Quiz Accounting

During August, 2018, Waterway's Supply Store generated revenues of $60200. The company's expenses were as follows: cost of goods sold of $36100 and operating expenses of $3900. The company also had rent revenue of $1000 and a gain on the sale of a delivery truck of $1700.Waterway's operating income for the month of August, 2018 is $22900. $24100. $20200. $21200.

$20200.

Concord Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows. UnitsPer unit priceTotalBalance, 1/1/18220$6$1320Purchase, 1/15/181406.2 868Purchase, 1/28/181406.4 896An end of the month (1/31/18) inventory showed that 175 units were on hand. If the company uses LIFO, what is the value of the ending inventory? $1050 $1077 $1085 $1113

A. $1050

Sheffield Trucking purchased a tractor trailer for $176300. Interline uses the units-of-activity method for depreciating its trucks and expects to drive the truck 1000000 miles over its 12-year useful life. Salvage value is estimated to be $23500. If the truck is driven 100000 miles in its first year, how much depreciation expense should Sheffield record? A. $15280 B. $14300 C. $16342 D. $17630

A. $15280 $176300 - $23500) ÷ $1000000 = $0.1528; $100000 × $0.1528 = $15280.

A company sells a plant asset which originally cost $356000 for $119000 on December 31, 2018. The Accumulated Depreciation account had a balance of $145000 after the current year's depreciation of $30000 had been recorded. The company should recognize a A. $92000 loss on disposal. B. $92000 gain on disposal. C. $62000 loss on disposal. D. $237000 loss on disposal.

A. $92000 loss on disposal. 356,000-119,000-145000= 92,000

When an account becomes uncollectible and must be written off, A. Accounts Receivable should be credited. B. Bad Debt Expense should be credited. C. Sales Revenue should be debited. D. Allowance for Doubtful Accounts should be credited.

A. Accounts Receivable should be credited.

Controls that enhance the accuracy and reliability of the accounting records are A. physical controls. B . automated controls. C. mechanical and electronic controls. D. external controls.

A. physical controls.

Your answer is correct. An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of A. segregation of duties is violated. B. establishment of responsibility is violated. C. documentation procedures is violated. D. independent internal verification is violated.

A. segregation of duties is violated.

Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $600,000, and sales of $960,000. Delmar's days in inventory is: A.60.8 days. B. 67.5 days. C. 38.0 days. D. 54.3 days.

A.60.8 days. Feedback: $600,000 ÷ [($90,000 + $110,000) ÷ 2] = 6; 365 ÷ 6 = 60.8

Sheffield Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $50000 that will produce an estimated 110000 units over its useful life. Estimated salvage value at the end of its useful life is $3800. What is the depreciation cost per unit? A. $4.55 B. $0.42 C. $0.45 D. $4.20

B. $0.42 $50,000-$3,800=46,200/110,000=0.42

Bad Debt Expense is considered A. an avoidable cost in doing business on a credit basis. B. a necessary risk of doing business on a credit basis. C. avoidable unless there is a recession. D. an internal control weakness.

B. a necessary risk of doing business on a credit basis.

A company purchased office equipment for $50000 and estimated a salvage value of $8000 at the end of its 10-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is A. 47%. B. 20%. C. 16%. D. 63%.

B. 20%. (100% ÷ 10) × 2 =20%

If the month-end bank statement shows a balance of $71000, outstanding checks are $53500, a deposit of $14400 was in transit at month end, and a check for $2800 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is A. $31900. B. $34700. C. $70700. D. $112900.

B. 34,700 71,000-53,500+14400+2800= $34,700 (Balance)-(Outstanding checks)+(Deposit in transit)+(Check for amount erroneously charged) =correct balance

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using A. FIFO will have the highest cost of good sold. B. FIFO will have the highest ending inventory. C. LIFO will have the lowest cost of goods sold. D. LIFO will have the highest ending inventory.

B. FIFO will have the highest ending inventory.

If a plant asset is retired before it is fully depreciated and no salvage value is received, A. a gain on disposal occurs. B. a loss on disposal occurs. C. either a gain or a loss can occur. D. neither a gain nor a loss occurs.

B. a loss on disposal occurs.

The collection of a $5600 account within the 2 percent discount period will result in a A. credit to Accounts Receivable for $5488. B. debit to Sales Discounts for $112. C. debit to Accounts Receivable for $5488. D. credit to Cash for $5488.

B. debit to Sales Discounts for $112. 5600*2%=112

An asset that cannot be sold individually in the market place is A. a trade name. B. goodwill. C. a patent. D. a copyright.

B. goodwill.

Accumulated Depletion A. is used by all companies with natural resources. B. is a contra-asset account. C. has a normal debit balance. D. is never shown on the balance sheet.

B. is a contra-asset account.

All of the following are intangible assets except A. copyrights. B. research and development costs. C. patents. D. goodwill.

B. research and development costs.

The method most commonly used to compute depletion is the A. double-declining-balance method. B. units-of-activity method. c. straight-line method. D. effective interest method.

B. units-of-activity method.

RLF Company estimates that 10% of accounts receivable will become uncollectible. Accounts receivable are $100,000 at the end of the year, and the allowance for doubtful accounts has a $500 debit balance. Bad debt expense =

Bad debt expense = $10,500 [($100,000 × .10) + $500]

RLF Company estimates that 2% of net credit sales will become uncollectible. Sales revenue are $600,000, sales returns and allowances are $30,000, and the allowance for doubtful accounts has a $6,000 credit balance. Bad debt expense =

Bad debt expense = $11,400 [($600,000 - $30,000) × .02]

Sheridan Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: UnitsPer unit priceTotalBalance, 1/1/18 200$6$1200Purchase, 1/15/181005.5 550Purchase, 1/28/181005.7 570 An end of the month (1/31/18) inventory showed that 150 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month? A. $1025 B. $1383 C. $1500 D. $1369

C. $1500 $1200 + [(250 - 200) × $5.5] = 1475; (250 × $10) - $1475 = $1025

Equipment was purchased for $306000. Freight charges amounted to $14100 and there was a cost of $39900 for building a foundation and installing the equipment. It is estimated that the equipment will have a $59100 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be A. $72000. B. $49380. C. $60180. D. $50400.

C. $60180. $30600+$14100+$39900-59100/5= $60,180

In preparing its bank reconciliation for the month of April 2018, Swifty, Inc. has available the following information. Balance per bank statement, 4/30/18 $79000 NSF check returned with 4/30/18 bank statement $990 Deposits in transit, 4/30/18 $10300 Outstanding checks, 4/30/18 $10300 Bank service charges for April $50 What should be the adjusted cash balance at April 30, 2018? A. $78420. B. $77960. C. $79000. D. $78010.

C. $79000. 79,000+10,300-10,300=$79000

Days in inventory is calculated by dividing A. 365 days by average inventory. B. the inventory turnover by 365 days. C. 365 days by the inventory turnover. D. average inventory by 365 days.

C. 365 days by the inventory turnover

Which of the following methods of computing depreciation is production based? A. Straight-line B. Declining-balance C. Units-of-activity D. None of these answer choices are correct

C. Units-of-activity

Allowing only the treasurer to sign checks is an example of A. segregation of duties. B. other controls. C. establishment of responsibility. D. documentation procedures.

C. establishment of responsibility.

Deposits in transit A. have not been recorded by the bank or the company. B. have been recorded by the bank but not yet by the company. C. have been recorded on the company's books but not yet by the bank. D. are checks from customers which have not yet been received by the company

C. have been recorded on the company's books but not yet by the bank.

Reconciling the bank statement monthly is an example of A. documentation procedures. B. segregation of duties. C. independent internal verification. D. establishment of responsibility.

C. independent internal verification.

The existing balance in Allowance for Doubtful Accounts is considered in computing bad debt expense in the A. percentage of sales basis. B. percentage of receivables and percentage of sales basis. C. percentage of receivables basis. D. direct write-off method.

C. percentage of receivables basis.

Under the direct write-off method of accounting for uncollectible accounts, Bad Debt Expense is debited A. at the end of each accounting period. B. when a credit sale is past due. C. when an account is determined to be uncollectible. D. whenever a pre-determined amount of credit sales have been made.

C. when an account is determined to be uncollectible.

In a period of inflation, which cost flow method produces the highest net income? A. LIFO method B. Average-cost method C. Gross profit method D. FIFO method

D. FIFO method

Waterway Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: UnitsPer unit priceTotalBalance, 1/1/18150$4.0$600Purchase, 1/15/181705.5 935Purchase, 1/28/181705.4 918 An end of the month (1/31/18) inventory showed that 230 units were on hand. If the company uses FIFO, what is the value of the ending inventory? A. $920 B. $1212 C. $1265 D. $1248

D. $1248

Waterway Company purchased a new van for floral deliveries on January 1, 2018. The van cost $56000 with an estimated life of 5 years and $13600 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2018? A. $8480 B. $16960 C. $11200 D. $22400

D. $22400

During August, 2018, Sunland's Supply Store generated revenues of $61100. The company's expenses were as follows: cost of goods sold of $36800 and operating expenses of $4300. The company also had rent revenue of $1200 and a gain on the sale of a delivery truck of $2400.Sunland's net income for August, 2018 is A. $24300. B. $21200. C. $20000. D. $23600.

D. $23600. $61100 - $36800 - 4300 + $1200 + $2400 = $23600.

At May 1, 2018, Concord Company had beginning inventory consisting of 200 units with a unit cost of $7.00. During May, the company purchased inventory as follows:870 units at $7.00430 units at $7.00 The company sold 1160 units during the month for $14 per unit. Concord uses the average cost method. The value of Concord's inventory at May 31, 2018 is A. $955. B. $3410. C. $2455. D. $2380.

D. $2380. (200 + 870 + 430) - 1160 = 340; 340 × $7.000 = $2380.

A factory machine was purchased for $372000 on January 1, 2018. It was estimated that it would have a $78000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 36000 hours in the 5 years. The company ran the machine for 4200 actual hours in 2018. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2018 would be A. $78000. B. $43400. C. $68600. D. $34300.

D. $34300.

A plant asset cost $291200 and is estimated to have a $40000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be A. $35886. B. $28020. C. $24570. D. $40950.

D. $40950. ($291200 - 0) × .25 = $72800; ($291200 - $72800) × .25 = $54600; ($291200 - $127400) × .25 = $40950.

CraneCompany uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: UnitsPer unit priceTotalBalance, 1/1/18220$6.00$1320Purchase, 1/15/18705.40 378Purchase, 1/28/18705.30 371 An end of the month (1/31/18) inventory showed that 200 units were on hand. How many units did the company sell during January, 2018? A. 140 B. 130 C. 200 D. 160

D. 160 (220 + 70 + 70) - 200 = 160.

A buyer would record a payment within the discount period under a perpetual inventory system by crediting A. Sales Discounts. B. Accounts Payable. C. Purchase Discounts. D. Inventory.

D. Inventory.

The declining-balance method of depreciation produces A. an increasing depreciation expense each period. B. a declining percentage rate each period. C. a constant amount of depreciation expense each period. D. a decreasing depreciation expense each period.

D. a decreasing depreciation expense each period.

In preparing a bank reconciliation, outstanding checks are A. added to the balance per books. B. deducted from the balance per books. C. added to the balance per bank. D. deducted from the balance per bank.

D. deducted from the balance per bank.

Intangible assets are the rights and privileges that result from ownership of long-lived assets that A. are depletable natural resources. B. have been exchanged at a gain. C. must be generated internally. D. do not have physical substance.

D. do not have physical substance.

Each of the following items affect the cash balance per books except A. bank service charges. B. notes collected by the bank. C. NSF checks. D. outstanding checks.

D. outstanding checks.

Jolene is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates A. establishment of responsibility is violated. B. documentation procedures are violated. C. independent internal verification is violated. D. segregation of duties is violated.

D. segregation of duties is violated.

Equipment that cost $430000 and on which $208000 of accumulated depreciation has been recorded was disposed of for $178000 cash. The entry to record this event would include a A. gain of $44000. B. loss of $44000. C. credit to the Equipment account for $222000. D. credit to Accumulated Depreciation for $208000.

loss of $44000.