ACC 202 Chapters 4-6

Snow company has the following inventory transactions for the year: Jan 1: Beginning inventory 200 units $4 Apr 20: purchase 800 units $4.25 Sep 8: purchase 400 units $4.50 Assuming Snow sells 1,000 units, calculate ending inventory under FIFO

$1,800

Snow company has the following inventory transactions for the year: Jan 1: Beginning inventory 200 units $4 Apr 20: purchase 800 units $4.25 Sep 8: purchase 400 units $4.50 Assuming snow sells 1,000 units, calculate cost of goods sold under LIFO

$1,800

On April 1, 20x1, Nelson Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20x2 (one year later). Assuming Nelson Inc. has a December 31 year-end, on March 31 20X2, Nelson Inc. will record interest revenue of:

$2,000

Katie Malls has the following inventory transactions for the year Jan 1: Beginning inventory 20 units $35unit cost $700 total cost Apr 8: Purchase 50 units $40 unit cost $2,000 total cost Jan 1- Dec 31 total sales to customers: 60 units What amount would madison report for cost of goods sold using LIFO under a periodic inventory system?

$2,350

At the beginning of the year, Johnson supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold?

$22,200

On August 4, Sanders provides services to Frederickson for $5,000, terms 3/10, n/30. Frederickson pays for the services on August 12. What amount would Sanders record as revenue on August 4?

$5,000

At the end of its first year operations, a company establishes an allowance for future uncollectible accounts for $5,600. At what amount would bad debt expense be reported in the current year's income statement?

$5,600

On April 1, 20x1, Nelson Inc. accepts a $100,000, 8% note. The note receivable and interest are due on March 31, 20x2 (one year later). On December 31 20X1, Nelson will accure interest revenue of:

$6,000

On December 31, the accounts receivable ending balance is $80,000. Assume that the unadjustable balance of allowance for uncollectible accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expenses recorded on December 31 will be:

$6,100

Use the information to calculate net revenues Sales revenue: $100,000 Sales Discount: $2,000 Accounts receivable: $15,000 Sales allowances: $7,000 Cash: $18,000

$91,000

Use the information below to calculate the receivable turnover ratio net credit sales: $200,000 Beginning accounts receivable: $40,000 Ending accounts receivable: $10,000 Cash: $20,000

8

Which of the following best describes a merchandising company? A) a company that produces products from raw materials, labor, and overhead B) a company that provides services to its customers C) A company that purchases products that are primarily in finished from for resale to customers D) a company whose revenues exceed expenses

A company that purchases products that are primarily in finished from for resale to customers

The entry to record the estimated for uncollectible accounts includes:

A debit to bad debt expense

When a company provides services on account, which of the following accounts id debited? A) Service revenue B) Cash C) Accounts receivable D) Accounts payable

Accounts receivable

The Sarbanes-Oxley Act (SOX) mandates which of the following? A) increased regulations related to corporate executives accountability B) all of the answers are correct C) increased regulations relate to auditor-client relations D) increased regulations related to internal control

All of the answers are correct

Fan Company sells inventory on account. The entry to record this sale using a perpetual inventory system would include a: A) debit to cost of goods sold B) all of these are included to record the sales C) Debit to accounts receivable D) credit to sales revenue

B) all of these are included to record the sales

Which of the following represents the balance of cost of goods sold at the end of the year? A) the cost of inventory purchased during the year B) the cost of inventory sold during the year C) the cost of inventory at the beginning of the year D) the cost of inventory not yet sold by the end of the year

B) the cost of inventory sold during the year

Which of the following is considered cash for financial reporting purposes? A) inventory that is likely to be sold within three months B) amounts owed to suppliers C) amounts to be collected from customers D) Balances on savings accouns

Balances in savings accounts

A sales discount is recorded by the seller as an:

Contra revenue

On January 18, a company provides services to a customer for $500 and offers the customer terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?

Debit sales discount for $10

The entry to write down inventory from cost to net realizable value at the end of the year includes a:

Debit to cost of goods sold

What is the concept behind separtation of duties in establishing internal control?

Employees fraud is less likely to occur when access to assets and access to accounting records are separated

Which of the following generally would be considered a good internal control over cash payments? A) the employee who authorizes payment should be the employee who prepares the check B) employees responsible for making cash disbursements should also be in charge of cash receipts C) Ensure checks are serially numbered and signed only by authorized employees D) require only one signature for larger checks

Ensure checks are serially numbered and signed only by authorized employees

Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs?

FIFO

The Sarbanes-Oxley Act of 2002 applies to all companies that

File reports with the securities and exchange commission

Under the allowance method for uncollectible accounts, the balance of allowance for uncollectible accounts increase when:

Future bad debts are estimated

Which of the following adjusts the company's balance of cash in a bank reconciliation

Interest earned

Which inventory cost flow assumption generally reults in the lowest reported for inventory when inventory costs are rising?

Last-in, first-out (LIFO)

Investing cash flows would include which of the following? payment for land payment of dividends to stockholders payment for advertising cash sales to customers

Payment for land

Operating cash flows would include which of the following? Reciept for cash from selling a building payment for prepaid insurance receipt of cash from bank borrowing payment of dividends to stockerholders

Payment for prepaid insurance

The purpose of petty cash fund is to

Provide cash on hand for minor expenditures

Gross Profit is defined as:

Sale revenue minus cost of goods sold

Which of the following refers to the sellers reducing the customer's balance owed because of some deficiency in the company's product or service?

Sales allowance

When preparing a bank reconciliation, Outstanding checks would be:

Subtracted from the bank's cash balance

When preparing a bank reconciliation, non-sufficient funds (NSF) checks would be:

Subtracted from the company's cash balance

Consistent with the COSO framework, an effective internal control system includes the control environment. The control environment refers to:

The ethical tone set by top management

A company's gross profit ratio measures:

The number of times the company sells its average inventory balance during the year

A company's inventory turnover ratio measures:

The number of times the company sells its average inventory balance during the year

If a company uses the allowance method of accounting for uncollectible accounts and collects cash on an account receivable previously written off:

There is no change in total assets

Employees purchases of supplies with a company-issued credit card is typically recorded with a credit to

accounts payable

Net income is defined as:

all revenues minus all expenses

Financing cash flows include which of the following? A) cash paid for supplies B) cash received from the sale of a used company truck C) cash received from the issuance of common stock D) cash received from a customer

cash received from the issuance of common stock

Which of the following adjusts the bank's balance of cash in a bank reconciliation? A) checks outstanding B) NSF checks C) Service fees D) an error by the company

checks outstanding

Operating income is defined as:

gross profit minus operating expenses

Which of the following is an example of detective controls? A) Important documents should be kept in a safe place, and electronic files should be backed up regularly B) the company should establish formal guidelines to handle cash receipts and make purchases C) management periodically determines whether the amount of physical assets agree with the accounting records D) Employees should be made aware of the company's internal control policies

management periodically determines whether the amount of physical assets agree with the accounting records