Bergmen/Clem Acct 284 Exam 2 Review

On July 1 of the current year, Uber paid a premium in advance on a one-year insurance policy on equipment in the amount of $72,000. At the time, the full amount was recorded as prepaid insurance. On December 31, Uber would be required to record an adjusting entry that would include which of the following: a. $6,000 increase to insurance expense b. $6,000 decrease to prepaid insurance c. $12,000 increase to insurance expense d. $12,000 decrease to prepaid insurance

C. $12,000 increase to insurance expense and D. $12,000 decrease to prepaid insurance

Blue Inc. utilizes a periodic LIFO inventory method. They make the following purchases and sales: August 3rd: Purchases 100 units at $20 per unit August 10th: Purchases 150 units at $25 per unit August 15th: Sells 125 units at $45 per unit August 23rd: Purchases 50 units at $35 per unit August 30th: Sells 75 units at $55 per unit. What is the value of Blue Inc.'s inventory at the end of August assuming they started with no inventory? a. $2,000 b. $3,000 c. $8,000 d. $2,500

a. $2,000

Samsung had a beginning inventory of $379,000, ending inventory of $124,000, and purchases of $200,000. What was their cost of goods available for sale (COGAFS) and cost of goods sold (COGS) for the year? COGAFS COGS a. $579,000 and $455,000 b. $455,000 and $579,000 c. $179,000 and $55,000 d. $579,000 and $179,000

a. $579,000 and $455,000

Company ABC's bank statement dated Dec. 31, 2019 shows a balance of $802.68. The company's cash record on the same date shows a balance of $846.68. The following additional information is available: Checks Outstanding: No. 846 $300 No. 847 $50 Deposit in Transit $250 NSF Check $102 Service Fee $42 What is the proper adjusted cash balance in the book and bank statement? a. $702.68 b. $602.68 c. $452.68 d. $990.68

a. $702.68

Barnes & Noble begins 2019 with $45,000 of inventory, they have purchases of $350,000, and COGS of $325,000. What is their inventory turnover ratio? a. 5.65 b. 6.09 c. 7.22 d. 5.00

a. 5.65

On February 1 ABC borrowed $20,000 and signed a note that promises repayment in a year. The interest rate was 7% annually. The adjusting entry on December 31 will include: a. Debit to Interest Expense of $706 b. Debit to Interest Payable of $675 c. Credit to Interest Expense of $706 d. Credit to Interest Payable of $11,000

a. Debit to Interest Expense of $706

. In a period of rising prices, which accounting method will most likely have the highest COGS? a. Periodic LIFO b. Perpetual FIFO c. Periodic FIFO d. Weighted Average

a. Periodic LIFO

The records of Iowa State University include the following as of June 1, 2010. The PP&E has a balance of $133,000. Depreciation for the month of June 2010 has been estimated at $12,500. What will the balance in the Accumulated Depreciation account be after the related adjustment is recorded on June 30, 2010? a. $120,500 b. $145,500 c. $587,500 d. $612,500

b. $145,500

Pink Co. purchases 40 units of inventory at $50 per unit. After having the inventory on hand for a period of time, they find the Net Realizable value of each unit to be $65. What will Pink Co. record for the total value of the inventory? a. $600 b. $2,000 c. $3,250 d. $2,600

b. $2,000

Apple has gross sales of $130,000, gives sales discounts of $15,000, and has net sales of $95,000. What were Apples sales returns and allowances? a. $50,000 b. $20,000 c. $35,000 d. $210,000

b. $20,000

Red Corp. utilizes a periodic FIFO inventory method. They make the following purchases and sales: January 7th: Purchases 300 units at $50 per unit January 10th: Sells 100 units at $75 per unit January 15th: Purchases 175 units at $60 per unit January 22nd: Sells 250 units at $85 per unit January 26th: Sells 50 units at $95 per unit What was COGS for Red Corp during the month of January assuming they started with no inventory? a. $4,500 b. $21,000 c. $21,750 d. $33,500

b. $21,000

On October 1, 2010, ABC co. paid $,000 for its rent for five months from October 2010 through February 2011. The entire amount of the payment was recorded in the prepaid rent account. No adjustments have been recorded. If the company makes an adjustment as of December 31, 2010, what amount should be included in the adjusting entry? a. $30,000 b. $45,000 c. $60,000 d. $75,000

b. $45,000

Which of the following is NOT correct regarding the Financial Reporting Environment? a. Key Requirements of SOX 2002 are: counteract incentives, reduce opportunities, and encourage honesty b. Employee fraud generally falls into 5 categories c. Opportunity is one of the three required items of accounting fraud d. Fraud is the attempt to deceive others for personal gain

b. Employee fraud generally falls into 5 categories

Tom's Clothing Store sends $12,000 worth of its $90,000 inventory to Bob's Consignment Store who has $13,000 of its own inventory. At the point in time when the inventory leaves the shipping point, what are the inventories of each store? a. Tom's: $90,000 and Bob's: $25,000 b. Tom's: $90,000 and Bob's: $13,000 c. Tom's: $78,000 and Bob's: $25,000 d. Tom's: $78,000 and Bob's: $13,000

b. Tom's: $90,000 and Bob's: $13,000

Consider the following information: beginning inventory was $4,000. Ending inventory (physically counted) was $2,000. Purchases during the period totaled $10,000, and recorded cost of goods sold during the period totaled $9,000. What was the amount of shrinkage during the period? a. $1,000 b. $2,000 c. $3,000 d. $5,000

c. $3,000

. Office Depot records supplies in the Supplies account when purchased. At the end of the month, the adjusting journal entry to record the use of supplies would include: a. An increase to supplies and an increase to expenses b. An increase to supplies and an increase to revenue c. A decrease to supplies and an increase to expenses d. A decrease to supplies and a decrease to cash

c. A decrease to supplies and an increase to expenses

ACE Hardware mistakenly overstates their ending inventory. What will the effect upon COGS and Net Income be next year? a. COGS: Overstated; Net Income: Overstated b. COGS: Understated; Net Income: Overstated c. COGS: Overstated; Net Income: Understated d. COGS: Understated; Net Income: Understated

c. COGS: Overstated; Net Income: Understated

Walmart operates using a perpetual inventory system. They purchase $15,000 worth of inventory. Which of the following is the correct way to account for this purchase? a. Purchases: +$15,000 b. No Entry c. Inventory: +$15,000 and Cash: -$15,000 d. COGS: +$15,000 and Inventory: +$15,000

c. Inventory: +$15,000 and Cash: -$15,000

Which of the following statements regarding closing journal entries is correct? a. Closing entries transfer net income (or loss) into the Retained Earnings account b. Temporary accounts are not closed, and are accumulated over time c. Permanent accounts are closed, and are zeroed out at the end of the closing entry process d. All of the above

c. Permanent accounts are closed, and are zeroed out at the end of the closing entry process

Which of the following is not a subtotal on the multistep income statement? a. Gross Profit b. Income before tax c. Sales Revenue d. Income from operations

c. Sales Revenue

Aldi currently has $15,000 worth of inventory. On October 28th, they order $13,000 worth of inventory. The contract specifies FOB destination. The inventory will not be delivered until November 5th. What how much inventory should they record at the end of October? a. $13,000 b. $2,000 c. $18,000 d. $15,000

d. $15,000

Target has $250,000 in net sales and a gross profit percentage of 15%. What was Target's COGS? a. $37,500 b. $294,117.65 c. $55,000 d. $212,500

d. $212,500

Orange LLC. utilizes a periodic weighted average inventory method. They make the following purchases and sales: May 2nd: Purchases 100 units at $15 per unit May 7th: Sells 75 units at $35 per unit May 12th: Purchases 125 units at $25 per unit May 25th: Sells 75 units at $45 per unit What was Orange LLC.'s COGS for the month of May assuming they did not have any initial inventory? a. $2,569.44 b. $4,111.11 c. $4,625.00 d. $3,083.33

d. $3,083.33

Which of the following statements regarding cash and cash equivalents is correct? a. Cash Equivalents are short-term investments with 3 or less months to maturity b. Petty cash is accessible stored money utilized for small expenditures such as pizza Friday c. Cash and Cash Equivalents are one item presented on the balance sheet d. All of the above

d. All of the above

Which of the following is NOT one of the Principles of Control Activities? a. Establish responsibility b. Document procedures c. Independently verified d. Provide access

d. Provide access