Accounting Exam 3
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of cash paid on July 8 equals:
1564
McCarthy Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 11 units that were sold?
2215
Starlight Company has inventory of 8 units at a cost of $200 each on October 1. On October 2, it purchased 20 units at $205 each. 11 units are sold on October 4. Using the LIFO perpetual inventory method, what is the amount of inventory after the October 4 sale?
2255
A merchandiser: A. Earns net income by buying and selling merchandise B. Receives fees only in exchange for services C. Earns profit from commissions only D. Buys products from consumers
A
A properly designed internal control system: A. Lowers the company's risk of loss B. Insures profitable operations C. Eliminates the need for an adult D. Requires the use of non computerized systems
A
Merchandise inventory includes: A. All goods owned by a company and held for sale. B. All goods in transit C. All goods on consignment D. Only damaged goods
A
The credit terms 2/10, n/30 are interpreted as: A. 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days B. 10% Cash discount if the amount is paid within two days, or the balance due in 30 days C. 30% discount if paid within 2 days D. 2% discount if paid within 30 days
A
The understatement of the ending inventory balance causes: A. Cost of goods sold to be overstated and net income to be understated B. Cost of goods sold to be overstated and net income to be overstated C. Cost of goods sold to be understated and net income to be understated D. Cost of goods sold to be understated and net income to be overstated
A
On May 1, Shilling Company Inc. SOLD merchandise in the amount of $5,800 to Anders, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. The journal entry or entries that Shilling will make on May 1 is:
A/R. 5800 Sales. 5800 COGS. 4000 Inventory. 4000
A company made a bank deposit on September 30 that did not appear on the bank statement dated September 30. In preparing the September 30 bank reconciliation, the company should: A. Deduct the deposit from the bank statement balance B. Add the deposit to the bank statement balance C. Deduct the deposit from the September 30 book balance and add it to the October 1 book balance D. Add the deposit to the book balance of cash
B
An analysis that explains differences between the checking account balance according to the depositor's records and the balance reported on the bank statement is a(n): A. Internal adult B. Bank reconciliation C. Bank adult D. Trail reconciliation
B
Beginning inventory plus net purchases is: A. Cost of goods sold B. Merchandise (goods) available for sale C. Ending inventory D. Sales
B
Cost of goods sold: A. Is another term for merchandise sales B. Is the term used for the expense of buying and preparing merchandise for sale C. Is another term for revenue D. Is also called the gross margin
B
Garza Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Garza Company's net sales equals: A. 5,200 B. 129,800 C. 133,00 D. 135,000
B
Merchandise inventory: A. Is a long term asset B. Is a current asset C. Includes supplies the company will use in future periods D. Is classified with investments on the balance sheet
B
On a bank reconciliation, the amount of an unrecorded bank service charge should be: A. Added to the book balance of cash B. Deducted from the book balance of cash C. Added to the bank balance of cash D. Deducted from the bank balance of cash
B
Which internal control principle prescribes the use of pre numbered printed checks? A. Technological controls B. Maintain adequate records C. Perform regular and independent reviews D. Establish responsibilities
B
A company's current inventory consists of 5000 units per chases at $6 per unit. Replacement cost has now fallen $5 per unit. What is the entry the company must record to adjust inventory to market? A. Debit Merchandise Inventory $25,000; credit Cost of Goods Sold $25,000 B. Debit Cost of Goods Sold $30,000; credit Merchandise Inventory $30,000 C. Debit Cost of Goods Sold $5,000; credit Merchandise Inventory $5,000 D. Debit Loss on Inventory $5,000; credit Cost of Goods Sold $5,000.
C
Preparing a bank reconciliation on a monthly basis is an example of: A. Establishing responsibility B. Separation of duties C. Protecting assets by proving the accuracy of cash records D. A technological control
C
A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals: A. 205,000 B. 695,000 C. 278,000 D. 417,000
D
Outstanding checks refer to checks that have been: A. Written, recorded, sent to payees, and received and paid by the bank B. Written and not yet recorded in the company books C. Held as blank checks D. Written, recorded on the company books, sent to the payee, but not yet paid by the bank.
D
Cushman Company, Inc. had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. What is the gross profit and net income?
Gross profit: 390,000 Net income: 115,000
A company that uses the perpetual inventory system purchased $8,500 of merchandise on March 25 with credit terms 2/10, n/30. The invoice was paid in full on April 4. Prepare the journal entries to record the transactions on March 25 and April 4.
March 25: Inventory 8500 A/P. 8500 April 4: A/P. 8500 Cash. 8330 Inventory. 170