ACCOUNTING EXAM 2
Each of the following items is considered a cash equivalent except
180-day note issued by a local government
Transportation-in is
Part of the net cost of purchases
Which of the following is a transposition error?
writing $89 as $98
A company's unadjusted bank balance is $3,000. Outstanding checks amount to $500 and deposits in transit total $300. Based on this information alone, what is the company's adjusted cash balance for the purpose of preparing a bank reconciliation?
2800
Parlato Corp. has an inventory turnover rate of 8 times. Calculate the company's average days to sell inventory.
45.625
Refer to the information provided for Pham Enterprises. What is the company's average-days-to-sell inventory measure?
59.76
Each of the following documents is used in the control of cash disbursements except
Bank credit memos
Each of the following documents is used in the control of cash receipts except
Bank credit memos
Which inventory cost flow method assigns the cost of the most recent items purchased to ending inventory?
FIFO
Refer to the information provided for Aaron Corporation. Calculate the Cost of Goods Sold.
$105500
What is Irwin Company's correct inventory balance on January 31, 2019?
$177000
On June 30, a company had $1,924 in its cash account according to its general ledger. This included a deposit of $174 that was in transit on June 30th. The June 30th bank statement contained the following information:
$2014
Refer to the information provided for Tedder Co. If the company uses FIFO inventory costing, how much is cost of goods sold for January?
$230
Refer to the information provided for Tedder Co. If the company uses the weighted average method of inventory costing, how much is cost of goods sold for January?
$232
Refer to the information provided for Aaron Corporation. Calculate net income.
$65500
Refer to the information provided for Eli Company. If the customer pays the invoice on March 31, 2013, how much sales discount will Eli Company recognize?
-0-
Refer to the information provided for Klump Co. If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is:
1823.75
Refer to the information provided for Eli Company. If the customer pays the amount of the invoice for its purchase on March 14, 2019, how much cash will Eli Company receive?
1980
If a company erroneously records a $50 check received from a customer as $500 in its records, which of the following must occur when reconciling its bank statement?
The company must decrease the balance per its records by $450
Having one employee prepare company checks and sign those checks relates to which internal control activity?
a violation of proper segregation
While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the bank statement?
Deposits in transit
During a period of increasing purchase prices, which inventory costing method will yield the lowest cost of goods sold?
LIFO
A check returned by a bank because the issuer's cash account balance could not cover the check is called a(n)
NFS check
Which of the following is a reconciling item on the bank side of a bank reconciliation?
Outstanding Checks
While preparing a bank reconciliation, which of the following items would be added to the bank statement balance?
Outstanding Checks
Refer to the information provided for Aaron Corporation. Calculate gross margin.
$144500
Refer to the information provided for Tedder Co. If the company uses the LIFO inventory method, how much is inventory on the balance sheet at the end of January?
50
Refer to the information provided for Pham Enterprises. What is the company's inventory turnover ratio for the year ended December 31?
6.108
A customer returned damaged goods for credit. Under a perpetual system, which of the seller's accounts decreases?
Accounts receivable
In the reconciliation of a bank statement, deposits in transit should be
Added to the unadjusted bank statement balance
Dietz, Inc. sells merchandise on credit. If a customer pays its balance due within the discount period, what is the effect of the payment on Dietz's accounting equation?
Assets and stockholders' equity decrease
If the amount assigned to ending inventory is incorrect,
Both the balance sheet and income statement are affected
Which of the following items would not be a reconciling item on a bank reconciliation?
Canceled Checks
Checks presented for payment and paid by the bank are known as
Canceled checks
Which of the assets listed below is considered the most liquid?
Cash
Which of the following statements best describes the act of collusion?
Collusion is an intentional act of two or more employees to accomplish theft of company assets.
Which inventory cost flow method assigns the cost of the most recent items purchased to cost of goods sold?
LIFO
While preparing a bank reconciliation, which of the following items would be subtracted from the balance per the company records?
Outstanding Checks
Which of the following is not a sound internal control procedure for cash disbursements?
Paying with petty cash to expedite the payment process
Which of the following is the correct entry to establish a petty cash fund in the amount of $300?
Petty Cash Fund $300 Cash: $300
Which of the following entries is necessary for recording the replenishment of the fund?
Postage Expense 48 Office Supplies Expense 146 Delivery Expense 35 Petty Cash 229
Refer to the information provided for Tedder Co. Which of the following entries correctly records the purchase assuming the units were acquired on credit under terms of 2/10, n/30?
Purchases 270.00 Accounts payable 270.00
A physical count of inventory is required even though the company uses the perpetual inventory system. This is an example of which of the following internal control activities?
Safeguarding of assets and records
At the year-end inventory count, if goods in transit are shipped FOB shipping point, they should be included in the inventory count of:
The buyer
If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement?
The company must increase the balance per its records by $450
At the year-end inventory count, if goods in transit are shipped FOB destination, they should be included in the inventory count of
The seller
All of the following would be considered internal control weaknesses except
it takes two days to get a check written because of the approvals required.
The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of
providing management with more complete information from which to control inventories
The operating cycle is the elapsed time between the
purchase of goods or services and the ultimate collection of cash from customers related to the sale of those goods.
Cost of goods sold is equal to
the cost of merchandise purchased plus transportation costs plus beginning inventory minus purchase returns and allowances and purchased discounts minus ending inventory.