TEST 3 ACCOUNTING

a company maintains the asset account, cash in bank, on its books, while the bank maintains a reciprocal account which is

a liability account

on a bank reconciliation, deport in transit are

added to the bank balance

a petty cash fund should be replenished

as necessary

which of the following is not necessarily a party to a check?

buyer

freight terms of FOB shipping point means that the

buyer must bear the freight cost

which of the following would not cause a bank to debit a depositor's account

collection of a note receivable

a deposit made by a company will appear on the bank statement as a

credit

a petty cash fund of $100 is replenished when the fund contains $3 in cash & receipts for $93. the entry to replenish the fund would

debit cash over and short for $4

in preparing a bank reconciliation, outstanding check are

deducted from the balance per bank

entries are made to the petty cash account when

establishing the fund

management may choose an inventory costing method it desires as long as the flow assumption chosen is consistent with the physical movement of goods in company.

false

the specific identification method of inventory valuation is desirable when a company sells a large # of low-unit cost items

false

which of the following should be included in the physical inventory of a company

goods in transit from another company shipped FOB shipping point

the factor which determines whether or not goods should be included in a physical count of inventory is

legal title

a debit balance in cash over and short is reported as

miscellaneous expense

a check returned by the bank market "NSF" means

not sufficient funds

a petty cash fund is generally established in order to

pay relatively small expenditures

A bank statement

shows the activity which increased or decreased the depositor's account balance

a debit memorandum would not be issued by the bank for

the issuance of traveler's checks

if goods in transit are shipped FOB destination

the seller has legal title to the good until they are delivered

an error that overstates the ending inventory will also cause net income for the period to be overstated

true

if a company change it in inventory valuation method, the effect of the change on net income should be disclosed in the financial statements

true

in applying the LIFO assumption in a perpetual inventory system, the cost of the units most recently prior to sale is allocated first to the units sold

true

the first-in,first-out (FIFO) inventory method results in an ending inventory valued at the most recent one

true

under the lower-of-cost-or-market basis, market is defined as current replacement cost

true