ACCT1501 Lecture Notes - Lecture 9: Debits And Credits, Inventory Control, Internal Control

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21 Jul 2018

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Are a record-keeping choice, not a reporting choice. This system maintains continuous records on the flow of units of inventory on all transactions (the balances for inventory and cogs are always in the accounting system. >beginning cost (often supported by physical count: internal control) + inventory acquired for the period (often supported by physical records) =ending inventory cost (supported by physical count (internal control) Uses dr inventory shortage expense + cr inventory" to record loss in inventory. Pros + cons: pro: provides better internal control losses are easily determined, con: very costly to constantly keep track of goods, especially if a company sells large quantities of low value goods, periodic method. This system determines inventory by physical count at the end of period and. Cogs is determined as opening inventory + purchases closing. The company will not have records of how much inventory should be on hand.

Related Questions

Answers to the 30multiple choice questions					2 points each, 30questions, for 60 point total
			60 points
	< please record	1)	From an internal control standpoint, the asset mostsusceptible to improper diversion and use is
	answer here	a.	prepaid insurance.
		b.	cash.
		c.	Equipment
		d.	Investments

		2)	Jolene is warehouse custodian and alsomaintains the accounting record of the inventory held at thewarehouse. An assessment of this situation indicates
		a.	documentation procedures are violated.
		b.	independent internal verification is violated.
		c.	segregation of duties is violated.
	< please record	d.	establishment of responsibility is violated.
	answer here
		3)	Internal control is defined, in part, as a planthat safeguards
		a.	all balance sheet accounts.
		b.	assets.
		c.	liabilities.
		d.	capital stock.

		4)	The control principle related to nothaving the same person authorize and pay for goods is known as
		a.	establishment of responsibility.
		b.	independent internal verification.
	< please record	c.	segregation of duties.
	answer here	d.	rotation of duties.

		5)	Two individuals at a retail store work thesame cash register. You evaluate this situation as
		a.	a violation of establishment of responsibility.
		b.	a violation of segregation of duties.
		c.	supporting the establishment of responsibility.
	< please record	d.	supporting internal independent verification.
	answer here
		6)	Having different individuals receive cash,record cash receipts, and hold the cash is an example of
		a.	establishment of responsibility.
		b.	segregation of duties.
		c.	documentation procedures.
		d.	independent internal verification.

		7)	An adjusting entry is not required for
		a.	outstanding checks.
		b.	collection of a note by the bank.
		c.	NSF checks.
		d.	bank service charges.

		8)	If a check correctly written and paid bythe bank for $591 is incorrectly recorded on the company's booksfor $519,
		the appropriate treatment on the bankreconciliation would be to
		a.	deduct $72 from the book's balance.
		b.	add $72 to the book's balance.
		c.	deduct $72 from the bank's balance.
		d.	deduct $591 from the book's balance.

		9)	During 2013, Parker Enterprises generatedrevenues of $60,000. The company's expenses were as follows:
			cost of goods sold of $30,000, operatingexpenses of $12,000 and a loss on the sale of equipment of$2,000.
		Parker's gross profit is:
		a.	$16,000.00
		b.	$18,000.00
		c.	$30,000.00
		d.	$60,000.00

		10)	A primary difference between a periodicand perpetual inventory system is that a periodic system:
		a.	determines the inventory on hand only at the end ofthe accounting period.
		b.	provides better control over inventories.
		c.	records the cost of goods sold after each saletransaction.
		d.	keeps a record showing the merchandise inventory onhand at all times.

		11)	A decline in a company's gross profitcould be caused by all of the following except:
		a.	selling products using a lower markup.
		b.	clearance of discontinued inventory.
		c.	paying lower prices to its suppliers.
		d.	increasing competition resulting in a lower sellingprice.

		12)	South Company uses the perpetual inventorysystem. South's goods in transit at December 31 include:
			Sales made by South	Purchases made by South
			(1) FOB destination	(3) FOB destination
			(2) FOB shipping point	(4) FOB shipping point
			Which itemsshould be included in South's inventory at December 31?
			a. (2) and (3)
			b. (1) and (4)
			c. (1) and (3)
			d. (2) and (4)

		13)	In periods of rising prices, the inventorymethod which results in the greatest net income is the:
		a.	LIFO method.
		b.	FIFO method.
		c.	Weighted Average method.
		d.	Lower of Cost or Market method.

		14)	The following information was available for RawleyCompany at December 31, 2008:
			inventory (Jan .01) $80,000; inventory (Dec. 31)$120,000; cost of goods sold $600,000;
			accounts receivable $73,000; and sales$900,000.
			Rawley's inventory turnover in 2008 was:
		a.	9.00 times.
		b.	7.50 times.
		c.	6.00 times.
		d.	5.00 times.

		15)	A petty cash fund of $200 is replenishedwhen the fund contains $5 in cash and receipts for $193.
		The entry to replenish the fund would:
		a.	credit Cash Over and Short for $2.
		b.	credit Miscellaneous Revenue for $2.
		c.	debit Cash Over and Short for $2.
		d.	debit Miscellaneous Expense for $2.

		16)	An item is considered material if
		a.	it doesn't costs a lot of money.
		b.	it is of a tangible good intended for re-sale.
		c.	it is likely to influence the decision of aninvestor or creditor.
		d.	the cost of reporting the item is greater than itsbenefits.

		17)	Receivables might be sold to
			a. lengthen the cash-to-cash operating cycle.
			b take advantage of deep discounts on the cashrealizable value of receivables.
			c. generate cash quickly.
			d. finance companies at an amount greater than cashrealizable value.

		18)	If the amount of uncollectible accountexpense is understated at year end:
		a.	net income will be understated.
		b.	stockholders' equity will be understated.
		c.	allowance for doubtful accounts will be overstated.
		d.	net accounts receivable will be overstated.

		19)	A debit balance in the Allowance for DoubtfulAccounts
		a.	is the normal balance for that account.
		b.	indicates that actual bad debt write-offs haveexceeded previous provisions for bad debts.
		c.	indicates that actual bad debt write-offs have beenless than what was estimated.
		d.	cannot occur if the percentage of sales method ofestimating bad debts is used.

		20)	Bad Debts Expense is considered
		a.	an avoidable cost in doing business on a credit basis.
		b.	an internal control weakness.
		c.	a necessary risk of doing business on a credit basis.
		d.	avoidable unless there is a recession.

		21)	The best managed companies will have
		a.	no uncollectible accounts.
		b.	a very strict credit policy.
		c.	a very lenient credit policy.
		d.	some accounts that will prove to be uncollectible.

		22)	Two methods of accounting for uncollectibleaccounts are the
		a.	allowance method and the accrual method.
		b.	allowance method and the net realizable method.
		c.	direct write-off method and the accrual method.
		d.	direct write-off method and the allowance method.

		23)	When the allowance method of accountingfor uncollectible accounts is used, Bad Debts Expense isrecorded
		a.	in the year after the credit sale is made.
		b.	in the same year as the credit sale.
		c.	as each credit sale is made.
		d.	when an account is written off as uncollectible.

		24)	Allowance for Doubtful Accounts on the balancesheet
		a.	is offset against total current assets.
		b.	increases the cash realizable value of accountsreceivable.
		c.	appears under the heading "Other Assets."
		d.	is offset against accounts receivable.

		25)	In reviewing the accounts receivable, thecash realizable value is $14,000 before the write-off of a $1,500account.
		What is the cash realizable value after thewrite-off?
		a.	$1,500
		b.	$12,500
		c.	$14,000
		d.	$15,500

		26)	The maturity value of a $60,000, 10%, 60-day notereceivable dated July 3 is
		a.	$60,000
		b.	$61,000
		c.	$66,000
		d.	$70,000

		27)	The interest on a $10,000, 10%, 1-year notereceivable is
		a.	$1,000
		b.	$10,000
		c.	$10,100
		d.	$11,000

		28)	The maturity value of a $60,000, 8%, 3-month notereceivable is
		a.	$60,400
		b.	$60,480
		c.	$61,200
		d.	$64,800

		29)	Notes receivable are recorded in the accounts at
		a.	cash (net) realizable value.
		b.	face value.
		c.	gross realizable value.
		d.	maturity value.

		30)	Which of the following are also called tradereceivables?
		a.	Accounts receivable
		b.	Other receivables
		c.	Advances to employees
		d.	Income taxes refundable

indigocoyote311

17 accounting 1 questions! HELP

9. The following amounts and costs of platters were availablefor sale by Corpus Christy Ceramics during 2016:

Beginning inventory	10 units at $41
First purchase	15 units at $55
Second purchase	30 units at $70
Third purchase	25 units at $65

Corpus Christy Ceramics has 35 platters on hand at the end ofthe year.

What is the dollar amount of inventory at the end of the yearaccording to the weighted-average cost method?

Select one:

A. $4,340

B. $9,920

C. $3,465

D. $6,200

32. Santa Fe Corporation uses the perpetual inventory method. OnMarch 1, it purchased $60,000 of merchandise inventory, terms 2/10,n/30. On March 3, Santa Fe returned goods (not damaged) that cost$6,000. On March 9, Santa Fe paid the supplier.

On March 9, Santa Fe should credit:

Select one:

A. Purchase discounts for $1,200

B. Purchase discounts for $1,080

C. Inventory for $1,080

D. Inventory for $1,200

33. Rocky Company has beginning equity of $600,000, net incomeof $100,000, dividends of $60,000 and investments by owners inexchange for stock of $20,000. Its ending equity is:

Select one:

A. $660,000

B. $480,000

C. $536,000

D. $446,000

35. On September 1, 2016, Chopper, Inc. reported RetainedEarnings of $272,000. During the month of September, Choppergenerated revenues of $40,000, incurred expenses of $24,000,purchased equipment for $10,000 and paid dividends of $12,000.

What is the balance in Retained Earnings on September 30,2016?

Select one:

A. $272,000 debit

B. $276,000 credit

C. $ 16,000 credit

D. $274,000 credit

36. Savannah Company purchases $120,000 of inventory during theperiod and sells $36,000 of it for $60,000. Beginning of the periodinventory was $6,000.

What is the companyâs inventory balance to be reported on itsbalance sheet at year end?

Select one:

A. $36,000

B. $90,000

C. $ 4,000

D. $ 6,000

37. Assuming rising prices, which method will give the highestdollar value for cost of goods sold on the income statement?

Select one:

A. FIFO

B. Average Cost

C. LIFO

D. All of these give equal values for cost of goods sold

38. Kali Company began the period with $20,000 in inventory. Thecompany also purchased an additional $20,000 of inventory andreturned $2,000 for a full credit. A physical count of theinventory at yearâend revealed an inventory on hand of $16,000.What was Kaliâs cost of goods sold for the period?

Select one:

a. $50,000

b. $22,000

c. $48,000

d. $16,000

39. The periodic inventory system differs from the perpetualinventory system:

Select one:

because the periodic system is not compatible with moderntechnology.

because the periodic system continually updates inventory, whilethe perpetual inventory system only updates inventory at the end ofthe period.

because the perpetual system continually updates inventory,while the periodic inventory system only updates inventory at theend of the period.

because the periodic system is more complex and costly.

40. Which one of the following is included in currentassets?

Select one:

A. Common stock

B. Accounts receivable

C. Taxes payable

D. Automobiles

41. For the balance sheet to be in balance, the following mustexist:

Select one:

Total assets must be less than total liabilities

Total assets must be greater than total liabilities

Total assets must equal total liabilities plus stockholders'equity

Total liabilities must equal total stockholders' equity

43. Using a perpetual inventory system, the buyerâs journalentry to record the freight costs includes a:

Select one:

A. Debit to Purchases

B. Debit to Inventory

C. Debit to Freight In

D. Debit to Cost of Goods Sold

44. Joshua records purchases at invoice price and uses theperpetual inventory system. On July 5, Joshua returned $6,000 ofgoods purchased on account to the seller.

How would Joshua record this transaction?

Select one:

Accounts Payable		6,000
	Purchases		6,000

Accounts Receivable		6,000
	Inventory		6,000

Accounts Payable		6,000
	Inventory		6,000

Cash		6,000
	Purchases		6,000

45. Smith & Sons purchased $5,000 of merchandise from theClaremont Company with terms of 3/10, n/30. How much discount isSmith & Sons entitled to take if it pays within the alloweddiscount period of 10 days?

Select one:

$100

$50

$300

$150

46. The accounting record for Max III Company reported thefollowing selected information:

Operating Expenses	$180,000
Sales Returns and Allowances	52,000
Sales Discounts	24,000
Sales Revenue	700,000
Cost of Goods Sold	268,000

Determine Max III Company's gross profit.

Select one:

A. $332,000

B. $280,000

C. $308,000

D. $356,000

48. Using a a perpetual inventory system, the sellerâs journalentry to record the payment for merchandise, received from thebuyer, within the discount period includes a:

Select one:

A. Debit to Accounts Receivable

B. Debit to Cost of Goods Sold

C. Credit to Sales Discounts

D. Debit to Sales Discounts

49.Geraldoâs Groceries purchased milk cartons at an invoiceprice of $6,000 and terms of 2/10, n/30. On arrival of the goods,Geraldoâs realized that half of the milk was past the expirationdate, and returned them immediately to the supplier.

If Geraldoâs pays the remaining amount of the invoice within thediscount period, the amount paid should be:

Select one:

A. $2,880

B. $5,880

C. $2,940

D. $6,000

50. Which one of the following is not a current liability?

Select one:

A. Wages payable

B. Accounts payable

C. Wage expense

D. Taxes payable

rubymacaw554

Dazzle, Inc. produces beads for jewelry making use. Thefollowing information summarizes production operations and salesactivities for June. The journal entry to record June sales is:

Direct materials used	$87,000
Direct labor used	160,000
Predetermined overhead rate(based on direct labor)	155%
Goods transferred to finishedgoods	432,000
Cost of goods sold	444,000
Credit sales	810,000

a.Debit Accounts Receivable $810,000; credit Cost of Goods Sold$810,000.

b.Debit Accounts Receivable $810,000; credit Sales $366,000;credit Finished Goods Inventory $444,000.

c.Debit Cost of Goods Sold $444,000; credit Sales $444,000.

d.Debit Finished Goods Inventory $444,000; debit Sales $810,000;credit Accounts Receivable $810,000; credit Cost of Goods Sold$444,000.

e.Debit Accounts Receivable $810,000; credit Sales $810,000;debit Cost of Goods Sold $444,000; credit Finished Goods Inventory$444,000.

2. A process cost summary is amanagerial accounting report that describes all but which of thefollowing:

a.The gross profit earned on the sale of products.

b.The equivalent units of production by the department.

c.How the costs were assigned to the output.

d.Physical transfers for a department.

e.The costs charged to a department.

3. During January, the productiondepartment of a process operations system completed and transferredto finished goods a total of 78,000 units. At the end of January,9,000 additional units were in process in the production departmentand were 65% complete with respect to labor. The beginninginventory included labor cost of $37,100 and the productiondepartment incurred direct labor cost of $294,300 during January.Compute the direct labor cost per equivalent unit for thedepartment using the weighted-average method.

a.$6.34.

b.$3.77.

c.$3.51.

d.$4.25.

e.$3.95.

4.Which of the following is thebest explanation for why it is necessary to calculate equivalentunits of production in a process costing environment?

a.In most manufacturing environments, it is not possible toconduct a physical count of units.

b.Companies often use a combination of a process costing and joborder costing systems.

c.In most process costing systems, direct materials are added atthe beginning of the process while conversion costs are addedevenly throughout the manufacturing process.

d.All of the work to make a unit 100% complete and ready to moveto the next stage of production or to finished goods inventory maynot have been completed in a single time period.

e.In most cases, there is no difference between physical unitsand equivalent units of production.

5.The following refers to unitsprocessed by a breakfast cereal maker in August. Compute the totalequivalent units of production with respect to conversion for Julyusing the weighted-average inventory method.

	Tons of Product	Percentof Conversion Added
Beginning Work in Process	230,000	60%
Goods started	570,000	100%
Goods completed	620,000	100%
Ending Work in Process	180,000	70%

a.758,000

b.800,000

c.620,000

d.746,000

e.884,000

6.During December, the productiondepartment of a process operations system completed and transferredto finished goods a total of 65,000 units of product. At the end ofMarch, 15,000 additional units were in process in the productiondepartment and were 80% complete with respect to materials. Thebeginning inventory included materials cost of $57,500 and theproduction department incurred direct materials cost of $183,000during December. Compute the direct materials cost per equivalentunit for the department using the weighted-averagemethod.

a.$3.70.

b.$2.38.

c.$2.82.

d.$3.12.

e.$4.79.

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ACCT1501 Lecture Notes - Lecture 9: Debits And Credits, Inventory Control, Internal Control

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