Accounting Test2 5-8 pre-lecture questions

Assume that sales revenue are $450000 sales discounts are $10000 net income is $35000 and cost of goods sold is $320000. How much are gross profit and operating expenses, respectively?

$120000 = gross profit (sales revenue - sales discount = net sales net sales - COGS = GP) $85000 = operating expenses (Gross profit - net income = OE)

if the beginning inventory is $60000 cost of goods purchased is $380000 sales revenue is $800000 and ending inventory is $50000 how much is cost of goods sold under a periodic system

$390000 beginning inventory + COGP ------------------------- COG available for sale - ending inventory ------------------------- COGS

Martin company purchases $4200 of merchandise on Mar. 1 with credit terms of 3/10, n/30. If Martin pays on March 11 which is the cost of this purchase

$4074 he payed it within discount period find 3% of 4200 and subtract it giving you the cost of this purchase

ownership passes to the buyer when purchased goods are received from a public carrier if the goods are shipped

FOB destination

what type of receivable is evidence by a formal instrument and normally requires the payment of interest?

a note receivable

which is correct? a. the person who has custody of assets should not perform the record keeping b. control is most effective when two or three people are given responsibility for the same task c. it is often a waste of company resources to have an employee perform independent internal verification d. the person who has custody of assets should also perform the record keeping for assets

a. the person who has custody of assets should not perform the record keeping for the assets

which is not a legitimate business reason for taking a physical inventory a. to verify profitability of individual inventory items b. to check the accuracy of perpetual inventory records c. to determine if any inventory has been lost from waste shoplifting or theft d. to determine cost of goods sold

a. to verify the profitability of individual inventory items

Deposits in transit are ____ to the balance per bank statement, and outstanding checks are ____ from the balance per bank statement during the bank reconciliation process

added, deducted

which of the following is true of FIFO inventory method a. cost of earliest units purchased are last to be allocated to cost of goods sold b. cost of earliest units purchased are first to be allocated to cost of goods sold c. cost of earliest units purchased are last to be allocated to beginning inventory d. cost of earliest units purchased are first to be allocated to ending inventory

b. cost of earliest units purchased are the first to be allocated to cost of goods sold

which of the following would appear on both a single step and multiple step income statement a. income from operations b. cost of goods sold c. other expense and losses d. gross profit

b. cost of goods sold

which is true a. LIFO requires physical flow of goods to be representative of cost flow b. FIFO requires physical flow of goods to be representative of cost flow c. specific ID method requires physical flow of goods d. all correct

c specific ID method requires physical flow of goods

which of the following statements about a periodic inventory system is true: a. the periodic system provides better control over inventories than a perpetual system b. the increased used of computerized systems has increased the use of the periodic system c. companies determine cost of goods sold only at the end of the accounting period d. companies continuously maintain detailed records of the cost of each inventory purchase and sale

c. companies determine cost of goods sold only at the end of the accounting period

which of the following should not be included in the physical inventory of a company a. goods in transit from another company shipped FOB shipping point b. goods shipped on consignment to another company c. goods held on consignment from another company d. all correct

c. goods held on consignment from another company

at what value are accounts receivable reported on the balance sheet?

cash (net) realizable value

which is correct: a. perpetual inventory system computes cost of goods sold at end of accounting period b. periodic inventory system provides better control over inventories than does a perpetual inventory system c. periodic inventory system computes costs of goods sold each time a sale occurs d. perpetual inventory system provides better control over inventories than does a periodic inventory system

d. perpetual inventory system provides better control over inventories than does a periodic inventory system

Jax company uses a perpetual inventory system and on Nov. 30 purchased merchandise for which it must pay the shipping charges. which of the following one part of the required journal entry when Jax pays the charges of $200?

debit Inventory for $200 credit cash for $200

if a company uses the allowance method for uncollectible accounts then the entry to record 800 of estimates uncollectible is

debit bad debt expense 800 credit allowance for doubtful account 800

Which is the adjusting entry Max Company would prepare when the bank collects a 200 note receivable from one of Max's customers?

debit cash credit notes receivable

Micheal Co. accepts a 4000 3 month 12% promissory note in settlement of an account with Tani co. the entry to record the transaction is?

debit notes receivable 4000 credit accounts receivable 4000

a 90-day promissory note is issued on Sept. 15 what is the notes maturity date?

december 14 30 days past september april june and november the rest are 31 except february which is 28

which situation requires a departure from the cost basis of accounting to the lower-of-cost-or-market basis in valuing inventory?

decline in value of inventory

internal auditors

evaluate the system of internal controls for the companies that employ them

for which item below might a bank issue a credit memorandum to a depositor's account. monthly service charge interest earned outstanding checks an NSF check

interest earned

the operating cycle of a merchandising company is ordinarily _______ that of service firm

longer than

in periods of rising prices what will LIFO produce

lower net income than FIFO

which of the following is not a primary components of an internal control system? information and communication rationalization monitoring risk assessment

rationalization

Which of the following is not an element of the fraud triangle? Segregation of duties opportunity financial pressure rationalization

segregation of duties

aptara construction supplies has a cashier who is also the accounts receivable clerk for the company. which internal control principle is violated?

segregation of duties

factoring is the process of

selling accounts receivable at a discount to another party

when is a receivable recorded by a service organization?

when service is provided on account

Springer Company listed outstanding checks totaling $4,500 on its September bank reconciliation. In October, the company issued checks totaling $45,700. The October bank statement shows that checks totaling $39,800 cleared the bank. In addition, a check from one of Springer's customers in the amount of $500 was returned as NSF. The outstanding checks on the October bank reconciliation should total

10400 checks outstanding (4500) + Issued checks (45700) - cleared checks (39800)

carlos comany had beginning inventory of 80000 ending inventory 110000 cost of goods sold 285000 and sales revenue of 475000 what is carlos days in inventory

121.7 365 / inventory turnover inventory turnover = COGS / average inventory

during the year ended Dec 31 2014 state street corp. had the following results: Sales revenue $267000 COGS $107000 net income $92400 operating expenses $55400 net cash provided by operating activities $108950. How much is the company's profit margin?

34.6% Profit margin = net sales / sales (since it is a percentage multiple it by 100 to get percent value)

cost of goods purchased is 540000 ending inventory is 20000 and cost of goods sold is 560000. how much is beginning inventory

40000 Beginning inventory + COG purchased ------------------------- COG available - Ending inventory ------------------------- COG sold

The following information came from the income statement of the Wilkens Company at December 31, 2014: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. What is Wilkens' inventory turnover ratio for 2014?

6.0 times COGS = sales - gross profit Inventory turnover = COGS / average inventory

Eddy Corporation had net credit sales during the year of $800,000 and cost of goods sold of $500,000. The balance in receivables at the beginning of the year was $100,000 and at the end of the year was $150,000. How much is the accounts receivables turnover?

6.4 net sales / average accounts receivable

On June 15, Kersee Company sold merchandise on account to Eng Co. for $1,000, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $300 to Kersee Company. On June 24, payment is received from Eng Co. for the balance due. What is the amount of cash received on June 24?

686 1000 - 300 (returned) -------------------- 700 x 2% (met the discount) --------------------- 14 700 -14 ------------------- 686

which one of the following is correct presentation and its contra account on the balance sheet

Accounts receivable less allowance for doubtful accounts

Myers and Company sold $1800 merchandise on account to Oscar, Inc. on Mar 1 with credit terms of 2/10, n/30. Oscar returned $500 of merchandise due to poor quality on Mar 3. if Oscar pays for the purchase on Mar 11 what entry does Myers make to record receipt of the payment

Debit Cash 1274 Debit Sales discount 26 credit Accts Receiv 1300 *remember to subtract the return $5oo before taking the discount which he met.*