ACC EXam 2 REVIEW

A company sells goods at a selling price of $20,000. The cost of the goods is$15,000. Under a perpetual inventory system, the journal entries prepared to record the sale will include one with a debit to

Cost of Goods Sold and a credit to Inventory for $15,000.

Mansfield Company has a periodic inventory system and uses the LIFO method to assign costs to inventory and cost of goods sold.

Cost of goods sold $550; Ending inventory $250

Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system.

Cost of goods sold $600; Ending inventory $200

When a deferral adjustment is made to a liability account, that liability becomes a

Revenue

FIFO uses the ________ cost for the cost of goods sold on the income statement and the ________ cost for inventory on the balance sheet.

d. oldest; newest

Inventory shipped FOB destination and in transit on the last day of the year should be included in

inventory balance of the seller

A contra-account

offsets, or reduces, another account.

Boron Company has sales of $60,000, beginning inventory of $7,000, purchases of $35,000, and ending inventory of $5,000. The cost of goods sold is: BI + Purchases = COGAS - EI = COGS

37,000

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a

A. Debit to Unearned Revenue

When using a perpetual inventory system, the Cost of Goods Sold is recorded:

A. each time a sale is made.

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement

Accrual adjustments can increase assets and increase revenues.

All the following accounts will have zero balances on a post-closing trial balance except

B. Accumulated Depreciation.

Which is the first financial statement that should be prepared after the adjusted trial balance has been prepared

B. Income Statement

How does the adjustment for depreciation differ from other deferral adjustments?

B. The depreciation adjustment uses a contra-asset account rather than reducing the asset accounts directly.

Which of the following will occur when inventory costs are decreasing?

C. FIFO will result in a lower net income and a lower ending inventory than will LIFO.

In order to calculate shrinkage

C. a perpetual inventory system requires an occasional count of actual inventory.

An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero?

C. after posting adjusting entries.

Closing entries

C. cause the revenue and expense accounts to have zero balances.

If a company's ending inventory count was $50,000, cost of goods sold was$27,000, and purchases were $56,000, its beginning inventory must have been:

D. $21,000.

When goods are sold to a customer with credit terms of 2/15, n/30, the customer will receive a

D. 2% discount if they pay within 15 days.

The specific identification method would probably be most appropriate for which of the following goods?

Diamond necklaces at a Tiffany & Co. jewelry store

When a deferral adjustment is made to an asset account, that asset becomes a

Expense