Accounting- Exam 2

The following information is available for Vaughn Company at December 31, 2018: beginning inventory $49000; ending inventory $111000; cost of goods sold $520000; and sales $1870000. Vaughn's inventory turnover in 2018 is

6.5 times (Cost of goods sold / (111,000+49000/2))

Which of the following would not be reported on the balance sheet as a cash equivalent? A. Six-month Treasury bill B. Money market fund C. Money market savings certificate D. Sixty-day certificate of deposit

A. Six month Treasury bill

Cost of goods sold is computed from what equation?

Beginning inventory + cost of goods purchased - ending inventory. (BI + COGP - EI)

Which of the following should be included in the physical inventory of a company? A. Goods held on consignment from another company. B. Goods in transit to another company shipped FOB shipping point. C. Goods in transit from another company shipped FOB shipping point. D. Goods in transit to or from another company shipped FOB shipping point.

C. Goods in transit from another company shipped FOB shipping point

When two or more people get together for the purpose of circumventing prescribed controls, it is called

Collusion

An error in the physical count of goods on hand at the end of a period resulted in a $15,000 overstatement of the ending inventory. The effect of this error in the current period is

Cost of goods sold = understated Net income = overstated

The cost of successfully defending a patent in an infringement suit should be: A. deducted from the book value of the patent. B. recognized as a loss in the current period. C. charged to Legal Expenses. D. added to the cost of the patent.

D. added to the cost of the patent

Cost of Inventory

Inventory = inventory worth + goods sold

Under the allowance method, writing off an uncollectible account

affects only balance sheet accounts

Depreciation is a process of

cost allocation

A check returned by the bank marked "NSF" means

not sufficient funds

Goodwill can be recorded when?

only when there is an exchange transaction involving the purchase of an entire business

A petty cash fund is generally established in order to:

pay relatively small expenditures

Having different individuals receive cash, record cash receipts, and hold the cash is an example of

segregation of duties

Inventory is reported in the financial statements at

the lower-of-cost-or-net realizable value

If employees are bonded it means

they have been insured against misappropriation (theft) of assets