accounting test 2

if the company uses the LIFO inventory costing method, ending inventory at June 30th is:

1,811.75

If the company uses the LIFO inventory costing method, cost of goods sold for june 5 is:

1,820

If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is:

1,823.75

If the company uses FIFO inventory costing method, cost of goods sold for the month of June is:

2,538

if the company uses the LIFO inventory costing method, cost of goods sold for june 24 is:

730

paden company purchased merchandise from emmett company with freight terms of FOB shipping point. The freight costs will be paid by the: a.) buyer b.) seller c.) transportation d.) buyer and the seller

a.) Buyer

if a company recorded a check they wrote as $729 when it should have been recorded as being written for $279, which of the following must occur when reconciling its bank statement? a.) add $450 to the company's records b.) deduct $450 from the company's records c.) add $450 to the bank statement balance d.) deduct $450 from the bank statement balance

a.) add $450 to the company's records

which of the following statements best describes the term "outstanding check" from a companys point of view? a.) a check written by the company and presented to the bank for payment b.) a check written by the company but not yet presented to the bank for payment c.) a check written by a customer to the company, and the check has been presented to the bank for payment d.) a check written by a customer to the company, but it has not yet been presented to the bank for payment

b.) a check written by the company but not yet presented to the bank for payment

Which of the following is an example of a credit memo? a.) notice of a bank service charge b.) notice of interest earned on a checking account c.) outstanding checks d.) a company's transposition error in the recording of a customers check

b.) notice of interest earned on a checking account

Which internal control activity is followed when inventory storage areas are secured with limited access? a.) segregation of duties b.) safeguarding of assets and records c.) checks on recorded amounts d.) clearly defined authority and responsibility

b.) safeguarding of assets and records

collusion is an intentional act of 2 or more employees to accomplish theft of company assets. Which control activity is designed to make fraud less likely because it would require collusion among employees? a.) clearly defined authority and responsibility b.) segregation of duties c.) safeguards over assets and records d.) adequate documents and records

b.) segregation of duties

Coffski, Inc. sold merchandise to customer on credit. The invoice amount was $1,000, the invoice date was June 10th; credit terms were 1/10, n/30. Which of the following statements is true? a.) the customer can take a 10% discount if the invoice is paid by June 30th b.) the customer should pay $990 if the invoice is paid on June 15th c.) the customer must pay a $10 penalty if payment is made after June 20th d.) Cost of goods available for sale is allocated into cost of ending inventory and cost of goods sold.

b.) the customer should pay $990 if the invoice is paid on June 15th

which of the following journal entries is recorded as a result of the bank reconciliation process to record a NSF check for $250? a.) Cash $250 Accounts Receivable $250 b.) Cash $250 Accounts Payable $250 c.) Accounts Receivable $250 Cash $250 d.) Accounts Receivable $250 Petty Cash $250

c.) Account Receivable 250 Cash 250

One employee or department should verify the work of another. This is an example of which of the following internal control activities? a.) segregation of duties b.) safeguarding of assets and records c.) checks on recorded amounts d.) clearly defied authority and responsibility

c.) checks on recorded amounts

The primary purpose of internal controls in managing a business is to: a.) prevent cash from being stolen. b.) ensure that financial statements are a faithful representation of the company's financial performance. c.) ensure that employees operating within the scope of their assigned responsibilities and act in the best interest of the business. d.) encourage theft and ensure that segregation of duties does not take place.

c.) ensure that employees operating within the scope of their assigned responsibilities and act in the best interest of the business

under the perpetual inventory system, in addition to making the entry to record a sale, a company would a.) increase Merchandise Inventory and decrease Cost of Goods Sold b.) increase Cost of Goods Sold and decrease Purchases. c.) increase Cost of Goods Sold and decrease Merchandise Inventory d.) make no additional entry until the end of the period

c.) increase Cost of Goods Sold and decrease Merchandise Inventory

which of the following statements is false? a.) the inventory account is updated after every sale and after every merchandise purchase under the perpetual inventory system. b.) the inventory account is updated only at the end of the accounting period under the periodic inventory system. c.) the cost of goods sold account is updated after each sale of merchandise under the periodic inventory system. d.) a perpetual inventory system provides more up-to-date information than a period inventory system.

c.) the cost of goods sold account is updated after each sale of merchandise under the periodic inventory system

Which of the following best describes "cost of goods available for sale"? a.) cost of goods available for sale is an expense account b.) cost of goods available for sale is added to the beginning inventory to determine cost of purchases during the period c.) cost of goods available for sale is subtracted from net sale to arrive at the gross margin d.) Cost of goods available for sale is allocated into cost of ending inventory and cost of goods sold.

d.) Cost of goods available for sale is allocated into cost of ending inventory and cost of goods sold.

a check returned by a bank because the issuers cash account balance could not cover the check is called a(n) a.) outstanding check b.) canceled check c.) certified check d.) NSF check

d.) NSF check

Sales returns and sales allowances are both designed to _________, however, with a sales allowance_______________. a.) satisfy a customer who found the product unsatisfactory, the customer does not keep the product b.) encourage prompt payment, the customer must return part of the product c.) satisfy a customer who found the product unsatisfactory, the customer must pay within the discount period d.) satisfy a customer who found the product unsatisfactory, the customer keeps the product

d.) Satisfy a customer who found the product unsatisfactory, the customer keeps the product

under the allowance method, the entry to write off a $1,425 uncollectible account includes: a.) a debit to Accounts Receivable for $1,425 b.) a credit to Bad Debt Expense for $1425 c.) a credit to Allowance for Doubtful Accounts for $1425 d.) a debit to Allowance for Doubtful Accounts for $1,425

d.) a debit to Allowance for Doubtful Accounts for $1,425

the account Allowance for Doubtful Accounts is classified as a(n) a.) contra account to bad debt expense b.) expense c.) liability d.) contra account to Accounts Receivable

d.) contra account to Accounts Receivable

The matching rule relates to credit losses by stating that Bad Debt Expense should be recorded a.) in the period of the loss b.) for an exact amount c.) in the same period as allowed for tax purposes d.) in the same time period that revenue is recorded

d.) in the same time period that revenue is recorded

Merchandise inventory becomes part of cost of goods sold when a company a.) receives payment from the customer b.) pays for the inventory c.) purchases the inventory d.) sells the inventory

d.) sells the inventory

which of the following statements is true regarding the two allowance procedures used to estimate bad debts? a.) the percentage of net credit sales method takes into account the existing balance in the allowance for Doubtful Accounts account. b.) the direct write-off method takes into account the existing balance in the Allowance for Doubtful Accounts account. c.) The aging of accounts receivable method takes into account the existing balance in the Allowance for Doubtful Accounts account d.) the direct write-off method does a better job of matching revenues and expenses

the aging of accounts receivable method takes into account the existing balance in the Allowance for Doubtful Accounts account