Accounting Exam 2

Which of the following costs are recognized as an intangible asset? A : franchise acquisition costs B : research and development costs C : labor costs D : plant operating costs

A : franchise acquisition costs

Where is bad debt expense reported on the income statement? A : in the operating expenses section B : under receivables C : under other revenues and gains D : under other expenses and losses

A : in the operating expenses section

Return on assets is used to calculate the amount of ________ generated by each dollar A : income; of assets. B : sales; of assets. C : sales; paid to employees. D : income; of sales.

A : income; of assets.

Which of the following is included in the cost of construction of a building? A : interest incurred during construction B : cost of repairing vandalism damage incurred after construction is complete C : cost of paving a parking lot D : cost of removing a demolished building on the land when it was purchased

A : interest incurred during construction

During January and February, Milford Toys often has excess cash. These months fall immediately after the huge Christmas sales, and inventory is usually low. Therefore, January and February are good months for Milford Toys to A : invest idle cash in liquid investments. B : plan the next year's cash budget. C : obtain cash financing. D : increase the speed of receivables collection.

A : invest idle cash in liquid investments.

FOB shipping point means that legal title of goods A : is transferred to the buyer when the goods are accepted by a carrier. B : is transferred to the buyer at the time of the sale. C : remains with the seller until the goods are delivered to the buyer. D : remains with the seller until the buyer accepts the delivery.

A : is transferred to the buyer when the goods are accepted by a carrier.

If a company holds _________, these goods should be included in its ending inventory. A : legal title to goods B : physical possession of goods C : an invoice for goods in transit shipped FOB destination D : consigned goods

A : legal title to goods

Income before taxes less income tax expense equals A : net income. B : income from operations. C : income before taxes. D : gross profit.

A : net income.

When a company purchases land, which of the following costs is included in the purchase price? A : net removal cost of an old building B : fences C : driveways D : the cost to install a new parking lot

A : net removal cost of an old building

For a merchandising firm, occupancy, general, and administrative expenses are part of A : operating expenses. B : cost of goods sold. C : other expenses and losses. D : income tax expense.

A : operating expenses.

The net amount expected to be received in cash from receivables is termed the cash ________ value. A : realizable B : receivable C : equivalent D : payable

A : realizable

Employee fraud can be minimized by A : requiring a voucher for all cash disbursements above an incidental amount. B : allowing the same individual to journalize accounting entries and sign checks. C : paying as many expenses as possible with cash. D : having the purchasing manager sign all checks.

A : requiring a voucher for all cash disbursements above an incidental amount.

When a company collects on an account after writing it off as uncollectible, it makes one journal entry A : reversing the entry made when writing off the account, and another entry recording the collection in the usual manner. B : recording the collection in the usual manner. C : charging the amount to Bad Debt Expense, and other entry recording the collection in the usual manner. D : reversing the entry made when writing off the account

A : reversing the entry made when writing off the account, and another entry recording the collection in the usual manner.

Asset turnover is used to calculate how many dollars of ________ a company generates for each dollar A : sales; invested in assets. B : income; received by sales. C : sales; of liabilities. D : income; invested in assets.

A : sales; invested in assets.

Old equipment that is retired is A : scrapped or discarded. B : exchanged for new equipment. C : sold to another party. D : stored in an inventory facility.

A : scrapped or discarded.

What is the meaning of work in process inventory? A : that portion of manufactured inventory that has begun the production process but is not yet complete B : manufactured items that are completed and ready for sale C : basic goods that will be used in production but have not yet been placed in production D : goods that are held for sale by one party although ownership of the goods is retained by another party

A : that portion of manufactured inventory that has begun the production process but is not yet complete

A note receivable can be transferred ________ by endorsement. A : to another party B : into Bad Debt Expense C : within the bookkeeping department D : to Accounts Payable

A : to another party

How can a company determine when to use the specific identification method of costing? A : when the company sells a limited number of high-unit-cost items B : when the physical flow of units cannot be estimated C : when the physical flow of units cannot be determined D : when the company sells large numbers of low-unit-cost items

A : when the company sells a limited number of high-unit-cost items

Manufactured goods that are partially built but still in production are considered A : work in process. B : raw materials. C : basic goods. D : finished goods.

A : work in process

A new company purchased three merchandise inventory items: first purchase $60; second purchase $40; third purchase $50. Using FIFO costing, if the company sells two units for $200, what is the gross profit for the period? A : $90 B : $200 C : $110 D : $100

D : $100 $200 - $60 - $40 = $100

James Corp. uses the periodic inventory system. Its beginning inventory was $17,000, purchases of inventory for the year were $55,000, and the cost of goods sold for the year was $33,000. What was the firm's year-end inventory? A : $88,000 B : $22,000 C : $72,000 D : $39,000

D : $39,000 Ending inventory is calculated by adding purchases to beginning inventory and subtracting the cost of goods sold from the result. $17,000 + 55,000 - 33,000 = $39,000

Both Curtis Flooring and Keller Roofing have estimated their uncollectible accounts at 12/31/22 to be $14,000. In addition, both companies use the allowance method for uncollectible accounts. If Curtis currently has a debit balance in Allowance for Doubtful Accounts and Keller Roofing has a credit balance in Allowance for Doubtful Accounts,___________________will need to record a larger adjusting entry for their Allowance for Doubtful Accounts account.

Curtis Flooring

A(n) ________ helps reduce the risk of errors and safeguard company assets. A : petty cash fund B : system of government regulations C : system of internal controls D : audit system

C : system of internal controls

Which of the following statements is true? A : Notes receivable are often listed last under receivables. B : Interest revenue is shown as an operating revenue on the income statement. C : Both the gross amount of receivables and the allowance for doubtful accounts should be reported. D : Selling receivables lengthens the cash-to-cash cycle.

C : Both the gross amount of receivables and the allowance for doubtful accounts should be reported.

Which of the following are ways that plant assets can be disposed of? Select all that apply. A sales B write-off C exchange D retirement

all but write off

Which of the following is included in the cost of land? Select all that apply. A : closing costs B : parking lots C : real estate brokers' commissions D : accrued property taxes

all except parking lots

Unlike money orders, postdated checks_________________be considered cash.

would not

Lost sales are a possible consequence of A : high inventory levels. B : low net income. C : low inventory levels. D : high operating expenses.

C

The ________ is responsible for the management of a company's cash. A accountant B president C treasurer D vice president

C treasurer

On March 1, 2022, Cullumber Company acquired real estate, on which it planned to construct a small office building, by paying $87,000 in cash. An old warehouse on the property was demolished at a cost of $9,600; the salvaged materials were sold for $1,980. Additional expenditures before construction began included $1,480 attorney's fee for work concerning the land purchase, $5,200 real estate broker's fee, $8,980 architect's fee, and $15,400 to put in driveways and a parking lot.

101,300 (pur. price. + demo cost -salv. + attor. fee + brok. fee)

What happens when the value of inventory is lower than its cost? A : The inventory is written down to its net realizable value. B : The company abandons the convention of conservatism. C : The inventory is sold off immediately. D : The company switches to the just-in-time method.

A

Owens Industries' accounting records at December 31 are shown in the chart. Assuming that Owens uses the periodic system, what is the company's cost of goods purchased? Purchase Discounts $14,600 Freight-IN $14,200 Purchases $205,000 Beginning Inventory $41,600 Ending Inventory $48,000 Purchase Returns and Allowances $18,200 A $186,400 B $223,600 C $158,000 D $210,400

A $186,400 Cost of Goods Purchased = Purchases - Purchase Returns/Allowances - Purchase Discounts + Freight-In. In this case, $186,400 = $205,000 - $18,200 - $14,600 + $14,200

The acronym DM could indicate which of the following? A the cost of printing checks B deposits made C collection of a note D interest earned by the account holder

A the cost of printing checks

When should a service organization record a receivable? A when it performs a service on account B when it contracts to perform a service on account C when a customer pays for a service done on account D when it performs a service paid for in cash

A when it performs a service on account

Which of the following would be classified as "other receivables"? A advances to employees B written promise to pay amount owed C accounts receivable D trade receivables

A advances to employees

Which of the following is an example of establishment of responsibility? A allowing only designated personnel to sign checks B having different employees approve and make payments C conducting background checks on employees D reconciling the bank statement monthly

A allowing only designated personnel to sign checks

Keeping inventories low is one way to improve a company's chances of having adequate A cash. B investments. C sales revenue. D financing.

A cash

Money market accounts, commercial paper, and U.S. Treasury bills with maturities of 90 days or less are called A cash equivalents. B current liabilities. C deposits in transit. D fixed assets.

A cash equivalents.

Evaluating the ________ of receivables is one of the five steps in sound management of accounts receivable. A liquidity B maturity date C gross total D statement presentation

A liquidity

Which of the following is a responsibility of a company's treasurer? A managing cash B managing investor relations C generating sales D overseeing production

A managing cash

Carrying a large amount of inventory may increase A : customer complaints. B : obsolete goods. C : manufacturing activities. D : lost sales.

B : obsolete goods.

Ellis Company had asset turnover of .60 in 2022. If net assets were $4,200,000 at the beginning of the year and $4,800,000 at the end of the year, what were Ellis' net sales for 2022? A : $2,700,000 B : $2,880,000 C : $5,400,000 D : $2,520,000

A : $2,700,000 Asset turnover is multiplied by average total assets to determine net sales. Average total assets are $4,500,000: ($4,200,000 + $4,800,000) /2. Multiplying this figure by .60 yields $2,700,000 in net sales for 2022.

In preparing a bank reconciliation, the adjusted cash balance per bank is $13,860. If outstanding checks total $6,325 and the cash balance per bank statement is $17,420, what amount represents deposits in transit? A : $2,765 B : $3,560 C : $7,535 D : $2,570

A : $2,765 When performing the bank side of a bank reconciliation, deposits in transit are added to the cash balance per bank statement. Then, outstanding checks are subtracted to arrive at the adjusted cash balance per bank. $17,420 + deposits in transit - $6,325 = 11,095 + deposits in transit = $13,860; deposits in transit = $2,765.

In preparing a bank reconciliation, the adjusted cash balance per bank is $12,540. If outstanding checks total $4,250 and the cash balance per bank statement is $13,875, what amount represents deposits in transit? A : $2,915 B : $9,625 C : $8,290 D : $7,165

A : $2,915 When performing the bank side of a bank reconciliation, deposits in transit are added to the cash balance per bank statement. Then, outstanding checks are subtracted to arrive at the adjusted cash balance per bank. $13,875 + deposits in transit - $4,250 = $9,625. $9,625 + deposits in transit = $12,540; deposits in transit = $2,915.

Jacobson & Sons recently purchased some new equipment for $75,600. Other associated costs are as follows: Freight Costs: $580 Sales Taxes: $2,250 Installation Costs: $6,500 Freight Insurance:$750 For what amount will Russell debit equipment at the acquisition date? A : $85,680 B : $75,600 C : $78,580 D : $77,850

A : $85,680 Equipment should be debited for the amount necessary to make the asset ready for its intended use. The freight costs, installation costs, sales taxes, and freight insurance are added to the price of the equipment to arrive at a total cost of $85,680.

The financial statements of R & P Imports report net sales of $600,000 and accounts receivable of $60,000 and $100,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for R & P Imports? A : 7.5 times B : 8.3 times C : 10.5 times D : 12 times

A : 7.5 times $600,000 ÷ [($60,000 + $100,000) ÷ 2] = 7.5 times

Which of the following statements is true? A A note receivable is a written promise to pay an amount owed. B A note receivable is usually collected in under 30 days. C An account receivable normally requires the collection of interest. D An account receivable is usually collected in 60 to 90 days. You selected A : A note receivable is a written promise to pay an amount owed. got it correct

A : A note receivable is a written promise to pay an amount owed.

Which of the following is an example of a control that provides reasonable assurance and why? A : A retail store installs security cameras to prevent shoplifting because it deters some shoplifters but does not reduce sales by innocent customers. B : A grocery store tracks every item from shipment to shelf placement to purchase because this is the most effective way to prevent loss due to employee stealing. C : A grocery store requires that customers participate in a loyalty program that tracks all their purchases because this provides data about customer preferences. D : A retail store hires security guards to inspect all packages and search all customers because this is the most effective method of preventing shoplifting.

A : A retail store installs security cameras to prevent shoplifting because it deters some shoplifters but does not reduce sales by innocent customers.

The best way to select a depreciation method is to choose that one which best measures the plant asset's A : contribution to revenue. B : need for repairs. C : market value. D : salvage value.

A : contribution to revenue

A company that avoids paying liabilities too early is A : following a basic principle of cash management. B : following an unsound approach to cash management. C : minimizing the amount of non-revenue-generating cash on hand. D : interrupting the cash to cash operating cycle of a merchandising operation.

A : following a basic principle of cash management.

Fisher Manufacturing uses the allowance method of writing off doubtful accounts. On March 1st, Fishers wrote off what it believed to be an uncollectible receivable from Mega Corporation for $3,145. Later, on July 1st, Fisher received the $3,145 from Mega. Which of the following entries should Fisher make? A : Accounts Receivable—Mega Corporation = Debit of $3,145; Allowance for Doubtful Accounts = Credit of $3,145 B : Cash = Debit of $3,145; Bad Debt Expense = Credit of $3,145 C : Accounts Receivable—Mega Corporation = Debit of $3,145; Bad Debt Expense = Credit of $3,145 D : Allowance for Doubtful Accounts = Debit of $3,145; Bad Debt Expense = Credit of $3,145

A : Accounts Receivable—Mega Corporation = Debit of $3,145; Allowance for Doubtful Accounts = Credit of $3,145

________ is often the most critical part of managing receivables. A : Determining who gets credit and who does not B : Establishing a payment period C : Determining which method to use to account for bad debts D : Monitoring the receivables

A : Determining who gets credit and who does not

Which of the following would result in Urban Kicks, which banks at First America Bank, recording an increase in cash? A : First America Bank collects a note and issues Urban Kicks a credit memorandum. B : First America Bank collects a note and issues Urban Kicks a debit memorandum. C : First America Bank receives notice of an NSF check from an Urban Kicks customer and issues Urban Kicks a debit memorandum. D : First America Bank receives notice of an NSF check from an Urban Kicks customer and issues Urban Kicks a credit memorandum.

A : First America Bank collects a note and issues Urban Kicks a credit memorandum.

Analyzing potential problems to reduce the elements of the fraud triangle is a characteristic of which component of internal control? A : Risk assessment B : Monitoring C : Control activities D : Information and communication

A : Risk assessment

Blair Automotive performed mechanic services for two customers. The first customer owed $5,280 for services, so Blair Automotive made them sign a written promise to pay in full after six months with an annual interest rate of 3.5%. The second customer owed $326 for services, so Blair Automotive plans to send them a bill within the next two weeks, due within 30 days of receipt of the bill. What is the difference between these two transactions? A : The first transaction will be recorded as a note receivable, whereas the second transaction will be recorded as an account receivable. B : The first transaction will be recorded as a note receivable, whereas the second transaction will be recorded as a cash sale. C : The first transaction will be recorded as an account receivable, whereas the second transaction will be recorded as a cash sale. D : The first transaction will be recorded as an account receivable, whereas the second transaction will be recorded as a note receivable.

A : The first transaction will be recorded as a note receivable, whereas the second transaction will be recorded as an account receivable. Solution: A note receivable requires a written promise to pay as well as the calculation of interest using an interest rate and maturity date. This is characteristic of the first transaction. An account receivable does not require a written promise to pay, nor does it require the calculation of interest. Instead, the customer will usually be expected to pay within 30 days. A cash sale would require payment in cash at the time of service

In what way do notes receivable differ from accounts receivable? A : They normally require collection of interest. B : They normally involve nontrade receivables. C : They normally involve amounts owed by customers. D : They normally involve trade receivables.

A : They normally require collection of interest

An overall measure of profitability is the return on assets ratio. A : True B : False

A : True

The specific identification method of inventory costing may enable management to manipulate net income. A : True B : False

A : True

How could Urban Kicks, a national shoe company, improve operations and increase control? A : Urban Kicks could establish a separate bank account for payroll. B : Urban Kicks could end petty cash payments. C : Urban Kicks could opt not to include remittance advices. D : Urban Kicks could reduce the frequency of bank reconciliations.

A : Urban Kicks could establish a separate bank account for payroll.

The IASB and FASB are involved in a joint project A : all of the answers are true of the joint project. B : that involves a focus on how to best present revenues and expenses. C : to evaluate the format of financial statements. D : that may result in an income statement format that better reflects how businesses are run.

A : all of the answers are true of the joint project.

Inventory should be reported A : as a current asset on the balance sheet. B : under the classification of Property, Plant, and Equipment on the balance sheet. C : as raw materials on the income statement. D : as finished goods on the income statement.

A : as a current asset on the balance sheet.

When should a merchandiser recognize an accounts receivable? A : at the point of sale B : when the goods are delivered C : when cash is received D : when payment is requested

A : at the point of sale

A loss on disposal occurs if the cash proceeds from the sale are less than the ________ value of the plant asset sold. A : book B : market C : estimated D : current

A : book

The ________ of an asset is equal to the asset's cost less accumulated depreciation. A : book value B : fair market value C : resale value D : replacement cost

A : book value

The term FOB shipping point means that the A : buyer owns the goods when the carrier accepts them from the seller. B : seller owns the goods while they are in transit to the buyer. C : buyer owns the goods only when the carrier delivers them. D : seller owns the goods until the carrier delivers them.

A : buyer owns the goods when the carrier accepts them from the seller.

How is the average collection period for receivables computed? A : by dividing 365 days by accounts receivable turnover B : by dividing 365 days by ending accounts receivable C : by dividing 365 days by average accounts receivable D : by dividing 365 days by net credit sales

A : by dividing 365 days by accounts receivable turnover

Time lags, errors by the bank, and errors by the company cause the balance on the bank statement to differ from the A : cash balance in the general ledger. B : cash budget. C : asset inventory. D : cash receipts.

A : cash balance in the general ledger.

If MegaCorp complies with the LIFO conformity rule, then it will use LIFO for A : income tax purposes and financial reporting purposes. B : only income tax purposes. C : only financial reporting purposes. D : neither income tax purposes nor financial reporting purposes.

A : income tax purposes and financial reporting purposes.

Which of the following best explains what is meant by a journal entry that reads Accounts Receivable- Westin Corporation $2400 Sales Revenue $2400 A A $2,400 sale was made to Westin Corporation. B A $2,400 sale was made by Westin Corporation. C A $2,400 payment was made by Westin Corporation. D A $2,400 payment is due to Westin Corporation.

A. A $2,400 sale was made to Westin Corporation.

Which of the following would be included in the definition of cash? Select all that apply. A petty cash B money on deposit in a bank C coins D NSF checks

A. petty cash B. money on deposit in a bank C. coins

Which of the following costs are included in a land account? Select all that apply. A : the cost of planting trees B : property taxes and liens assumed by the purchaser C : attorney's fees to title and deed D : demolition and removal costs of old buildings

ALL but A. the cost of planting trees

Jon's company purchased $1,500 of inventory on account from Sartol Industries on January 9th. The terms were 3/15, n/45. Jon's company also paid freight charges of $120 on January 10th and returned $500 of the inventory on January 14th. Journalize the entry to record the payment of the invoice on February 6th.

Accounts Payable $1000 Cash $1000 Jon's company did not pay within the discount period, so the amount due is $1,500 - 500 = $1,000. Freight charges were paid in cash before payment of the invoice.

Simmons Home Hardware offers a store credit card to customers. A customer that purchased $812 in merchandise failed to pay their account within 30 days. Therefore, Simmons added an interest charge of 2% per month to the customer's account. What adjusting entry would Simmons make to record this transaction for the first month?

Accounts Receivable $16.24 Interest Revenue $16.24

Williamson Paints offers a store credit card to customers. A customer that purchased $247 in merchandise failed to pay their account within 30 days. Therefore, Williamson added an interest charge of 1.25% per month to the customer's account. What adjusting entry would Williamson make to record this transaction for the first month?

Accounts Receivable $3.09 Interest Revenue $3.09

Manny Howard wrote a check for $720 for advertising expense, but posted the amount as $270 in the check register. Journalize the adjusting entry to correct the error.

Advertising Expense 450 Cash 450 An entry must be made to account for the difference between the amount of the check and the erroneous (transposed) posted amount ($720 - $270 = $450)

Which of the following are inventory costs? Select all that apply. A : freight costs for inventory purchased B : costs associated with the purchasing and warehousing departments C : beginning inventory D : cost of goods purchased

All but B

Which of the following requirements about internal controls were enacted under the Sarbanes-Oxley Act? Select all that apply. A : Companies must continually assess the functionality of internal controls. B : Independent outside auditors must eliminate redundant internal controls. C : Independent outside auditors must attest to the level of internal control. D : Companies must develop sound internal controls over financial reporting.

All but B

Basic principles of cash management include which of the following? Select all that apply. A : paying liabilities early B : keeping inventory levels low C : increasing the speed of receivables collection D : investing idle cash

All except A

Objectives of a system of internal controls include which of the following? Select all that apply. A : to enhance the accuracy and reliability of accounting records B : to overstate liabilities in order to be conservative C : to safeguard company assets D : to reduce the risks of errors

All except B

What do cash equivalents include? Select all that apply. A : commercial paper B : salary expense C : money market accounts D : U.S. treasury bills held for ninety days or less

All except B

Which of the following are basic principles of cash management? Select all that apply. A : Delay payment of liabilities. B : Keep excess cash on hand. C : Increase the speed of receivables collection. D : Plan the timing of major expenditure

All except B

Which of the following would be subtracted from the balance per books in a bank reconciliation? Select all that apply. A : NSF checks B : check printing charges C : service charges D : outstanding checks

All except D

________is the process of allocating the cost of intangible assets.

Amortization

Sandhill Company purchased a delivery truck for $48,000 on July 1, 2022. The truck has an expected salvage value of $4,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2022 and 12,000 in 2023. Sandhill uses the straight-line method of depreciation. Compute depreciation expense for 2022 and 2023.

Answer: Depreciation expense for 2022 was $2,750 Depreciation expense for 2023 was $5,500 Explanation: Sandhill Company uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula: Annual Depreciation Expense = (Cost of delivery truck − Salvage Value )/Useful Life = ($48,000-$4,000)/8 = $5,500 In 2022, the delivery truck was used from July 1 to December 31 (6 months) Depreciation Expense for 2022 = ($5,500 /12) x 6 = $2,750 Depreciation Expense for 2023 = $5,500

Oriole Company purchased a new machine on October 1, 2022, at a cost of $90,240. The company estimated that the machine has a salvage value of $8,800. The machine is expected to be used for 70,300 working hours during its 8-year life. Compute the depreciation expense under the straight-line method for 2022 and 2023, assuming a December 31 year-end.

Answer: Depreciation for 2022 = $2,545 Depreciation for 2023 = $10,180 Explanation: The computation of the depreciation expense is shown below:- Cost of assets = $90,240 Salvage value = $8,800 Useful life of assets = 8 years Depreciation expenses = (Cost of assets - Salvage value) ÷ Estimated useful life of assets = ($90,240 - $8,800) ÷ 8 = $10,180 So Depreciation for 2022 = (Depreciation expenses × 3 months(i.e. from Oct 1 to Dec 31)) ÷ 12 = ($10,180 × 3 months) ÷ 12 = $2,545 and Depreciation for 2023 = $10,180

Suppose during 2014 that Federal Express reported the following information (in millions): net sales of $34,272 and net income of $84. Its balance sheet also showed total assets at the beginning of the year of $24,738 and total assets at the end of the year of $23,242. Calculate the asset turnover and return on assets.

Asset turnover = Net sales / Average total assets $34,272 / [($24,738 + 23,242) / 2] = 1.43 Return on assets = Net income / Average total assets $84 / [($24,738 + 23,242) / 2] = 0.0035 or 0.35%

When is the specific identification method of costing inventories used? A : when the physical flow of units cannot be determined B : when the company sells a limited number of high-unit-cost items C : when the company sells large quantities of relatively low-cost heterogeneous items D : when the company sells large quantities of relatively low-cost homogeneous items

B

Which of the following statements is true? A : Regulations limit the types of inventory costing methods managers may choose, depending on the volume of goods. B : Management may choose any inventory costing method it desires. C : Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company. D : Regulations limit the types of inventory costing methods managers may choose, depending on whether the goods have a low or high unit cost.

B

In banking, what is the relationship between a deposit and a credit? A A customer's deposit will be a credit to the bank's cash account. B A customer's deposit will be a credit to their account at the bank. C A customer deposits credits to be used like cash. D A customer uses credits to make a deposit

B A customer's deposit will be a credit to their account at the bank.

Assuming a 36% annual rate of interest on a company-issued credit card, which of the following best explains what is meant by a journal entry that reads accounts receivable(debit) 60 interest revenue(credit) 60 A The customer paid off all but 3% of a $2,000 purchase. B The customer owes one month's interest on a purchase of $2,000. C The customer paid one month's interest on a purchase of $2,000. D The customer paid only 3% on a $2,000 purchase.

B The customer owes one month's interest on a purchase of $2,000. If the yearly interest rate is 36%, this rate is divided by 12 to arrive at a monthly rate of 3%. A $60 charge represents 3% of a $2,000 purchase ($60/.03).

The cost of ________ is expensed as it benefits the company. A : a long-term liability B : equipment C : a short-term liability D : land

B : equipment

Errors made by banks tend to A occur regularly. B be infrequent. C require an adjusting entry on the company's books. D be expected.

B be infrequent.

Employees who commit fraud because of financial pressure are most likely A being monitored closely by employers. B facing too much debt. C feeling that their employer makes too much money. D earning a high salary.

B facing too much debt.

The LIFO inventory method assumes that the cost of the latest units purchased are the ________ to be allocated to A first; ending inventory. B first; cost of goods sold. C last; cost of goods sold. D first; beginning inventory.

B first; cost of goods sold.

Rights and privileges resulting from the ownership of long-lived assets that do not have physical substance are called A plant assets. B intangible assets. C franchises. D tangible assets.

B intangible assets

A plant asset is ________ from the books upon sale or exchange whether or not it is fully depreciated. A retired B removed C amortized D devalued

B removed

At the end of a clerk's shift, two copies of the deposit slip are necessary; one for ________ and the other to the bank. A the treasurer B the accounting department C human resources D the cashier

B the accounting department

Monica Moran processes hundreds of vouchers each week for Sunlight Company. When will she create journal entries in Sunlight's voucher system? A when the order is made and the liability is paid B when the voucher is issued and when the liability is paid C when the order is made and when the goods are received D when the goods are received and the liability is paid

B when the voucher is issued and when the liability is paid

What is the principal of a 10-month, 8% note that will earn $800 of interest? A : $10,000 B : $12,000 C : $8,000 D : $18,000

B : $12,000 Solution: Using the formula I = PRT where I is the amount of interest earned on the note, P is the principal of the note, R is the interest rate, and T is the time of the note in terms of one year, the principal can be determined by multiplying the interest rate and time (.08 × (10/12) = .066666). Dividing the interest by this amount ($800/.066666) results in principal of $12,000.

Stanton Metal Company's accounting records show the following for the year ending December 31, 2022: Purchase Discounts $5,600 Freight-IN $7,800 Purchases $350,010 Beginning Inventory $23,500 Ending Inventory $28,800 Purchase Returns and Allowances $6,400 Using the periodic system, the cost of goods purchased is A : $330,210. B : $345,810. C : $357,010. D : $354,210.

B : $345,810. $350,010 - $5,600 - $6,400 + $7,800 = $345,810

Velocity Company reports an average collection period of 43.8 days. Beginning and ending accounts receivable are $61,225 and $51,025, respectively. What were Velocity's net credit sales? A : $1,018,750 B : $467,708 C : $510,208 D : $425,208

B : $467,708 Dividing 365 days by the average collection period results in accounts receivable turnover of 8 and 1/3 times. Multiplying this figure by average accounts receivable of $56,125 [($61,225 + $51,025) ÷ 2] results in net sales of $467,708.

Sanders Company has a debit balance of $7,000 in its Allowance for Doubtful Accounts before any adjustments are made. Based on a review of its accounts receivable at the end of the year, Sanders estimates that $70,000 of its receivables are uncollectible. The amount of bad debt expense which should be reported for the year is A : $63,000. B : $77,000. C : $70,000. D : $7,000.

B : $77,000 Year-end balance = Beginning debit balance + Necessary ending balance = 7,000 + 70,000 = $77,000.

The company with the lowest operating efficiency is one with an asset turnover of A : 0.68. B : 0.52. C : 0.94. D : 1.37.

B : 0.52.

What is the annual interest rate for a 60-day note issued with a face value of $2,500 that will earn interest of $42? A : 14.3% B : 10.1% C : 1.7% D : 5.95%

B : 10.1% Using the formula I = PRT where I is the amount of interest earned on the note, P is the face value of the note, R is the annual interest rate, and T is the time of the note in terms of one year, the interest rate can be determined by multiplying the principal and time ($2,500 × (60/360) x R = $42). Dividing the interest by this amount (R = $42/416.67) results in an interest rate of 10.1%

In 2022, Butler Tractors had a cost of goods sold of $95.8 million and an average inventory of $42.3 million. What was their inventory turnover for 2022? A : 1.9 B : 2.3 C : 2.7 D : 3.1

B : 2.3 Inventory turnover is equal to cost of goods sold divided by average inventory. Therefore, inventory turnover = $95.8 million/$42.3 million = 2.3.

What is the annual interest rate for a 90-day note issued with a face value of $8,000 that will earn interest of $160? A : 12% B : 8% C : 16% D : 4%

B : 8% Using the formula I = PRT where I is the amount of interest earned on the note, P is the principal of the note, R is the interest rate, and T is the time of the note in terms of one year, the interest rate can be determined by multiplying the principal and time ($8,000 × (90/360) = $2,000). Dividing the interest by this amount ($160/$2,000) results in an interest rate of 8%.

Which of the following statements is true? A : A bank statement and a bank reconciliation are two terms that mean the same thing. B : A bank statement is a monthly statement that shows the bank's record of a depositor's bank transactions. C : A bank statement is an annual statement that summarizes the activities of a depositor's account. D : A bank statement is a bill from the bank for services rendered.

B : A bank statement is a monthly statement that shows the bank's record of a depositor's bank transactions.

Gemini Group utilizes the voucher system. What would be the role of an invoice from a supplier in the system? A : Accounting would use it to prepare the check. B : Accounts payable would use it to prepare a voucher. C : An account manager would use it to authorize the purchase. D : Accounts receivable would use it to verify shipment.

B : Accounts payable would use it to prepare a voucher.

Which is not true about leasing? A : Leasing accounts for about one-third of all business investment. B : Airlines lease most of their airplanes on short-term leases. C : Major banks are the major lessors. D : One-third of heavy-duty commercial trucks are leased.

B : Airlines lease most of their airplanes on short-term leases.

________ is a process of cost allocation. A : Impairment B : Depreciation C : Accumulation D : Devaluation

B : Depreciation

Which of the following would be a consequence of company policies that do not require authorization on purchases? A : Employees may submit fake invoices from fake vendors. B : Employees may make personal purchases with company funds. C : Employees may be hired despite past fraud against other companies. D : Employees may take home inventory for personal use.

B : Employees may make personal purchases with company funds.

In periods of inflation, which of the following can result in phantom or paper profits? A : perpetual inventory method B : FIFO costing assumption C : periodic inventory method D : LIFO costing assumption

B : FIFO costing assumption

Companies usually list an Accumulated Depreciation contra account for plant assets and an Accumulated Amortization contra account for intangible assets on the balance sheet. A : True B : False

B : False

Which of the following statements is true? A : A company is not allowed to change its inventory valuation method. B : If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements. C : If a company changes its inventory valuation method, the effect of the change on net income need not be disclosed in the financial statements. D : If a company changes its inventory valuation method, the effect of the change on net income needs to be disclosed only within the company.

B : If a company changes its inventory valuation method, the effect of the change on net income should be disclosed in the financial statements.

Which is the last step in a multiple-step income statement? A : Net sales less cost of goods sold equals gross profit. B : Income before taxes less income tax expense equals net income. C : Income from operations plus or minus other revenues or expenses equals income before taxes. D : Gross profit less operating expenses equals income from operations.

B : Income before taxes less income tax expense equals net income.

The requirement that companies maintain an adequate system of internal controls was mandated by the A : Securities and Exchange Commission (SEC). B : Sarbanes-Oxley Act. C : Public Accounting Oversight Board (PCAOB). D : Federal Reserve Board

B : Sarbanes-Oxley Act.

________ are deducted from the balance per books in a bank reconciliation. A : Outstanding checks B : Service charges C : Deposits in transit D : Notes collected by the bank

B : Service charges

The service potential of ________ does not decline over its useful life. A : a land improvement B : land C : equipment D : a building

B : land

If a company holds ________, these goods should be included in its ending inventory. A : an invoice for goods in transit shipped FOB destination B : legal title to goods C : physical possession of goods D : consigned goods

B : legal title to goods

The term NSF associated with checks returned by the bank means A : no signature found B : not sufficient funds C : not satisfactorily filled out D : no service fee

B : not sufficient funds

Graves Construction is journalizing two transactions related to uncollectible accounts. The first transaction does not affect cash flows, but the second transaction does affect cash flows. If Graves Construction uses the allowance method to account for uncollectibles, which of the following scenarios may pertain to these transactions? A : The first transaction is to record the write-off of an uncollectible account, and the second transaction is to record the estimate of uncollectible accounts. B : The first transaction is to record the write-off of an uncollectible account, and the second transaction is to record the recovery of a previously written off uncollectible account. C : The first transaction is to record the sale of uncollectible accounts to a factor, and the second transaction is to record the write-off of an uncollectible account. D : The first transaction is to record the recovery of a previously written off collectible account, and the second transaction is to record the estimate of uncollectible accounts.

B : The first transaction is to record the write-off of an uncollectible account, and the second transaction is to record the recovery of a previously written off uncollectible account

Which of the following statements about credit cards is true? A : The retailer receives more cash from the issuer as a result of accepting the card. B : The retailer receives less cash from the credit card issuer as a result of accepting the card. C : The issuer leaves the credit investigation of customers to the retailer. D : The issuer leaves the collection process to the retailer.

B : The retailer receives less cash from the credit card issuer as a result of accepting the card.

________ indicates an overall measure of profitability. A : Net revenue B : The return on assets ratio C : The asset turnover ratio D : The profit margin ratio

B : The return on assets ratio

Which of the following best describes the LIFO inventory method assumption about the cost of the latest units purchased? A : They are not allocated to cost of goods sold or ending inventory. B : They are the first to be allocated to cost of goods sold. C : They are the first to be allocated to ending inventory. D : They are the last to be allocated to cost of goods sold.

B : They are the first to be allocated to cost of goods sold.

Which is not an advantage of leasing vs purchasing? A : Reduced risk of obsolescence. B : Use of the leased asset by both parties during the lease term. C : Little or no down payment. D : Shared tax advantages.

B : Use of the leased asset by both parties during the lease term

When a company works to improve the accuracy and reliability of their accounting records, they are using A : independent internal verification. B : a system of internal controls. C : government regulations. D : external verification processes.

B : a system of internal controls

Credit sales result in the creation of ________ for the company. A : cash receipts B : accounts receivable C : notes payable D : debt

B : accounts receivable

A debit to Accumulated Depreciation occurs when A : an asset is purchased. B : an asset is disposed of. C : depreciation is recorded for an asset. D : an asset is stored.

B : an asset is disposed of

How is Bad Debt Expense reported on the income statement? A : as an expense subtracted from net sales to determine gross profit B : as an operating expense C : as part of cost of goods sold D : as a contra revenue account

B : as an operating expense

Outstanding checks would be deducted from the ________ section on a bank reconciliation. A : debits B : balance per bank C : cash receipts D : balance per books

B : balance per bank

Which of the following would cause a bank to debit a customer's account? A : interest received B : bank charges C : collection of a note receivable D : cash deposit

B : bank charges

A statement that shows the activities that increased or decreased the depositor's account balance in a bank is called a A : pay slip B : bank statement C : bill for services rendered D : letter of credit

B : bank statement

What is the difference between the cost of an intangible asset and the amortization recorded to date? A : historical value B : book value C : fair market value D : estimated value

B : book value

Carter Company uses ________ as the basis for the journal entry for an increase in A : deposit slip; accounts receivable. B : cash register tape; cash. C : cash register tape; accounts receivable. D : deposit slip; cash.

B : cash register tape; cash.

Amortization refers to the A : process of bifurcation of revenue and capital expenditure. B : cost allocation of an intangible asset. C : process of allocating to expense the cost of a plant asset over its useful life in a systematic manner. D : cost allocation of a tangible asse

B : cost allocation of an intangible asset.

Inventory turnover is calculated by dividing A : cost of goods sold by total assets. B : cost of goods sold by average inventory. C : net sales by cost of goods sold. D : average inventory by cost of goods sold.

B : cost of goods sold by average inventory.

A company must evaluate the extent of its internal control features according to which of the following? A : employee responsibility B : cost-benefit C : need D : government regulations

B : cost-benefit

Depending on when it is to be used, how can restricted cash be classified on the balance sheet? A : noncurrent asset or current liability B : current asset or noncurrent asset C : current asset or current liability D : comprehensive income or current asset

B : current asset or noncurrent asset

Because the ________ method violates the ________, it is unacceptable for financial reporting. A : allowance; matching principle B : direct write-off; matching principle C : allowance; relevance criteria D : direct write-off; going-concern principle

B : direct write-off; matching principle

For the same company and the same year, net income on a single-step income statement will be A : greater than on a multiple-step income statement. B : equal to net income on a multiple-step income statement. C : sometimes great than, and sometimes less than, on a multiple-step income statement. D : less than on a multiple-step income statement.

B : equal to net income on a multiple-step income statement.

Lee Steele uses ________ to provide proper documentation procedures and help ensure that a transaction is recorded only once. A : only bonded employees B : prenumbered documents C : telephone authorization by the CEO D : temporary employees

B : prenumbered documents

Old equipment that is scrapped or discarded when it is no longer useful is said to be A : written off. B : retired. C : sold. D : exchanged.

B : retired.

According to GAAP, what is the correct classification for the cost of an oil change on a delivery vehicle? A : a reduction of the vehicle's historical cost B : revenue expenditure C : an addition to accumulated depreciation D : capital expenditure

B : revenue expenditure

Which of the following will reduce Accounts Receivable? A : sale of goods B : sales returns C : advances to employees D : adjusting entry for interest owed

B : sales returns

What is the meaning of work in process inventory? A : manufactured items that are completed and ready for sale B : that portion of manufactured inventory that has begun the production process but is not yet complete C : basic goods that will be used in production but have not yet been placed in production D : goods that are held for sale by one party although ownership of the goods is retained by another party

B : that portion of manufactured inventory that has begun the production process but is not yet complete

Which of the following is a characteristic of a plant asset? A : held for sale in the ordinary course of business B : used in the operations of business C : intangible D : not currently used in the business but held for future use

B : used in the operations of business

What does the LIFO inventory method assume about the cost of the latest units purchased? A : It is the first to be allocated to ending inventory. B : It is the first to be allocated to cost of goods sold. C : It is the last to be allocated to cost of goods sold. D : It is not allocated to cost of goods sold or ending inventory.

B : It is the first to be allocated to cost of goods sold.

How will an amount withdrawn by a company appear on the bank statement? A : as a credit B : as a debit memorandum C : as a debit D : as a credit memorandum

C : as a debit

Which of the following will require the depositor to make a journal entry? Select all that apply. A bank errors B collection of a note receivable C an NSF check D bank service charges

B. collection of a note receivable C. an NSF check D. bank service charges

Laser Company reports the following information for its most recent fiscal year, before adjustments Sales: $581, 500 Beginning Accounts Receivable Balance: $32,500 Sales Returns and Allowances: $9,500 Ending Accounts Receivable Balance:$34,400 Allowance for Doubtful Accounts: $2,100 (credit balance) An accounts receivable aging schedule results in $4,800 of estimated bad debts. If Laser uses the percentage-of-receivables basis to estimate bad debts, journalize the appropriate year-end adjusting entry.

Bad Debt Expense 2700 Allowance for Doubtful Accounts 2700 Solution The allowance for doubtful accounts should have an ending credit balance based on the aging schedule. Since the account has an unadjusted credit balance, the amount of the entry is the result of the aging schedule, less the existing balance ($4,800 - 2,100 = $2,700)

Journalize the entry for the receipt of cash by Flowers Company when the company sells $2,100 of merchandise to Thorne Corporation on January 12th with terms 2/15, n/EOM if payment is made on January 22nd.

Because Thorne Corporation paid within the discount period, it is entitled to a 2% discount ($2,100 × .02 = $42). Flowers Company will receive cash of $2,058 ($2,100 - 42).

What determines a company's use of the specific identification method of costing? A : when the company purchases a large number of low-unit-cost items B : when the company sells large numbers of low-unit-cost items C : when the company sells a limited number of high-unit-cost items D : when the physical flow of units cannot be determined

C

Notes collected by the bank would be added to the ________ in a bank reconciliation. A credit balance B balance per bank C balance per books D expected earnings section

C balance per books

Which of the following enables a company to prepare for possible cash deficiencies at the end of any month? A cash account B cash verification C cash budget D cash surplus

C cash budget

Depreciation refers to the periodic allocation of a plant asset's A book value. B liability. C cost. D fair market value.

C cost.

An advantage of leasing is A : a larger down payment. B : that all taxes are paid by the lessee. C : reduced risk of obsolescence. D : the short-term nature of all lease

C : reduced risk of obsolescence.

Companies often sell their receivables to A : lengthen the collection period. B : decrease the inventory turnover. C : shorten the operating cycle. D : lengthen the operating cycle.

C : shorten the operating cycle.

When a company purchases vacant land, which account should expenditures for clearing, draining, filling, and grading be charged to? A land improvement account B machinery account C land account D plant account

C land account

What is the main responsibility of the treasurer of a company? A collection of receivables B issuance of stocks and bonds C management of the company's cash D journal entry of transactions

C management of the company's cas

One type of inventory costing method is A : lower-of-cost-or-market. B : periodic. C : specific identification. D : perpetual.

C : specific identification.

Every year, the fraud prevention task force at Hula International reviews the employee handbook and company procedures to ensure that they are still applicable and up-to-date. This action is part of the _________ component of the internal control system. A information and communication B risk assessment C monitoring D control activities

C monitoring

If a company has significant concentration of credit risk, it A should offer a sales discount to the customer to encourage prompt payment. B is required by law to investigate the personnel who allowed the credit risk. C must include a note about this in its financial statements. D should write off the risk as a bad debt. You selected A : should offer a sales discount to the customer to encourage prompt payment. got it wrong the correct Answer is C : must include a note about this in its financial statements.

C must include a note about this in its financial statements

Which of the following statements is true? A Payments from petty cash funds are not recorded. B Companies rely on a petty cash fund to increase their liquid assets. C Transactions involving a petty cash fund are subject to some internal controls. D Payments from petty cash funds are made by check.

C Transactions involving a petty cash fund are subject to some internal controls.

Fraud occurs when A companies are subject to fines. B internal controls are in place and operational. C an employee commits a dishonest act for personal benefit that harms the employer. D companies have redundant controls.

C an employee commits a dishonest act for personal benefit that harms the employer.

How many dollars of sales a company generates for each dollar invested in assets is calculated by A profit margin. B inventory turnover. C asset turnover. D return on assets.

C asset turnover.

What was the cost of goods sold for Spinaldi's, Inc., if the days in inventory ratio was 11.5 days, and the average inventory was $100,000 for the most recent fiscal year (round calculations to nearest decimal)? A : $4,500,000 B : $2,075,000 C : $3,170,000 D : $4,170,000

C : $3,170,000

Patrick Enterprises recently installed a parking lot. The paving costs were $38,750, and the lighting costs were $20,000. In addition, the company entered into a $1,000 annual agreement with Romero Cleaning to maintain the parking lot. For what amount should Patrick Enterprises debit the land improvements account when the parking lot is completed? A : $38,750 B : $59,750 C : $58,750 D : $57,750

C : $58,750 The maintenance contract is expensed as Romero completes its work. The relevant costs to complete the parking lot include the paving and the lighting ($38,750 + 20,000 = $58,750).

At the beginning of January, Cooper Designs has a cash balance of $295,000. They have expected cash receipts of $67,000 and expected cash disbursements of $118,000 for the month of January. If Cooper Designs wants to maintain a minimum monthly balance of $250,000, how much cash should Cooper Designs borrow in January? A : $51,000 B : $45,000 C : $6,000 D : $0

C : $6,000 The ending cash balance is calculated by (beginning cash balance + cash receipts - cash disbursements + borrowings = ending cash balance). To determine how much Cooper Designs should borrow, take $295,000 + $67,000 - $118,000 + borrowings = $250,000. Therefore, they should borrow $6,000.

The financial statements of the Darlington Company report net sales of $500,000 and accounts receivable of $40,000 and $20,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Darlington? A : 10 B : 23 C : 16.7 D : 21.1

C : 16.7 $500,000 ÷ [($40,000 + $20,000) ÷ 2] = 16.7

The financial statements of Baker Company report net sales of $500,000 and accounts receivable of $10,000 and $15,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? A : 12 B : 8 C : 9.1 D : 10.2

C : 9.1 Solution: $500,000 ÷ [($10,000 + $15,000) ÷ 2] = 40; 365 ÷ 40 = 9.1

Which of the following statements is true? A : A company cannot use more than one inventory cost flow method at the same time. B : A company is required to use different inventory cost flow methods for domestic and foreign inventories. C : A company may use more than one inventory cost flow method at the same time. D : A company is required to use different inventory flow methods for low-unit-cost and high-unit-cost items.

C : A company may use more than one inventory cost flow method at the same time.

What is a deposit slip and when is it used? A : A document that is the bank's record of transactions that is used in account reconciliation. B : A document that accompanies checks to explain their purpose. C : A document that accompanies checks and cash when making a bank deposit to provide documentation of the deposit. D : A document that is the company's record of transactions that is used in internal control procedures.

C : A document that accompanies checks and cash when making a bank deposit to provide documentation of the deposit.

Which of the following statements is true? A : Bank errors must be corrected by debits. B : Bank errors are corrected by making an adjusting entry on the depositor's books. C : Bank errors are infrequent in occurrence. D : Bank errors occur because of time lags.

C : Bank errors are infrequent in occurrence.

________ are highly liquid investments that are close to their maturity and easily convertible. A : Treasury bills B : Cash subsidies C : Cash equivalents D : Dividends

C : Cash equivalents

Manufacturing inventory accounts are A : Finished Goods, Merchandise Inventory, and Work in Process. B : Finished Goods, Raw Materials, and Merchandise Inventory. C : Finished Goods, Raw Materials, and Work in Process. D : Finished Goods, Unfinished Goods, and Raw Materials.

C : Finished Goods, Raw Materials, and Work in Process.

________ is an internal control feature that would address employees who do not take vacations. A : Segregation of duties B : Establishment of responsibility C : Human resource controls D : Documentation procedures

C : Human resource controls

________ is accomplished when the ________ counts the cash at the end of the shift. A : Physical controls; accounts receivable clerk B : Independent internal verification; sales clerk C : Independent internal verification; cashier D : Endorsement; treasurer

C : Independent internal verification; cashier

Reeves Incorporated is accepting notes receivable from four individuals for $5,000 each. Which individual will end up paying the MOST in interest, assuming all individuals pay in full on the maturity date? A : Individual 1 has an annual interest rate of 3.5% and a maturity date of 60 days. B : Individual 2 has an annual interest rate of 4.75% and a maturity date of three months. C : Individual 3 has an annual interest rate of 4.05% and a maturity date of one year. D : Individual 4 has an annual interest rate of 3.8% and a maturity date of six months.

C : Individual 3 has an annual interest rate of 4.05% and a maturity date of one year. Individual 1 will pay $5,000 * 3.5% * 60/360 = $29.17. Individual 2 will pay $5,000 * 4.75% * 3/12 = $59.38. Individual 3 will pay $5,000 * 4.05% * 1 = $202.50. Individual 4 will pay $5,000 * 3.8% * 6/12 = $95. Therefore, Individual 3 will end up paying the most in interest.

Higgins Enterprises is accepting notes receivable from four customers for $18,000 each. Which customer will end up paying the LEAST in interest, assuming all individuals pay in full on the maturity date? A : Individual 2 has an annual interest rate of 5.98% and a maturity date of one year. B : Individual 1 has an annual interest rate of 6.75% and a maturity date of four months. C : Individual 3 has an annual interest rate of 7.3% and a maturity date of 90 days. D : Individual 4 has an annual interest rate of 7.15% and a maturity date of eight months.

C : Individual 3 has an annual interest rate of 7.3% and a maturity date of 90 days. Individual 1 will pay $18,000 * 6.75% * 4/12 = $405. Individual 2 will pay $18,000 * 5.98% * 1 = $1,076.40. Individual 3 will pay $18,000 * 7.3% * 90/360 = $328.50. Individual 4 will pay $18,000 * 7.15% * 8/12 = $858. Therefore, Individual 3 will end up paying the least in interest.

On December 31, 2022, Haas Engineering's ending inventory was $41,200. On December 31, 2023, Haas' ending inventory was $40,000. Assuming beginning inventory and cost of goods purchased were the same in both 2022 and 2023, how will Haas' cost of goods sold in 2023 differ from its cost of goods sold in 2022? A : The difference cannot be determined from this information. B : It will be the same in 2023 as in 2022. C : It will be higher in 2023 than in 2022. D : It will be lower in 2023 than in 2022.

C : It will be higher in 2023 than in 2022

What is the maturity date of a 60-day note receivable issued on November 17th, 2021? A : January 31st, 2022 B : January 15th, 2022 C : January 16th, 2022 D : January 17th, 2022

C : January 16th, 2022

Newman Shoes and Bowman Footwear both decided to write off a specific customer's uncollectible account as a bad debt expense. If Newman Shoes uses the direct write-off method and Bowman Footwear uses the allowance method for uncollectible accounts, what will be the difference in the journal entries for these two companies? A : Newman Shoes will record a credit to Allowance for Doubtful Accounts, whereas Bowman Footwear will record a credit to Bad Debt Expense. B : Newman Shoes will record a credit to Bad Debt Expense, whereas Bowman Footwear will record a credit to Allowance for Doubtful Accounts. C : Newman Shoes will record a debit to Bad Debt Expense, whereas Bowman Footwear will record a debit to Allowance for Doubtful Accounts. D : Newman Shoes will record a debit to Allowance for Doubtful Accounts, whereas Bowman Footwear will record a debit to Bad Debt Expense.

C : Newman Shoes will record a debit to Bad Debt Expense, whereas Bowman Footwear will record a debit to Allowance for Doubtful Accounts. When recording an uncollectible account under the direct write-off method, the company records a debit to Bad Debt Expense and a credit to the specific Accounts Receivable account that is uncollectible. This characterizes Newman Shoes' method. When recording an uncollectible account under the allowance method, the company records a debit to Allowance for Doubtful Accounts and a credit to the specific Accounts Receivable account that is uncollectible. This characterizes Bowman Footwear's method.

Both Fowler Landscaping and Stanley Cleaning Services have estimated their uncollectible accounts at 12/31/22 to be $3,500. In addition, both companies use the allowance method for uncollectible accounts. If Stanley has to record an amount larger than $3,500 for their Bad Debts Expense at the end of 2022, and Fowler has to record an amount less than $3,500, what can you assume about the balance of the Allowance for Doubtful Accounts account for each company? A : Stanley Cleaning Services had a zero balance in Allowance for Doubtful Accounts at the end of 2022, whereas Fowler Landscaping has a debit balance. B : Stanley Cleaning Services had a credit balance in Allowance for Doubtful Accounts at the end of 2022, whereas Fowler Landscaping has a debit balance. C : Stanley Cleaning Services had a debit balance in Allowance for Doubtful Accounts at the end of 2022, whereas Fowler Landscaping has a credit balance. D : Stanley Cleaning Services had a credit balance in Allowance for Doubtful Accounts at the end of 2022, whereas Fowler Landscaping has a zero balance.

C : Stanley Cleaning Services had a debit balance in Allowance for Doubtful Accounts at the end of 2022, whereas Fowler Landscaping has a credit balance The normal balance for Allowance for Doubtful Accounts is a credit balance. A company with a debit or zero balance will have a higher adjusting entry than a company with a credit balance, and a company with a zero or credit balance will have a lower adjusting entry than a company with a debit balance, provided both companies need the same ending balance. If Stanley Cleaning Services has Bad Debts Expense larger than $3,500, and Fowler Landscaping has a Bad Debts Expense smaller than $3,500, then the only correct option is that Stanley had a debit balance and Fowler had a credit balance in their Allowance for Doubtful Accounts at the end of 2022.

Holland Trucks is journalizing two transactions. The first is to write off an uncollectible account. The second is to record the recovery of an uncollectible account. Which of the following differences will apply to these transactions? A : The first transaction will affect only assets, but the second transaction will affect only stockholders' equity. B : The first transaction will require two journal entries, but the second transaction will only require one journal entry. C : The first transaction will not affect cash flows, but the second transaction will affect cash flows. D : The first transaction will affect both balance sheet and income statement accounts, but the second transaction will only affect balance sheet accounts.

C : The first transaction will not affect cash flows, but the second transaction will affect cash flows

Credit sales result in the creation of ________ for the company. A : debt B : notes payable C : accounts receivable D : cash receipts

C : accounts receivable

The cost of a plant asset is equal to the ________ when it is purchased for cash. A : cash paid or fair value of the asset, whichever is higher B : fair value of the asset C : amount of cash paid D : book value of the seller

C : amount of cash paid

When is a physical inventory usually taken? A : on the first weekend of the new fiscal year B : when the company has its greatest amount of inventory C : at the end of the company's fiscal year D : when the company has its greatest amount of inventory or on the first weekend of the new fiscal year

C : at the end of the company's fiscal year

A(n) ________ should be prepared to explain any difference between a depositor's balance per books with the balance per bank. A : internal audit B : voucher C : bank reconciliation D : asset statement sheet

C : bank reconciliation

Why are national credit card sales considered cash sales even though cash is not received at the time the transaction is carried out? A : because the issuer absorbs any losses associated with a failure to collect B : because the service fee must be recorded as a cash loss C : because the credit card issuer guarantees payment D : because there is no other way to differentiate national and store-issued credit sales

C : because the credit card issuer guarantees payment

Management should select a depreciation method that A : is the easiest method to apply. B : it has used most often in the past. C : best measures the plant asset's contribution to revenue over its useful life. D : best measures the plant asset's market value over its useful life

C : best measures the plant asset's contribution to revenue over its useful life.

Control over cash disbursements is generally more effective when a company uses ________ to make most payments. A : credit B : cash C : checks D : both credit and cash

C : checks

Journal entries are required by the depositor for any bank service charges, NSF checks, and A : bank errors. B : deposits in transit. C : collections of a note receivable. D : outstanding checks.

C : collections of a note receivable.

Goods that are held for sale by one party although ownership of the goods is retained by another party are called A : work in process. B : finished goods. C : consigned goods. D : raw materials

C : consigned goods

Which of the following processes best describes depreciation? A : cost accumulation B : asset valuation C : cost allocation D : asset devaluation

C : cost allocation

Sales of merchandise using the perpetual system of inventory include a second entry to increase ________ and decrease A : cost of goods sold; sales revenue. B : administrative expenses; gross profit. C : cost of goods sold; the seller's inventory. D : cost of goods sold; the purchaser's inventory.

C : cost of goods sold; the seller's inventory.

Companies must initially record plant assets at A : market value. B : the greater of cost or fair value. C : cost. D : fair value.

C : cost.

At the end of the company's fiscal year, a company takes a physical inventory to A : calculate the cost of goods sold. B : calculate net income. C : count the inventory on hand. D : determine ownership of the goods.

C : count the inventory on hand.

A plant asset is removed from the books upon sale or exchange whether or not it is fully A : devalued. B : paid for. C : depreciated. D : utilized.

C : depreciated.

Which of the following should be included in the buyer's ending inventory? A : goods that have been purchased but have not left the seller B : goods for which a sales order has been accepted C : goods in transit shipped FOB shipping point D : goods in transit shipped FOB destination

C : goods in transit shipped FOB shipping point

Mary Moore, ________ for Dexter Company, goes to the bank daily to make deposits. A : accounts receivable manager B : purchasing manager C : head cashier D : receiving manager

C : head cashier

Principles of cash management include (select all that apply) A : keeping inventory levels high. B : paying dividends. C : increasing speed of receivables collection. D : investing idle cash.

C : increasing speed of receivables collection. D : investing idle cash.

Specific identification is a type of A : price calculation method. B : management system. C : inventory costing method. D : inventory location system.

C : inventory costing method

Lower inventory levels are a desired result of implementing a A : consigned goods system. B : merchandising inventory classification. C : just-in-time (JIT) inventory system. D : manufacturing inventory classification.

C : just-in-time (JIT) inventory system.

Whether or not goods should be included in ending inventory depends on A : management's judgment. B : physical possession. C : legal title. D : whether the purchase price has been paid.

C : legal title.

Raw materials, work in process, and finished goods are inventory categories of a A : merchandising company. B : service enterprise. C : manufacturing company. D : retailer.

C : manufacturing company.

The asset turnover ratio is calculated as ________ divided by average total assets. A : net income B : ending total assets C : net sales D : average sales

C : net sales

Grant Incorporated has loaned $15,000 to a corporate officer. Grant should classify the loan as a(n) ________ since the transaction is outside the normal course of business. A : notes receivable B : current liability C : other receivable D : accounts receivable

C : other receivable

Under a perpetual inventory system, a company would debit the Inventory account when it A : calculates operating expenses. B : records the cost of goods sold. C : purchases merchandise for resale. D : records sales revenue.

C : purchases merchandise for resale.

To be considered cash equivalents, investments must be highly liquid and A : have a maturity date of one year or less. B : collectible within one year. C : readily convertible, and very close to their maturity dates. D : readily convertible and with a market value that is sensitive to changes in interest rates.

C : readily convertible, and very close to their maturity dates.

What are claims that are expected to be received in cash? A : payments B : profits C : receivables D : interest

C : receivables

Assuming a 2/10, n/30 term, which of the following best explains what is meant by a journal entry that reads Cash 980 Sales Discount 20 Accounts Receivable 1000 A A 2% interest charge was charged to Wilson Company on a purchase of $1,000 because Wilson paid after 30 days. B A 2% interest charge was charged by Wilson Company to a customer on a purchase of $1,000 because the customer paid after 30 days. C A 2% discount was extended to Wilson Company on a purchase of $1,000 because Wilson paid within 10 days. D A 2% discount was extended by Wilson Company to a customer on a purchase of $1,000 because the customer paid within 10 days.

C. A 2% discount was extended to Wilson Company on a purchase of $1,000 because Wilson paid within 10 days Solution: Wilson Company received 2% discount ($1,000 × .02 = $20). The company with which Wilson did business will receive cash of $980 ($1,000 - $20). You selected B : A 2% interest charge was charged by Wilson Company to a customer on a purchase of $1,000 because the customer paid after 30 days. got it wrong the correct Answer is C : A 2% discount was extended to Wilson Company on a purchase of $1,000 because Wilson paid within 10 days.

Which of the following statements are true of cash equivalents? Select all that apply A Cash equivalents are non-liquid investments. B Cash equivalents have maturities of 180 days or less. C Cash equivalents can be converted into a specific amount of cash. D The market value of cash equivalents is relatively insensitive to changes in interest rates.

C. Cash equivalents can be converted into a specific amount of cash. D. The market value of cash equivalents is relatively insensitive to changes in interest rates.

Hat Trick Manufacturing had the following expenditures related to plant assets for its most recent fiscal year Oil changes on delivery vans: $750 Oil and belt replacement in machinery: $2,250 Engine Replacement on 2 delivery vans: $6,500 Installation of heating system for manufacturing facility: $25,000 Painting corporate office building: $4,000 Expansion of corporate office building: $60,000 What amount is Hat Trick Manufacturing's revenue expenditures? A $38,500 B $9,500 C $7,000 D $13,500

C. $7000 Revenue expenditures include ordinary repairs. Painting, vehicle maintenance, and replacement parts for machinery and equipment are considered revenue expenditures ($750 + 2,250 + 4,000 = $7,000). The engine replacement in the delivery vans is considered a capital expenditure because it extends the useful life of the asset

________ is located on the balance sheet as a current asset immediately below receivables. A : Cost Of Goods Sold B : Gross Profit C : Inventory D : Net Income

C. Inventory

The first cost to be allocated to cost of goods sold is the cost of the latest goods purchased, according to the assumptions of the ________ inventory method. A : FIFO B : average-cost C : LIFO D : specific identification

C. LIFO

Using_______________to make major payments is an appropriate internal control.

Checks

Which of the following entries will be used when a merchandiser sells goods on account? Assume the merchandiser expects payment within 30 days. Select all that apply. A debit to Notes Receivable B credit to Service Revenue C credit to Interest Revenue D credit to Sales Revenue E debit to Accounts Receivable F debit to Cash

D credit to Sales Revenue E debit to Accounts Receivable

Bloom Corp. uses the periodic inventory system. Determine Thornton's cost of goods sold if its beginning inventory was $124,000, purchases for the year were $265,700, and the ending inventory was $73,220. A : $192,480 B : $389,700 C : $462,920 D : $316,480

D $316,480 Cost of goods sold is determined by adding purchases to beginning inventory, then subtracting ending inventory. $124,000 + 265,700 - 73,220 = $316,480

The financial statements of Glazer Manufacturing report net sales of $400,000 and accounts receivable of $20,000 and $30,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? A 16 B 15.1 C 25 D 22.8

D 22.8 365 / ($400,000 ÷ [($20,000 + $30,000) ÷ 2]) = 22.8

Intangible assets____________use an Accumulated Amortization contra account similar to the Accumulated Depreciation contra account for plant assets.

DO NOT

Balances of the land, buildings, and equipment are presented within A The balance sheet. B The operating section of the statement of cash flows. C The notes to financial statements. D Either the balance sheet or the notes to the financial statement.

D Either the balance sheet or the notes to the financial statement.

NSF means "not sufficient funds" on ________ returned by the bank. A credit memoranda B reconciliations C debit memoranda D checks

D checks

Which of the following is an example of segregation of duties? A having one person in charge of all related activities B having two employees do the same task to evaluate each other's work C having one person design and use a computer system D giving responsibility for recordkeeping of an asset and physical custody of the asset to two different people

D giving responsibility for recordkeeping of an asset and physical custody of the asset to two different peopl

A company creates a(n) ________ report to identify how the company is meeting its corporate social responsibilities. A triple bottom line B community C environmental D sustainability

D sustainability

Owen Industries reports an average collection period of 19.6 days. Beginning and ending accounts receivable are $28,665 and $19,782, respectively. What were Owen's net credit sales? Round to the nearest cent. A : $421,893 B : $430,775 C : $474,781 D : $450,557

D : $450,557 Dividing 365 days by the average collection period results in accounts receivable turnover of 18.6 times and multiplying this figure by average accounts receivable of $24,223.50 [($28,665 + $19,782) ÷ 2], results in net sales of $450,577.

In preparing a bank reconciliation, the adjusted cash balance per bank is $9,685. If the cash balance per bank statement is $11,873 and deposits in transit are $3,429, what amount represents outstanding checks for the most recent banking period? A : $2,188 B : $6,256 C : $7,821 D : $5,617

D : $5,617 Outstanding checks are determined by adding the cash balance per bank statement to the deposits in transit, then subtracting the adjusted cash balance per bank ($11,873 + $3,429 - $9,685 = $5,617).

The financial statements of the Dimensions Company report net sales of $600,000 and accounts receivable of $20,000 and $10,000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Dimensions? A : 10 B : 21 C : 20 D : 40

D : 40 Accounts receivable turnover = $600,000 ÷ ($20,000 + $10,000)/2 = 40

Emerson Resources had the following financial information for 2021-2022: Total Assets, December 31, 2021: $4.12million Total Assets, December 31, 2022: $4.27million Net Income, December 31, 2022: $298,000 What was Emerson's return on assets for 2022? A : 7.23% B : 7.34% C : 6.98% D : 7.10%

D : 7.10% Return on assets is calculated by net income divided by average total assets. Average total assets is ($4.12 million + $4.27 million) / 2 = $4,195,000. Therefore, return on assets is $298,000/$4,195,000 = 7.10 percent.

Compare and contrast two common types of receivables. A : Accounts receivable are amounts customers owe on an account, whereas interest receivable are written promises for amounts to be received. B : Notes receivable are written promises for amounts to be received, whereas interest receivable are amounts customers owe on an account. C : Accounts receivable are written promises for amounts to be received, whereas notes receivable are amounts customers owe on an account. D : Accounts receivable are amounts customers owe on an account, whereas notes receivable are written promises for amounts to be received.

D : Accounts receivable are amounts customers owe on an account, whereas notes receivable are written promises for amounts to be received.

Which of the following will occur if a company shortens its collection period? A : Accounts receivable turnover will decrease. B : Net credit sales will decrease. C : Net credit sales will increase. D : Accounts receivable turnover will increase.

D : Accounts receivable turnover will increase.

: ________ are usually collected within 30 to 60 days, while __________ are collected over a longer time period and are accompanied by a formal instrument. A : Interest receivable, accounts receivable B : Notes receivable, accounts receivable C : Notes receivable, nontrade receivables D : Accounts receivable, notes receivable

D : Accounts receivable, notes receivable

Gemini Group ordered motor tune ups and oil changes on their entire fleet of company vehicles in the third quarter. How should this expense be recorded? A : As a capital expenditure. B : As an increase in salvage value. C : As a depreciation expense. D : As a revenue expenditure

D : As a revenue expenditure

Which of the following statements is true? A : Capital expenditures are debited to Maintenance and Repairs Expense as incurred. B : Capital expenditures are made to maintain the operating efficiency of plant assets. C : Capital expenditures are fairly small amounts that are spent frequently throughout the life of a plant asset. D : Capital expenditures are made to increase a company's investment in plant assets

D : Capital expenditures are made to increase a company's investment in plant assets

________ are highly liquid investments that can be converted into a specific amount of cash. A : Fixed assets B : Current liabilities C : Deposits in transit D : Cash equivalents

D : Cash equivalents

Which of the following would result in a credit made to depositor's bank account? A : checks marked NSF B : wiring of funds to other locations C : bank service fees D : EFT receipt from a customer

D : EFT receipt from a customer

Bryan's company uses the periodic inventory system and Bryan is attempting to determine cost of goods sold. His records show the company had$9,600 of purchase returns and allowances for the year ended December 31, but he is unsure whether to add or subtract this value. What should he do? Why? A : He should add returns and allowances because they are considered part of costs from a tax perspective. B : He should add returns and allowances because they are considered part of the cost of purchasing inventory. C : He should subtract returns and allowances because they represent credits to be received on future purchases. D : He should subtract returns and allowances because they are contra purchase items.

D : He should subtract returns and allowances because they are contra purchase items.

What is true about the specific identification method of inventory costing? A : It always minimizes a company's net income. B : It always maximizes a company's net income. C : It has no effect on a company's net income. D : It may enable management to manipulate net income.

D : It may enable management to manipulate net income.

What will happen if the amount of bad debt expense is understated at year-end? A : Net income will be understated. B : Stockholders' equity will be understated. C : Allowance for Doubtful Accounts will be overstated. D : Net Accounts Receivable will be overstated.

D : Net Accounts Receivable will be overstated.

________ would be added to the balance per books in a bank reconciliation. A : Outstanding checks B : An NSF check C : Deposits in transit D : Notes collected by the bank

D : Notes collected by the bank

________ is the most important part of the fraud triangle. A : Revenge B : Financial pressure C : Rationalization D : Opportunity

D : Opportunity

________ is a key objective of a company's system of internal control. A : Revising systems of accounting B : Limiting government regulations C : Creating regulations D : Safeguarding assets

D : Safeguarding assets

What is the reason for the utilization of pre-numbered documents? A : To increase document control by making documents more difficult to copy. B : To prevent errors in numbering from confounding errors in transactions. C : To provide an easy numbering system for internal auditors. D : To increase document control by ensuring that all transactions are recorded and each transaction is only recorded once.

D : To increase document control by ensuring that all transactions are recorded and each transaction is only recorded once.

What is a primary difference between a note receivable and an account receivable? A : When issuing a note receivable, the company has less legal claim to assets than when issuing an account receivable. B : When issuing a note receivable, the company can expect immediate repayment, whereas they expect delayed payment with an account receivable. C : When issuing a note receivable, the company does not use Allowance for Doubtful Accounts as the contra account like they do for an account receivable. D : When issuing a note receivable, the company has to compute interest and determine a maturity date, but they do not have to do this for an account receivable.

D : When issuing a note receivable, the company has to compute interest and determine a maturity date, but they do not have to do this for an account receivable.

Which of the following explains the difference between a depositor's balance per books and the balance per bank? A : cash receipts not yet deposited B : a credit memorandum C : a debit memorandum D : a bank reconciliation

D : a bank reconciliation

Bad debt expense is classified as ________ on a multiple-step income statement. A : service charge expense B : a nonoperating expense C : interest expense D : a selling expense

D : a selling expense

Plant assets A : are intangible. B : include Inventory. C : are intended for sale to customers. D : are expected to be in service for a number of years.

D : are expected to be in service for a number of years.

How is a trademark classified on the balance sheet? A : as a fixed asset B : as a liquid asset C : as a tangible asset D : as an intangible asset

D : as an intangible asset

When is the cost of a long-term asset recorded as an expense? A : in the period in which it is acquired B : in the period in which it is disposed of C : at the time of payment D : as the asset benefits the company

D : as the asset benefits the company

By establishing a system of internal controls, a company can safeguard its A : capital stock. B : balance sheet accounts. C : liabilities. D : assets.

D : assets.

The voucher is a(n) _________ form. A : journalizing B : order C : counting D : authorization

D : authorization

What are raw materials? A : the portion of manufactured inventory that has begun the production process but is not yet complete B : materials that are in various stages of production C : manufactured items that are completed and ready for sale D : basic goods that will be used in production but have not yet been placed into production

D : basic goods that will be used in production but have not yet been placed into production

Why is it wise to segregate duties related to accounts receivable and cash handling? A : because doing so decreases the difficulty associated with reconciling bank statements B : because the skills associated with receivables and cash are diverse and it is the same clerk can handle both C : because combining the two creates a system of checks and balances that does not otherwise exist D : because allowing an accounts receivable clerk to handle both increases opportunities for fraud

D : because allowing an accounts receivable clerk to handle both increases opportunities for fraud

A cash ________ enables a company to prepare for possible cash deficiencies. A : account B : audit C : verification D : budget

D : budget

A sustainability report is used by companies to describe how they are meeting their A : budget restrictions. B : fiscal year goals. C : sales and inventory goals. D : corporate social responsibilities.

D : corporate social responsibilities

Ron Sybert, an accountant for Ritchie Corporation, opens all mail received from Grey Federal Bank. Upon receiving a ________ for ________, Sybert will record an increase in cash. A : debit memorandum; interest earned B : debit memorandum; the bank collection of a note C : credit memorandum; an NSF check D : credit memorandum; the bank collection of a note

D : credit memorandum; the bank collection of a note

The periodic allocation of a plant asset's cost is called A : amortization. B : expiration of useful life. C : depletion. D : depreciation.

D : depreciation

Which of the following should be disclosed in the balance sheet or the notes to the financial statements? A : amount of depreciation and amortization expense for the period, but not depreciation and amortization methods used. B : depreciation and amortization methods used, but not balances of major classes of assets. C : balances of major classes of assets, but not the amount of depreciation and amortization expense for the period. D : depreciation and amortization methods used, balances of major classes of assets, and the amount of depreciation and amortization for the period.

D : depreciation and amortization methods used, balances of major classes of assets, and the amount of depreciation and amortization for the period.

A note that is not paid in full at its maturity is called a ________ note. A : promissory B : factored C : deferred D : dishonored

D : dishonored

When vacant land is acquired, ________ should be charged to the land account. A : interest costs incurred during construction of a building B : expenditures for putting up fences around the land C : construction costs for a new building D : expenditures for clearing, draining, and filling

D : expenditures for clearing, draining, and filling

Which of the following is an internal control feature that would address employees who do not take vacations? A : risk assessment B : establishment of responsibility C : independent internal verification D : human resource controls

D : human resource controls

A merchandising company sells very high-end gear for professional athletes. Therefore, they have a hard time increasing their asset turnover. If the company wants to increase their return on assets, what should they focus on? A decreasing their retained earnings B decreasing their profit margin C increasing their inventory levels D increasing their profit margin

D : increasing their profit margin

Franchises are classified as ________ assets. A : tangible B : plant C : fixed D : intangible

D : intangible

In the notes to the financial statements, a stockholder will find information regarding a company's A : operating expenses, basis and cost method. B : net income, gross profit, and cost of goods sold. C : sales revenue, beginning inventory, and ending inventory. D : major inventory classifications, basis, and cost method.

D : major inventory classifications, basis, and cost method.

Carter Conglomerates, a national distribution company, has multiple regional bank accounts. This practice creates ________ and A : duplication of effort; unnecessary bank fees. B : distrust with employees; a lack of control. C : greater potential for fraud; the need for more employees. D : more efficient operations; better control.

D : more efficient operations; better control.

"NSF" on a check returned by the bank means A : no service fee. B : not satisfactorily filled out. C : no signature found. D : not sufficient funds.

D : not sufficient funds

Interest receivable, income taxes refundable, and advances to employees are examples of A : trade receivables. B : notes receivable. C : accounts receivable. D : other receivables.

D : other receivables.

Which of the following best defines the return on assets ratio? A : overall measure of depreciation B : overall measure of investment C : overall measure of loss D : overall measure of profitability

D : overall measure of profitability

By having a separate bank account for ________, Nash Company is increasing control and improving operations. A : customer receipts B : inventory purchases C : petty cash D : payroll

D : payroll

A manufacturing company's inventory is comprised of A : only merchandise inventory. B : only raw materials. C : only finished goods. D : raw materials, work in process, and finished goods.

D : raw materials, work in process, and finished goods.

An overall measure of profitability is the ________ ratio. A : gross profit B : net sales C : average total D : return on assets

D : return on assets

The amount of income generated by each dollar of assets is determined by calculating A : asset turnover. B : inventory turnover. C : profit margin. D : return on assets.

D : return on assets.

How are plant assets disposed of? A : write-off, exchange, or sales B : retirement, write-off, or sales C : exchange, retirement, or write-off D : sale, exchange, or retirement

D : sale, exchange, or retirement

How is restricted cash reported? A : as part of cash B : as a cash equivalent C : as an investment D : separately on the balance sheet

D : separately on the balance sheet

What is the book value of an asset equal to? A : the replacement cost of the asset B : the blue book value relied on by secondary markets C : the asset's fair value less its historical cost D : the asset's cost less accumulated depreciation

D : the asset's cost less accumulated depreciation

Manufacturers list their ________ inventory account(s) as ________ assets. A : three; long-term B : one; long-term C : one; current D : three; current

D : three; current

Which person in a company is responsible for the management of cash? A : chief of operations B : accounts receivable clerk C : president D : treasurer

D : treasurer

Miller Enterprises shows total inventories of $96,600. Unfortunately, errors were made in calculating this amount. Based on the information in the chart, what is the correct amount of total inventories for Miller? Merchandise inventory: 72,600 FOB Destination from supplier A: 4,600 FOB shipping point from supplier B: 9,700 FOB shipping point to customer B: 7,200 Consignment goods received: 2,500 A : $89,500 B : $86,900 C : $79,700 D : $82,300

D : $82,300 FOB destination from supplier, FOB shipping point to customer, and consignment goods were erroneously included in inventories. Miller's total inventories are $96,600 - $4,600 - $7,200 - $2,500 = $82,300.

An insurance premium paid by the company will appear on the bank statement as a_______________

Debit

Which of the following would be on a bank statement? Select all that apply. A : point-of-sale transactions B : vendor invoices C : company errors D : remittance advices E : deposits received F : checks paid

E&F

A note receivable___________considered a cash equivalent.

Is NOT

On January 5, 2022, Lawrence Industries returned $862 of products to Lynch Company. If the products were originally purchased on account, how would Lynch Company record this transaction in their books?

Sales Returns and Allowances: 862 Accounts Receivable-Lawrence: 862

If the amount of bad debt expense is overstated at year end, net Accounts Receivable will be_______

Understated

Uncollectible Accounts Expense is another name for

bad debt expense

___________________provides an explanation about the difference between the bank's account balance and the company's.

bank reconciliation

Goods in transit shipped FOB shipping point are included in the inventory of the____________________

buyer

Vanderbilt Corporation, which utilizes a calendar year as its fiscal year, is the payee on a $12,000, 7%, 8-month note receivable from Stanford Company dated October 1st, 2021. Journalize the entry to record the receipt of payment in full on June 1, 2022

cash (debit) 12560 notes receivable(credit) 12000 interest receivable(credit) 210 Interest Revenue(credit) 350 Vanderbilt must accrue interest of $210 [($12,000 × .07 × (3/12)] at year-end. Interest for 2022 is recorded as interest revenue [$12,000 × .07 × (5/12)] = $350.

Four companies each have a credit term period of 45 days. Based on each company's net credit sales and average net accounts receivable for 2018, which company is MOST successful at collecting their accounts receivable? company 1: NCR: 3.7m AR: 451k company 2: NCR: 1.63m AR: 182k company 3: NCR: 740k AR: 56k company 4: NCR: 2.12m AR: 347k

company 3: NCR: 740k AR: 56k Company 1 has accounts receivable turnover of $3.7 million/$451,000 = 8.20 and an average collection period of 365/8.20 = 44.5 days. Company 2 has accounts receivable turnover of $1.63 million/$182,000 = 8.96 and an average collection period of 365/8.96 = 40.7 days. Company 3 has accounts receivable turnover of $740,000/$56,000 = 13.21 and an average collection period of 365/13.21 = 27.6 days. Company 4 has accounts receivable turnover of $2.12 million/$347,000 = 6.11 and an average collection period of 365/6.11 = 59.7 days. Therefore, the company that is most successful at collecting receivables is Company 3.

Bank service charges are___________ the balance per books in a bank reconciliation

deducted from

Correctly calculating interest can be done in

different ways

Inventory costs _________ the costs of warehousing the inventory.

do not include

A company that has excess cash that is temporarily idle should consider investing in__________________

interest-paying U.S. government securities.

A separate section for____________________is included in a cash budget.

financing

An employee who commits a dishonest act that benefits the employee at a cost to the employer is committing______________

fraud

The sale of old assets causes a(n)________in cash flows

increase

A check with a date that is later than the current date_______ considered cash.

is not

The type of inventory costing method chosen by management_______________be consistent with the physical movement of goods in the company.

need not

Saddle Incorporated accepts a $9,000, 7%, 120-day note receivable from Rope Company as a result of lending them $9,000. Journalize the appropriate entry on the date of issuance.

notes receivable(debit) 9000 cash (credit) 9000 Notes receivable are to be recognized at their face value.

When estimating the useful life of an asset, accountants consider

obsolescence

_______________ ___________________ are basic goods that will be used in production but have not yet been placed into production.

raw materials

The ________________________ method of inventory valuation is desirable when a company sells a limited number of high-unit-cost items.

specific identification