ACC 100 Lecture Notes - Lecture 6: Fifo (Computing And Electronics), Cashiering, Weighted Arithmetic Mean

134 views2 pages

ochretoad724

30 Apr 2015

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Chapter 6 inventories and cost of goods sold. Perpetual: detailed records of the cost of each inventory purchases and sale are maintained, cost of goods sold is determined each time a sale occurs, provides better control over inventory. Periodic: detailed records are not kept throughout the period, cost of goods sold determined only at the end of the accounting period when a physical inventory count is taken. Cost of goods sold (cogs) = available goods ending inventory = beginning. Maintaining inventory accuracy: good shelf maintenance, cashiering accuracy, and careful counting will reduce errors, therefore producing better accuracy which reducing errors in counting. Factors that cause counting errors: multiple locations, back/top stock, accurate counting. Inventory costing methods with a period system: valuation is the major problem in accounting for inventories and should be focused on with merchandise inventory. Specific identification method an inventory costing method that relies on matching unit costs with the actual unit sold.

Related Questions

Which of the following statements about a periodic inventory system is true?

a. The increased use of computerized systems has increased the use of periodic systems.

b. The periodic system provides better control over inventories than a perpetual system

c. The company continuously maintained detailed records of the cost of each purchase and sale.

d. Companies determine the cost of goods sold only at the end of the accounting period.

carmineserval589

Periodic inventory system. Each of the following four horizontal lines represents data taken from a separate multiple-step income statement. Insert the missing amounts in the space (empty box) provided. Indicate any net loss by placing brackets around the amount.

Hint: Not all parts of the income statement are shown, so be careful with your arithmetic.

	Beginning Inventory	Purchases	Cost of Goods Available for Sale	Ending Inventory	Cost of Goods Sold
a.	$180,000		$325,000	$80,000

	Sales (Revenue)	Cost of Goods Sold	Gross Profit	Operating Expenses	Net Income
b.	$240,000	$145,000			$32,000

	Revenue (Sales)	Cost of Goods Available for Sale	Ending Inventory	Cost of Goods Sold	Gross Profit	Operating Expenses	Net Income
c.	$515,000	$240,000		$145,000		$225,000	$145,000

. For each question below, circle the best answer from the choices given. (

1 : Under the periodic inventory system the purchases of merchandise are recorded at their selling prices.
a. True b. False

2 : Inventory shrinkage does not include the loss of merchandise through shoplifting.
a. True b. False

3 : Only under the periodic inventory system is a physical count of the inventory necessary.
a. True b. False

4 : It is not possible to have more inventory at the end of a period then at the beginning of a period.
a. True b. False

5) True and false. Indicate whether each of the following is True (T) or False (F). (5 POINTS)

T F 1. US Treasury bills that mature within 120 days are cash equivalents.

T F 2. Financial assets describe not just cash, but all assets that are easily and directly convertible into known amounts of cash.

T F 3. Good cash mgmt. dictates that any cash and checks received each day should be deposited the same day.

T F 4. The income statement approach to estimating Bad debts Expense emphasizes the aging of accounts receivable and the adjustment of the Allowance for Doubtful Accounts account to the level of the estimated uncollectible amount.

T F 5. When I use the allowance method for accounts receivable, I will recognize a Bad Debt Expense at the same time the account is taken off the Accounts Receivable Subsidiary Ledger.

. For each question below, circle the best answer from the choices given.

1. Which of the following items would cause the ending balance on the bank statement to be larger than the ending balance of cash shown in the accounting records (checkbook)?

A) Bank service charges.

B) Deposits in transit.

C) Outstanding checks.

D) NSF check from one of the depositor's customers.

2. When a bank reconciliation has been satisfactorily completed, the only related entries to be made in the companyâs records are:

A) To correct errors made by the bank in recording the dollar amounts of cash transactions during the period.

B) To reconcile items explaining the difference between the balance per books and the balance per bank stmt.

C) To record outstanding checks and bank service charges.

D) To record items explaining the difference between the balance per accounting records and the adj. cash bal.

3. The Allowance for Doubtful Accounts represents:

A) Cash set aside to make up for bad debt losses.

B) The amount of uncollectible accounts written off to date.

C) The difference between total credit sales and collections on credit sales.

D) The difference between the face value of A/R and the net realizable value of A/R.

4. In preparing a bank reconciliation, a service charge shown on the bank statement should be:

A) Added to the balance per the bank statement.

B) Deducted from the balance per the bank statement.

C) Added to the balance per the depositor's records.

D) Deducted from the balance per the depositor's records.

5. During preparation of a bank reconciliation, outstanding checks should be:

A) Added to the balance per the bank statement.

B) Deducted from the balance per the bank statement.

C) Added to the balance per the depositor's records.

D) Deducted from the balance per the depositor's records.

Bank reconciliation. Indicate what effect each situation will have on the bank reconciliation process (Match the situation with the bank reconciliation process below by placing the number of the process next to the situation). Note that there are more situations than processes, so some processes may be used more than once, but not all processes have to be used. Only one process is required for each situation. Hint: Determine if Cash is increasing or decreasing

Process

Deduct from bank balance 2. Add to bank balance

3. Deduct from checkbook balance 4. Add to checkbook balance

Situation

_______ Bank received $2,750 from one of your customers (Terms: Cash in advance)

_______ Bank collection (wire) fee was $15

_______ Check number 111 was outstanding for $55

_______ A $400 check was written, but recorded on the books as $40

_______ Interest received from your bank for the month was $16.55

ceriseraccoon894

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

ACC 100 Lecture Notes - Lecture 6: Fifo (Computing And Electronics), Cashiering, Weighted Arithmetic Mean

Document Summary

Get access

Related Documents

ACC 100 Chapter Notes - Chapter 5: Perpetual Inventory, Accounts Payable, Gross Profit

ACC 100 Lecture Notes - Accounts Receivable, Accounts Payable, Aror

ACC 100 Chapter Notes - Chapter 6: Uptodate, Fifo (Computing And Electronics), Weighted Arithmetic Mean

Related Questions