chapter 4, 5, 6 practice exam ACC 131
a customers check for $25 that had been deposited into the companys checking account the previous month was returned stamped NSF by the bank which of the following journal entries is required
accounts receivable at 25 debit and cash at 25 credit
the method of recording bad debts that results in a bad debt expense before the actual default is the
allowance
checks presented for payment and paid by the bank are known as
cancelled checks
are those investments and deposits with financial institutions that are readily convertible into known amounts of cash and that have original maturities of 3 months or less
cash equivalent
cash collected and recorded by a company but not yet reflected in a bank statement are known as
deposits in transit
shipping terms of FOB destination means that the shipping costs are paid by the
seller
costs of goods sold is equal to beginning inventory plus the net cost of purchases minus
end inventory
a ___ is the buyer of receivables from a big company who acquires the right to collect the receivables and assumes the risk of uncollectibility
factor
cost of goods sold represents an outflow of a resource inventory which is caused by the sale of products (T/F)
false
for a merchandising company the cost of goods sold is subtracted from net sales to arrive at gross profit (T/F)
false
sales discounts decrease the cost of inventory acquired (T/F)
false
the best response to an employee caught stealing from a company is to say "don't ever let me catch you doing that again" (T/F)
false
cost of completed unsold items
finished goods
check written on the companys account in may and paid by the bank is returned with the bank statement
not included on the reconciliation
the understatement of ending inventories in one period leads to an
over of cost of goods sold in the same period
requires updating of the inventory account at the time of each purchase and each sale
perpetual inventory system
cost of ingredients used to make a product
raw materials
management of publicly traded corporations has increased responsibility for a system of internal controls that ensures reliability of financial statements
sabres oxley 2002 act
used to induce the customer to keep damaged goods
sales allowance
to encourage prompt payment sellers offer a
sales discount
used to encourage prompt payment
sales discount
check written on the companys account in may that does not appear on the bank statement
subtraction from bank balance
customers check was deposited on may 31 but is not included on the bank statement
subtraction from company balance
reduction of price granted by the seller for a particular class of customers
trade discount
shipping costs paid to acquire merchandise
transportation-in
accounts receivable are shown on the balance sheet at their net realizable value (T/F)
true
for a merchandising company the cost of goods sold is subtracted from net sales to arrive at gross profit (T/F)
true
petty cash is NOT considered to be a cash equivalent (T/F)
true
sales discounts decrease the cost of inventory acquired (T/F)
true
the use of the allowance method is an attempt by accountants to match bad debts as an expense with the revenue of the period din which a sale on credit takes place (T/F)
true
under the FIFO method of inventory costing the units in the ending inventory represent the oldest purchases (T/F)
true
under the periodic inventory system a physical inventory must be taken to determine cost of goods sold (T/F)
true