash dividend of $6000. What is the necessary entry to record this transaction? A) Debit cash, credit retained earnings B) Debit dividends, credit cash C) Debit common stock, credit cash D) Debit cash, credit common stock E) Debit cash, credit dividend income

C) Sales Salaries Payable

Of the following accounts, the one that normally has a credit balance is: A) cash B) office equipment C)sales salaries payable D) dividends E)sales salaries expense

B) $47000

On April 30, Holden Company has an accounts receivable balance of $18000. During the month of May, total credits to accounts Receivable were $52,000 from customer payments. The Accounts receivables balance was $13,000 on May 31. What was the amount of credit sales during May? A) $5,000 B) $47000 C) $52000 D) $57000 E) $32,000

E) revenue recognition principle

On Dec. 15 2013 Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client for 2014. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2014 and not in 2013? A) monetary unit principle B) going-concern principle C) cost principle d) business entity principle E) revenue recognition principle

D) Debit insurance expense 360; credit prepaid insurance 360

On Jan. 1 a company purchased a 5 year insurance policy for $1800 with coverage starting immediately. If the purchase was recorded in the prepaid insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: A) Debit prepaid insurance 1800; credit cash 1800 B) Debit prepaid insurance 1440; credit insurance expense 1440 C) Debit prepaid insurance 360; credit insurance expense 360 D) Debit insurance expense 360; credit prepaid insurance 360 E) Debit insurance expense 360; credit prepaid insurance 1440

E) debit cash 5684; debit sales discounts 116; credit accounts receivable 5800

On Oct. 1 Robertson Company sold merchandise in the amount of $5800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4000. Robertson uses the perpetual inventory system. Alberts pays the invoice on Oct. 8 and takes the appropriate discount. The journal entry that Robertson makes on Oct. 8 is: A) debit cash 5800; credit accounts receivable 5800 B) debit cash 4000; credit accounts receivable 4000 C) debit cash 3920; debit sales discounts 80; credit accounts receivable 4000 D) debit cash 5684; credit accounts receivable 5684 E) debit cash 5684; debit sales discounts 116; credit accounts receivable 5800

B) $4300 debit balance

On Sept. 30 the Cash account of Value Company had a normal balance of $5,000. During Sept. the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the cash account at the beginning of September? A) $0 balance B) $4300 debit balance C) $4300 credit balance D) $5700 debit balance E) $5700 credit balance

d) assets that represent prepayments of future expenses

Prepaid expenses are: A) payments made for products and services that do not ever expire B)classified as liabilities on the balance sheet C) decreases in retained earnings d) assets that represent prepayments of future expenses e) promises of payments by customers

B) managerial accounting

The area of accounting aimed at serving the decision making needs of internal users is: A) financial accounting B) managerial accounting C) external auditing D) SEC reporting E) governmental accounting

D) matching principle

The broad principle that requires expenses to be reported in the same period as the revenue that were earned as a result of those expenses is the: A) recognition principle B) cost principle C) cash basis of accounting D) matching principle E) time period principle

D) specific identification method

The inventory valuation method that identifies the invoice cost of each item in ending inventory to determine the cost assigned to that inventory is the: A) weighted average method B) First in, first out method C) last in, first out method D) specific identification method E) retail inventory method

B) weighted average

The inventory valuation method that tends to smooth out erratic changes in costs is: A) FIFO B) weighted average C) LIFO D) specific identification E) WIFO

B) cost of goods sole to be understated and net income to be overstated

The understatement at the beginning inventory balance causes: A) cost of goods sole to be understated and net income to be understated B) cost of goods sole to be understated and net income to be overstated C) cost of goods sole to be overstated and net income to be overstated D) cost of goods sole to be overstated and net income to be understated E) cost of goods sole to be understated and net income to be correct

C) 43300

These transactions were completed by the art gallery opened by Zed Bennett: --Bennett started the gallery, Artery, by investing $40,000 cash and equipment valued at $18000 in exchange for common stock --purchased $70 of office supplies on credit --paid $1200 in cash for the receptionist's salary --sold a painting for an artist and collected $4500 cash commission on the sale --completed an art appraisal and billed the client $200 What was the balance of the cash account after these transactions were posted? A) 12230 B) 12430 C) 43300 D) 43430 E) 61430

E) $15900

What would be the account balance in the Service Revenue account after the following transactions, assuming a zero beginning balance? performed services and left a bill: $4200 performed services and collected immediately: $3500 performed services and billed customer: $2200 performed services on account: $6,000 received partial payment on account: $1500 A) $17400 B) $10900 C) $14400 D) $9000 E) $15900

A) FIFO

Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses? A) FIFO B) weighted average C) LIFO D) specific identification E) first in still there

D) assets and expenses are both increased with a debit

Which of the following is a true statement regarding debits and credits? A)if a company earned a profit, debits will not equal credits B) for a business, debits are better than credits C) a company's books are not in balance if they have a current period loss D) assets and expenses are both increased with a debit E) liabilities and equity are both increased with a debit

E) adjusting entries affect the cash account

Which of the following statements is incorrect? A) prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities B) accrued expenses and accrued revenues involve assets and liabilities that were recorded C) adjusting entries can be used to record both accrued expenses and accrued revenues D) prepaid expenses, depreciation and unearned revenues often require adjusting entries to record the effects of the passage of time E) adjusting entries affect the cash account

A) sales discounts, sales returns and allowances, and cost of goods sold should all be credited during closing

Which of the following statements is true regarding the closing process of a merchandiser? ** A) sales discounts, sales returns and allowances, and cost of goods sold should all be credited during closing B) sales discounts, sales returns and allowances, and cost of goods sold should all be debited during closing C) sales discounts and sales returns and allowances should be debited during closing; and cost of goods sold should be credited during closing D) sales discounts and sales returns and allowances should be credited during closing; and cost of goods sold should be debited during closing E) Sales discounts and sales returns and allowances are not closed. Cost of goods sold should be credited when closing.

C) overstatement of liabilities

if a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account, there would be an: A) overstatement of net income B) overstatement of assets C) overstatement of liabilities D) overstatement of equity E) understatement of liabilities

E) assets, net income and equity overstated

if a company forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at the time would shoe: A) assets overstated and equity understated B) assets and equity both understated C) assets overstated, net income understated, and equity overstated D) assets, net income, and equity understated E) assets, net income and equity overstated

C) liabilities created when a customer pays in advance for products or services before the revenue is earned

unearned revenues are: A) revenues that have been earned and received in cash B) revenues that have been earned but not yet collected in cash C) liabilities created when a customer pays in advance for products or services before the revenue is earned D) recorded as an asset in the accounting records E) increases to retained earnings

D) matching principle

which of the following accounting principles dictates when expenses are recognized? A) revenue recognition principle B) monetary unit principle C) business entity principle D) matching principle E) full disclosure principle

D) dividends

which of the following accounts would not be on the post-closing trial balance? A) accounts payable B) accounts receivable C) common stock D) dividends E) retained earnings

E) salaries expense

which of the following elements are found on the income statement? A) cash B) accounts receivable C) common stock D) retained earnings E) salaries expense

C) for accounting information to be useful, it must be trusted and therefore the result of ethical decisions

why are ethics crucial to accounting? A) ethical behavior creates the most profit for the business B) ethics are a tool that helps the accountants balance the accounting equation C) for accounting information to be useful, it must be trusted and therefore the result of ethical decisions D) ethics are important to consider when applying GAAP, but do not apply to international accounting issues E) ethics are a way to compute revenues and expenses, but they do not apply to assets, liabilities, and owner's equity