True and False
Factoring with recourse permits the factor to chargeback unpaid customer accounts receivable to the seller. A. True B. False
true
The account Allowance for Uncollectible Accounts is adjusted at the end of the accounting period A. true B. false
true
The holder of a note receivable adjusts for accrued interest income by debiting a receivable and crediting interest income. A. True B. False
true
The lower the receivable turnover, the higher the days' sales uncollected. A. true B. false
true
The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales. A. true B. false
true
A company with a profit margin of 6% earns sixty cents of profit for every dollar of net sales. A. True B. False
False
A physical inventory or count is not necessary under a perpetual inventory system, since the inventory balance is known at all times. A. True B. False
False
Accounting information does not contain estimates, classifications, summarizations, judgments, and allocations. A. True B. False
False
Companies whose securities are sold to the general public must adhere to standards established by the Public Securities Commission (PSC). A. True B. False
False
Costs incurred in storing inventory usually are included in inventory costs. A. True B. False
False
Ending merchandise inventory for LIFO will always be the same dollar amount under a periodic inventory system as under a perpetual inventory system. A. True B. False
False
FOB shipping point means that the seller incurs the shipping costs. A. true B. False
False
Financial statements are generally prepared for a limited number of users. A. True B. False
False
For a merchandiser (CVS or Target), cost of sales includes store related costs for lighting, heat and electricity? A. True B. False
False
Goods in transit shipped FOB shipping point should be included in the seller's ending inventory. A. true B. False
False
If prices were to never change, there would still be a need for alternative inventory methods. A. true B. false
False
In accounting for inventory, the assumed cost flow must match the physical goods flow. A. True B. False
False
In periods of rising inventory prices, the LIFO method will result in a higher inventory valuation than will the average-cost method. A. true B. false
False
Inventory methods such as LIFO and FIFO deal more with goods flow than with cost flow. A. True B. False
False
Office expenses for sales and marketing employees are included in cost of goods sold. A. True B. False
False
The account "Building, Not in Uses" on the post-closing trial balance should be reported as part of property, plant and equipment. A. True B. False
False
The allowance for doubtful accounts is recorded in the liability section of the balance sheet. A. True B. False
False
The largest shareholder of a public company can obtain internal projections and view financial records that are not available to the general public? A. True B. False
False
To improve liquidity, a company needs to increase the number of days in the operating cycle. A. true B. false
False
Uncollectible accounts cannot be estimated because it is not possible to know which accounts will not be collected. A. True B. False
False
Under the allowance method, bad debt expense is recorded when a customer account is determined to be uncollectible. A. True B. False
False
An advantage of using the periodic inventory system is that it requires less recordkeeping than the perpetual inventory system. A. true B. false
True
Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period. A. True B. False
True
Determining the percentage change in an item from one year to the next is a type of horizontal analysis. A. True B. False
True
During periods of consistently falling prices, the LIFO inventory method will produce the highest possible amount of net income. A. True B. False
True
Freight charges associated with the purchase of inventory normally are included in inventory cost. A. True B. False
True
General and administrative expenses are a category of operating expense. A. True B. False
True
In a common-size income statement, each item is expressed as a percentage of net revenues A. True B. False
True
Inventory losses are easier to identify under the perpetual inventory system than under the periodic inventory system. A. true B. false
True
Investors can access historical and projected financial information using the SEC and company based websites? A. True B. False
True
It is possible for horizontal analysis to indicate a decrease in revenues from one year to another and an increase in net income A. True B. False
True
Profit margin and gross margin measure income at different levels. A. True B. False
True
Providing financial information that is useful to present and potential equity investors, lenders, and other creditors in decision making is the objective of financial reporting. A. True B. False
True
Taking a physical inventory refers to making a count of all merchandise on hand at a particular time. A. true B. false
True
The portion of cost of goods available for sale that is not assigned to ending inventory is assigned to cost of goods sold. A. True B. False
True
The single-step and multistep income statements result in the same net income figures. A. True B. False
True
When the cost of inventory is written down due to a market decline, a loss must be recorded. A. True B. False
True
A business pays a supplier early and receives a $100 discount on its inventory purchase. The business should record the $100 discount as "other income" on its income statement below the line income from operations. A. Yes B. No
No
Are selling related costs included in cost of goods sold when calculating gross margin? A. Yes B. No
No
In a multi-step income statement, sales less cost of goods sold equals gross margin. Does a service business report cost of goods sold? A. Yes B. No
No
In periods of declining prices, the FIFO method will result in a larger gross margin than the LIFO method. A. Yes B. No
No
The LIFO inventory costing method uses the most recent prices to value ending inventory. A. Yes B. No
No
The account "Prepaid Rent" on post-closing trial balance represents a liability to pay rent in the future A. Yes B. No
No
Under the periodic inventory system, cost of goods sold is recorded throughout the accounting period as inventory is sold. A.Yes B.No
No
Will the profit margin of a business be higher than its gross margin? A. Yes B. No
No
A balance sheet is a good source to measure the liquidity of a business. A. true B. false
True
A business may use the periodic or perpetual inventory systems for different types of inventory. A. true B. false
True
A company with a current ratio of 1.5 is considered more liquid than one with a current ratio of 1 A. True B. False
True
A company's acceptance of credits cards, like Visa, is an example of factoring without recourse. A. True B. False
True
A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors A. True B. False
True
A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be comparable A. True B. False
True
Does a post-closing trial balance account "Capital" include results from the income statement? A. Yes B. No
Yes
The higher the inventory turnover, the lower the days' inventory on hand. A. Yes B. No
Yes
A company that factors its receivables will have a less favorable receivable turnover than a company that does not factor. A. true B. false
false
Because bad debt losses are incurred to generate sales, they should be expensed at the same time sales (revenue) is recorded. A. True B. False
true
