UNL - Acct. Unit Two

A periodic performance review is an example of a(n) ___ control

Detective

The two types of control procedures are preventive and

Detective

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest ending inventory?

LIFO

Includes formal procedures for reporting control deficiencies

Monitering

High profile accounting scandals in the early 2000s prompted the passage of the:

Sarbanes-Oxley Act

The Public Company Accounting Reform and Investor Protection Act of 2002 is known as the

Sarbanes-Oxley Act

The percentage-of-receivables approach to measuring bad debt expense is referred to as _____ method

a balance sheet

Neumann, Inc.'s books show an ending cash balance of $20,000 before preparing the bank reconciliation. Given that the bank reconciliation shows outstanding checks of $2,000; deposits outstanding of $3,000; NSF check of $200; and interest earned on the bank account of $30, the company's up-to-date ending cash balance equals:

$19,830

Pine Corporation provides $1,000 of services on account with terms 2/10, n/30. If the customer takes the discount and pays within 10 days, Pine will receive

$980

Which of the following are provisions included in the Sarbanes-Oxley Act?

-Require auditors to retain work papers for 7 years -Require that audit firms are hired by the audit committee of the board of directors

When adjusting the company's cash account balance in a bank reconciliation, which items reduce the company's cash account balance?

-Service charges -Charges for NSF checks

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

-collection from customers -receipt of interest

Sales to customers in which the customers pay within 30 to 60 days are referred to as

-credit sales -sales on account

The journal entry to record bad debt expense includes:

-debit to bad debt expense -credit to allowance for uncollectible accounts

York Inc. records a year-end adjustment for estimated sales returns and allowances. As a result of this entry, York's financial statements will change as follows:

-equity decreases -assets decrease

Internal control consists of plans to

-provide accurate and reliable accounting information -safeguard company assets

A company is most likely to utilize the specific identification method if its inventory consists of

-unique products -very expensive products

The specific identification method

-would be beneficial to a company that makes fine jewelry -matches each unit of inventory with its actual cost

Which of the following items are not included in cash?

Accounts receivable from customers

Policies and procedures that help ensure management's directives are being carried out

Control Activities

Formal policies related to management's philosophy, assignment of responsibilities, and organizational structure

Control Environment

Because cash is assumed to be available for spending, it is typically reported on the balance sheet as a(n)

Current asset

Clover Corporation uses the perpetual inventory system. When Clover purchases inventory on account, the entry will include which of the following?

Debit Inventory

On March 5, Oak Corp. provided services on account to Pine. Oak agreed to accept a $100,000, 8%, 6-month interest-bearing note from Pine in payment for the services. The entry required on Oak's books on March 5 would require which of the following entries?

Debit Notes Receivable $100,000; credit Service Revenue $100,000

Lindell sells $100 of goods to a customer. The customer pays with a personal check. Recording this transaction will include a

Debit to cash

(T/F) Accounts receivable not expected to be collected should be counted in the assets of the company until they are later written off

False

(T/F) Employee purchases using cash or purchase cards must be recorded immediately as business expense

False

(T/F) The entry for a sale to customers is different depending on whether the customer pays with cash or a check.

False

(T/F) Variability in operating cash flows is unimportant as long as the total cash flows over a three-year period is sufficiently positive

False

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest pretax income?

LIFO

The primary benefit for choosing this method is that it tends to save taxes

LIFO

When prices increase, the ___ inventory method provides the best matching of revenue and expenses.

LIFO

When prices increase, the ___ inventory method tends to decrease a company's tax liability during a particular fiscal period.

LIFO

When prices rise, which inventory method tends to result in lower income and a lower tax liability?

LIFO

Which inventory cost flow method most realistically matches the current cost of inventory with the current revenue it produces?

LIFO

Vogel Company maintains its inventory records using the FIFO assumption, but reports its inventory consistent with LIFO. At the end of the year, Vogel converts its inventory balance from FIFO to LIFO by using the

LIFO adjustment

Which inventory system recognizes cost of goods sold and decreases inventory each time a sale occurs?

Perpetual inventory system

Separation of duties and E-commerce controls are examples of ___ controls

Preventive

(T/F) An internal control goal for cash receipts is to ensure that the business documents the correct amount of cash received and safely deposits the cash into its bank account

True

In a perpetual inventory system, when a company sells inventory on account, how many entries are required?

Two

The percentage-of-receivables method of estimating bad debt applies ____ to _____

a single percentage; accounts receivable

With the allowance method, bad debt expense is recorded

at the end of the period when bad debts are estimated

The formula 365 divided by the inventory turnover ratio equals the

average days in inventory

The ratio that indicates the approximate number of days the average inventory is held is referred to as the:

average days in inventory

he lower of cost and net realizable value method was developed to

avoid reporting inventory at an amount that exceeds the benefits it provides

The cost of estimated accounts receivable that will not be collected is referred to as ___ expense

bad; debt

The components of internal control are

based on the ethical tone set by management

The Sales Returns and Sales Allowances accounts are classified as

contra revenue accounts

Catalina Bookstore pays freight on books shipped to its store. The shipping cost is debited to Inventory. When the books are sold, the freight costs pertaining to the books are included in:

cost of goods sold

If a company pays freight-in for its inventory, that amount will later be included in

cost of goods sold

The formula for inventory turnover is

cost of goods sold divided by average inventory

The account "Allowance for Uncollectible Accounts" normally has a ___ balance

credit

Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include

debit Allowance for Uncollectible Accounts

On June 1, Tulip Corp. provided services on account to Daffodil. Tulip agreed to accept a $40,000, 10%, 3-month interest-bearing note from Daffodil in payment for the services. The entry required on Tulip's books on June 1 would include a

debit to Notes Receivable, $40,000

Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a(n):

decrease in Accounts Receivable

In a bank reconciliation, an outstanding check is ___

deducted from the bank balance

The Committee of Sponsoring Organizations (COSO) of the Treadway Commission provided a framework for

designing an internal control system

The shipping term FOB stands for

free on board

When the allowance method is used, the write-off of an uncollectible account:

has no effect on net income

Freight-in is

included as a cost of inventory

Gerald Corporation purchases inventory FOB shipping point. The shipping costs are $300. The shipping costs are

included in Gerald's inventory

The amount of net credit sales is reported on the

income statement

Cost of goods sold divided by average inventory is

inventory turnover

Freight-in is recorded as part of ______, whereas freight out is often recorded as ______

inventory; selling expense

An aging schedule classifies accounts receivable based on

length of time outstanding

In times of rising prices, ending inventory determined using the LIFO inventory assumption will be ___ than ending inventory determined using the FIFO inventory assumption.

lower

On a multiple step income statement, the category of revenues and expenses reported immediately after operating income is referred to as ___ revenues and expenses

non-operating

Receivables not expected to be collected should

not be counted in assets of the company

Pixie Inc. writes off a specific accounts receivable. If Pixie is using the allowance method, the write off will _____ net income

not effect

A formal credit arrangement between a creditor and debtor is called a(n)

note receivable

A formal, signed credit agreement between a lender and a borrower is called a(n) _____ by the lender

note receivable

The FIFO method assumes that units sold are the ___ units acquired

oldest

When merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called a(n)

sales return

A petty cash fund is used for

small amounts of cash needed for low-cost items

The inventory costing method that matches each unit of inventory with its actual cost is referred to as the _____ method. Multiple choice question

specific identification

The primary benefit of LIFO is:

tax saving

Average days in inventory measures

the average time the inventory is held

For accounts receivable, the longer an account is outstanding

the more likely it will prove uncollectible

The LIFO adjustment is used internally to convert the inventory

to the LIFO basis

Average days in inventory is calculated as

365 divided by the inventory turnover ratio

Which of the following companies would be most likely to utilize the specific identification method?

Adams Company produces one-of-a-kind products

In a bank reconciliation, which of the following will require a journal entry by the company?

Adjustments to the balance per books for items discovered on the bank reconciliation that were not yet recorded on the books

Who has final responsibility for internal controls?

Managment

The ending balance in cash is reported in which financial statement(s)?

The balance sheet and statement of cash flows

Who is responsible for providing an opinion on management's assessment of internal control?

The company's auditors

The receivables turnover ratio indicates

The number of times during a year that the average accounts receivables were collected.

The account "Allowance for Uncollectible Accounts" is classified as

a contra asset to accounts receivable

Margot, a prospective investor, wants to know how much cash Ziegler Inc. has on December 31. Margot can find the information in Ziegler's:

-Balance Sheet -Statement of cash flows

When an account previously written off is collected in full, the entry to reverse the previous write-off would require which of the following?

-Debit Accounts Receivable -Credit Allowance for Uncollectible Accounts

Which of the following are preventive controls?

-Physical controls -Separation of duties

When adjusting the company's cash account balance in a bank reconciliation, which item must be added to the cash account balance?

-Service charges -Charges for NSF checks

Using the perpetual inventory system, what is the effect of a sale of inventory on assets?

-assets increase by the sales price of the inventory -assets decrease by the cost of the inventory

Two important ratios that help in understanding a company's effectiveness in managing receivables are the:

-average collection period -receivable turnover ratio

A trade discount is a reduction from the list price, which is used to:

-change prices without publishing a new catalog -give quantity discounts to customers -disguise real prices from competitors

Which of the following items are readily available from an inventory account under the perpetual inventory system?

-ending inventory balance -beginning inventory balance -cost of units sold -individual purchases

The two most common sources of occupational fraud are:

-financial statement manipulation -misuse of company resources

Purchasing inventory on account:

-increases assets -increases liabilities

The Work-in-Process inventory account typically includes which costs?

-raw materials -indirect manufacturing costs -direct labor

When two or more persons work together to circumvent internal control procedures and commit a fraud, this is called ___

Collusion

The framework for designing an internal control system is provided by the

Committee of Sponsoring Organizations (COSO) of the Treadway Commission

The accounting term for a situation where two or more people act in coordination to circumvent internal controls is

Conclusion

Warner Corp. sells goods on account for $10,000 on April 2. On April 20, the customer returns $3,000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned?

Debit Sales Returns; credit Accounts Receivable

Which of the following is an internal control procedure for cash disbursements?

Disbursements should be made by check, debit, or credit card

The disclosure that shows the difference in the cost of inventory between LIFO and FIFO is referred to as the ___

LIFO reserve

When a company has earned interest in the current period but has not yet recorded the interest, what type of adjustment is the company required to make?

Make an adjusting entry at the end of the current period to accrue the interest earned

What type of company purchases raw materials and makes goods to sell?

Manufacturers

Which of the following allows greater reliance by investors on reported financial statements?

Strong internal control systems

(T/F) When goods are sold, the cost of the goods is transferred from the Inventory account to the Cost of Goods Sold account

True

___ companies purchase inventory that is primarily in finished form and ready for resale to customers

Wholesale

Which of the following accounts would be found in the balance sheet of a manufacturing company?

Work in process

The allowance for uncollectible accounts is a contra account to

accounts receivable

In a bank reconciliation, a deposit outstanding is

added to the bank balance

The lower of cost and net realizable value method was developed to

avoid reporting inventory at an amount that exceeds the benefits it provides.

The estimated expense for accounts that may not be collected is referred to as

bad debt expense

Compared to other methods of estimating uncollectible accounts, the aging of accounts receivables method tends to

be more accurate

The ratio that shows the approximate number of days the average accounts receivable balance is outstanding is referred to as the average

collection period

Allowance for Uncollectible Accounts has a credit balance because it is a(n) _____ account

contra-asset

A periodic inventory system measures cost of goods sold by

counting inventory at the end of the period

The Accounts Receivable account is reduced when the seller:

determines that a specific customer account will not be collectible

The receivables turnover ratio and the average collection period provide information about a company's

effectiveness in managing receivables

At the beginning of the year, Gerta Company's allowance account has a credit balance of $10,000. This may indicate that the

estimate of uncollectible accounts was too high

Gwendolyn uses the allowance method to account for uncollectible receivables. Gwendolyn should record _____ bad debt expense ______

estimated; at the end of the year

Under the allowance method, companies estimate _____ uncollectible amounts and report those estimates in the _____ year

future; current

A company's plans to safeguard company assets and enhance the reliability and accuracy of accounting information are referred to as

internal controls

Managers typically monitor inventory very closely to ensure that sufficient units are available for sale and to prevent inventory from becoming ___

outdated

Raw materials, direct labor, and manufacturing ___ are the three costs related to the manufacturing of products.

overhead

Kilian Company's inventory balance at the end of the current year does not include $10,000 of inventory that was stored in a separate warehouse and accidentally excluded from the physical count. If the error is not discovered, the effect of this error on financial statements in the following year will be:

overstated net income

Ronald Corporation purchases inventory with terms FOB destination. The shipping costs are $300. The shipping costs are

paid by the supplier

Freight-in on inventory purchases is typically recognized as

part of the cost of purchasing inventory

Under the ___ inventory system, the inventory account reflects purchases during the year, as well as cost of units sold

perpetual

The average collection period is an estimate of

the number of days the average account receivable balance is outstanding

Acme, Inc.'s books show an ending cash balance of $10,000 before preparing the bank reconciliation. Given that the bank reconciliation shows outstanding checks of $3,000; deposits outstanding of $2,000; NSF check of $100; and interest earned on the bank account of $10, the company's up-to-date ending cash balance equals:

$9,910

Which of the following are common controls over cash receipts?

-opening mail daily and making a detailed list of checks received -having two different employees take custody of the checks and make the deposit

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows?

-payment of employee salaries -purchase of supplies with cash -interest paid on notes

Two entries are required when a previously written off account is collected. These two entries include:

-reinstate the account receivable -record the collection on the account receivable

The cumulative difference between reporting inventory at LIFO rather than FIFO is commonly referred to as the

LIFO reserve

In times of rising prices, cost of goods sold determined using the LIFO inventory assumption typically will be ___ than cost of goods sold determined using the FIFO inventory assumption.

greater

Which of the following steps are necessary to reconcile the bank balance and the cash account balance

-Adjust bank's cash balance -Adjust the company's cash balance -Record items that reconcile the company's cash balance

Internal control procedures for cash disbursements (other than small disbursements from petty cash) should include that

-checks are signed by authorized individuals -all expenditures are authorized -all disbursements are made by check, debit card, or credit card

Abby Fashions sells a suit to a customer for $600 on account. The day after the sale, the customer discovers that the jacket has a small stain on the back. Abby Fashions grants the customer a $60 credit. Abby Fashions will record:

-debit to Sales Allowances $60 -credit to accounts receivable $60

Costs related to manufacturing products typically include

-direct labor -overhead -raw materials

"Net credit sales" refers to credit sales net of:

-discounts -allowances -returns

Norma Inc. uses the perpetual inventory system. When the company records a sale, it should make entries to:

-increase an asset and increase revenue -decrease an asset and increase an expense

What comparative advantages do notes receivables possess compared to other receivables?

-interest-bearing -higher likelihood of collectibility

The financial statement effects of recording an allowance for estimated sales returns are that:

-net income decreases -assets decrease -equity decreases

The key provisions of the Sarbanes-Oxley Act include

-restricting activities of auditors to prevent conflicts of interest -requiring documentation and assessing effectiveness of internal controls -requiring that corporate executives certify financial statements

What is the effect of recording a sale of inventory under the perpetual inventory system on the financial statements? (Assume that the sales price is higher than the cost of inventory)

-stockholders' equity increases -total assets increase -net income increases

Joyce Corp. uses the percentage-of-receivables method to account for bad debt expense. Joyce determines that a customer account of $20,000 should be written off as uncollectible. The write off of the account will include which of the following entries?

-Credit to Accounts Receivable -Debit to Allowance for Uncollectible Accounts

Clark uses the perpetual inventory system. Clark sells goods to a customer on account for $1,000. The cost of the goods sold was $700. Which of the following entries are required?

-Debit Cost of Goods Sold $700; credit Inventory $700 -Debit Accounts Receivable $1,000; credit Sales Revenue $1,000

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods

-Inventory -Cost of Goods Sold

A major difference between companies that provide services and companies that manufacture or sell goods is that those that manufacture or sell goods must account for:

-Inventory -cost of goods sold

Sales Returns and Sales Allowances are ___ accounts and require a debit entry to increase the account.

contra-revenue

Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance?

$93,000

Net revenues is calculated as total revenues minus which of the following items?

-Sales discounts -Sales allowances -Sales returns

Which inventory account consists of the cost of items for which the manufacturing process is complete?

Finished goods inventory

Identifies and analyzes factors that could prevent objectives from being achieved

Risk Assessment

The normal balance of notes receivable is:

a debit

The approach that considers the age of various accounts receivables to estimate uncollectible accounts is referred to as the ___ method of accounts receivable

aging

Using a percentage of each period's net credit sales to estimate bad debt expense is a(n) ___ approach to measuring bad debts

income statement

In a LIFO inventory system, inventory costs shown in the balance sheet may be distorted because they may represent costs

incurred several years earlier

A calendar-year-end company that accepts a 3-month interest-bearing note on December 1 must accrue ___ revenue on December 31

interest

A key factor in helping safeguard cash is a well functioning ___ system

internal control

The ______ method of valuing inventory was developed to avoid reporting inventory at an amount that is ______ than the benefits it can provide

lower of cost and net realizable value; greater

Companies that serve as intermediaries between manufacturers and end users typically are referred to as ____ companies

merchandising

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a ______ income statement

multiple-step

Which of the following methods are not used for inventory costing?

-Simple-average -NIFO

When a person intentionally deceives another person or company for personal gain, this is referred to as

Fraud

The cost of goods not yet sold is recorded in the ______ account, whereas the cost of goods that are sold to customers is recorded in _____

Inventory; Cost of Goods Sold

The most common source of occupational fraud is:

misuse of company resources

What would cause a bank statement not to agree with the cash balance in the accounting records?

-The bank paid interest that the company has not recorded -The bank made an error in recording a deposit made by the company -Deposits outstanding that have been recorded on the company's records, but not on the bank's -The company made an error in recording a deposit

Preparation of a bank ___ helps maintain control of cash accounts.

Reconciliation

Which of the following is a discount in the amount to be paid if the customer pays within a specified time period?

Sales return

Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The customer has not yet paid for any of the goods. What will Adrian record on May 15?

-Debit to Sales Returns -Credit to Accounts Receivable

Which of the following accounts are typically reported in the balance sheet of a manufacturing company?

-Finished goods -Work in process -Raw materials

A company makes a sale on terms 2/10, n/30. What does this mean?

-If payment is not made in 10 days, the net amount is due in 30 days -The customer may take a 2% discount off the price if paid within 10 days

Which of the following items will require a journal entry following a bank reconciliation?

-Notes collected by the bank -NSF checks

Effective internal control over cash requires segregation of duties. Which of the following duties should be segregated?

-Opening the mail and deposit of checks in the bank -Depositing checks into the bank and recording receipts in the accounting records

Which of the following costs are recognized in work in process for a manufacturing company?

-Raw materials -Overhead -Direct labor

Which of the following represent reasons why managers closely monitor inventory levels?

-To minimize costs of inventory write-downs due to obsolete inventory -To ensure that sufficient units are available

Smith's operating cash flows in millions were $100, $150, $80 during the past three years; while Jones' operating cash flows in millions were $105, $115, $110 during the same period. From the perspective of operating cash flows, which company would likely be perceived as riskier?

Smith

Kilian Company's inventory balance at the end of the year does not include $10,000 of inventory that was stored in a separate warehouse and accidentally excluded from the physical count. If the error is not discovered until the following year, the financial statement effect in the current year will be:

understated assets, retained earnings, and net income

Cash disbursements that have been recorded in the company's accounting records but are not yet recorded by the bank are called

checks outstanding

The _____ ratio shows the number of times during a year that the average receivable balance is collected

receivables turnover

Strong internal control systems allow greater reliance by investors on:

reported financial statements

The difference between LIFO and FIFO disclosed in the notes to the financial statements of a company currently utilizing the LIFO cost flow assumption is sometimes referred to as the LIFO ___

reserve

A cash discount representing a reduction in the amount to be paid by a credit customer if the customer pays within a specified period of time is also referred to as a(n) ___ discount

sales

A non-sufficient funds check requiring an adjustment to the cash balance was written:

to the company preparing the bank reconciliation

The allowance method estimates

uncollectible accounts

The direct write-off method is used when

uncollectible accounts are not anticipated or are immaterial

Employee purchases should be included in the accounting records

by the end of the accounting period

Tudor Corp. has an ending balance in the accounts receivable account of $20,000. Tudor recorded bad debt expense of $1,000. Tudor has an ending balance in the allowance for uncollectible accounts of $2,000. What is the net accounts receivable balance?

$18,000

Which of the following are detective controls?

-Audits -Reconciliations -Performance reviews

When an account previously written off is collected in full, which is required to ensure the accounting for the complete payment history of the customer?

An entry to reinstate the account receivable and an entry to record payment

Raven receives a 3-year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?

As a noncurrent asset

Where is inventory reported in the financial statements?

Balance sheet as a current asset

The asset most susceptible to fraudulent activity is(are)

Cash

Josh Corporation uses the perpetual inventory system. Josh sells goods to a customer on account for $2,000. The cost of goods sold is $1,500. What is the entry required to record the expense of the inventory sold?

Debit Cost of Goods Sold $1,500; credit Inventory $1,500

When a company finds out that an NSF check was written to the company, the company must ___ the balance in the cash account.

Decrease

The two reasons why companies may issue incorrect financial statements are fraud and

Error

Differences between the bank statement balance and the cash account balance in the accounting records are primarily caused by timing differences and

Errors

Internal control components are built on the foundation of the ___ tone established by top management in its control environment.

Ethic

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest cost of goods sold?

FIFO

For internal record keeping, most companies carry their inventory using the _____ basis

FIFO

Generally, if a company wants its inventory cost flows to be the same as the inventory's physical flows, what inventory method would it use?

FIFO

The ___ inventory cost flow assumption typically approximates the actual physical flow of inventory items of most companies

FIFO

Which inventory cost flow assumption is commonly used internally by companies that externally report under the LIFO cost flow assumption?

FIFO

Which inventory cost flow method approximates the physical flow of inventory items?

FIFO

Which inventory costing method assumes that the inventory's costs flow out in the same order the goods are received?

FIFO

The allowance method is required by

GAAP

Where is a note receivable reported in the balance sheet?

In either current or noncurrent assets, as appropriate

Bad debt expense is reported on the:

Income statement

Margot Inc, which uses the perpetual inventory system, purchases 500 units of inventory to be held for resale. Margot should debit the purchase to:

Inventory

The ___ cost flow assumption more realistically matches the current cost of inventory with current sales revenue.

LIFO

Which inventory account includes the cost of components that will become part of the finished product but have not yet been used in production

Raw materials inventory

One of the most important internal controls for cash is the bank

Reconciliation

To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to

allowance for uncollectible accounts

To record an estimate for future bad debts at the end of the period, an adjustment would be made with a credit to Multiple choice question

allowance for uncollectible accounts

A company that expects that some of its customers will not pay the agreed upon sales price must utilize the

allowance method

Meller purchases inventory on account. As a results, Meller's

assets will increase

Planters Corp. wrote off a customer's uncollectible account in April. In the following month, Planters collected from the customer in full. The entry to reinstate the account would require a

credit to Allowance for Uncollectible Accounts

The bank will show a customer's deposit on bank statements as a

credit, because a deposit is a liability from the bank's point of view

The income statement approach for estimating bad debts focuses on

current year's credit sales

In a bank reconciliation, an outstanding check is

deducted from the bank balance

At the beginning of the year, Blocker Company's allowance account has a debit balance of $10,000. This may indicate that the

estimate of uncollectible accounts was too low

The formula for calculating interest on a note is

face value x annual rate x fraction of the annual period

The FIFO inventory method assumes that units remaining in ending inventory are the ___ units purchased

newest

The inventory turnover ratio directly measures ______

the times per period the average inventory balance is sold

Accounts receivable are typically classified as current assets because

they will be converted to cash within 1 year

The definition of inventory includes which of the following items?

-Items held for resale -Items used currently in the production of goods to be sold -Items currently in production for future sale

Which of the following methods are available for costing inventory?

-LIFO -Weighted-average -FIFO -Specific identification

Which of the following are components of internal control?

-Monitoring -Risk assessment -Control environment -Control activities

Published financial statements may be incorrect because of

-errors -fraud

The Sarbanes-Oxley Act applies to

companies that are required to file with the SEC

When the direct write-off method is used, an entry for bad debt expense is required

when the account receivable is determined to be uncollectible

FOB shipping point means title to the goods passes

when they are shipped