Accounting EXAM 2

16. Glasgow's cost of goods sold under FIFO would be:

$1,860.

9. Sanchez's gross margin for the year 2015 is:

$14,600.

17. Glasgow's ending inventory under LIFO would be:

$2,220.

18. Glasgow's ending inventory under weighted average would be approximately:

$2,340.

What is the true cash balance as of April 30, 2016?

$27,656

30. On January 1, 2016, the Accounts Receivable balance was $37,000 and the balance in the Allowance for Doubtful Accounts was $2,800. On January 15, 2016 an $800 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:

$34,200.

19. Landis Company is preparing its financial statements. Gross margin is normally 40% of sales. Information taken from the company's records revealed sales of $25,000; beginning inventory of $2,500 and purchases of $17,500. The estimated amount of ending inventory would be:

$5,000.

What will Domino record as Uncollectible Accounts Expense for 2016?

$6,132

10. Gomez Co. had beginning inventory of $2,400 and ending inventory of $1,200. The cost of goods sold was $9,600. Based on this information, Gomez Co. must have purchased inventory amounting to:

$8,400.

36. Rosewood Company made a loan of $16,000 to one of the company's employees on April 1, 2016. The one-year note carried a 6% rate of interest. The amount of interest revenue that Rosewood would report in 2016 and 2017, respectively would be:

2016-$720 & 2017-$240

22. The average number of days to sell inventory for Company Y is approximately:

24.8

37. Rhodes Company reports the following information for the 2016 fiscal year:Determine the average number of days it takes Rhodes to collect its accounts receivable. (Round intermediate calculations to 2 decimal places.)

37

24. Which of the following is not a primary role of an independent auditor?

Advise client on tax strategies

32. How would accountants estimate the amount of a company's uncollectible accounts expense?

All of these answer choices are correct.

28. Which of the following statements about materiality is not true?

Any error greater than $5,000 is considered material in a financial statement audit.

38. If you suspect someone in your company of committing fraud, what should you do?

Call the "anonymous" whistleblower helpline and hope it's not being monitored by those complacent to the shady dealings (Wells Fargo style)

12. Which of the following businesses is most likely to use a specific identification cost flow method?

Car dealership

26. Which of the following entries would be required to establish a $500 petty cash fund?

Debit petty cash & Credit cash

7. Product costs include all costs associated with the sale of products

False

35. What does the accounts receivable turnover ratio measure?

How quickly accounts receivable turn into cash.

8. Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

LIFO.

21. Which of the following is not necessary for someone to commit fraud?

Legal Protection.

33. The amount of accounts receivable that is actually expected to be collected is known as:

Net realizable value.

13. An overstatement of ending inventory results in which of the following in the present period?

Overstatement of total assets.

1. Which of the following would not be considered as primarily a merchandising business?

Regal Cinemas

20. Which internal control procedure addresses the idea that the likelihood of employee fraud or theft is reduced if collusion is required to accomplish it?

Separation of duties.

34. Which of the following is not an advantage of accepting credit cards from retail customers?

There are fees charged for the privilege of accepting credit cards.

23. How will a certified check be treated in a company's bank reconciliation?

There is no adjustment when preparing the bank reconciliation.

14. Which of the following circumstances is not a reason to compute an estimate of the amount of inventory?

To complete the company's annual income tax return.

4. Anchor Company sold merchandise with a cost of $560 to a customer for $890 on account. Due to an error, this sale was never recorded in the accounting records. What effect will the failure to make the necessary entries have on the company's accounting equation?

Total assets and total equity will be understated.

2. Which of the following is considered a product cost?

Transportation cost on goods received from suppliers.

5. Which of the following retailers would be expected to have the highest gross margin percentage?

a Jeweler

11. In an inflationary environment,

a company's assets will be lower if it uses LIFO as opposed to FIFO cost flow.

3. The Cost of Goods Sold account is classified as:

an expense.

31. The primary reason for a business to allow customers to purchase goods or services on account is to:

increase sales.

15. Rowan Company has four different categories of inventory. Quantity, cost, market value for each inventory category is shown below:The company carries inventory at lower-of-cost-or-market applied to the inventory in aggregate. The implementation of the lower-of-cost-or-market rule would:

reduce assets and equity by $101.00.

6. The credit terms, 2/15, n/30, indicate that a:

two percent discount is given if the invoice is paid within fifteen days of the sale.

27. The most favorable audit opinion that a company can receive is a(n):

unqualified opinion