1. In order t o pay the least income tax possible in periods ofrising inventory costs , the company should use which of followinginventory costing methods ?
A. Average cost C. Specific identification
B. FIFO D. CIFO
2. The ending physical inventory count revised for adjustmentslisted on the balance sheet as a :
A . Long â term asset.
B. current asset after accounts receivable
C. Current asset immediately after cash .
D. Current asset before accounts receivable.
3. A method of valuing inventory based on the assumption that theoldest goods will be sold first is called the:
A. Specific cost method C. FIFO Method
B. Average cost method D. LIFO Method
4- â¦â¦â¦â¦â¦â¦â¦â¦ helps investors compare a companyâs FinancialStatements from one period to the next:
A.Consistency C. Objectivity
B.Entity D. Reliability
5. Change From LIFO to FIFO over two accounting periods could beviewed as violation of what accounting concept or principle ?
A. Entity C. Consistency
B. Materiality D. Conservatism
6. Cost of goods sold is shown on the :
A. Statement of retained earnings
B. Balance sheet as asset
C. Income statement before gross profit
D. Income Statement after gross profit
A. Average cost C. Specific identification
B. FIFO D. CIFO
2. The ending physical inventory count revised for adjustmentslisted on the balance sheet as a :
A . Long â term asset.
B. current asset after accounts receivable
C. Current asset immediately after cash .
D. Current asset before accounts receivable.
3. A method of valuing inventory based on the assumption that theoldest goods will be sold first is called the:
A. Specific cost method C. FIFO Method
B. Average cost method D. LIFO Method
4- â¦â¦â¦â¦â¦â¦â¦â¦ helps investors compare a companyâs FinancialStatements from one period to the next:
A.Consistency C. Objectivity
B.Entity D. Reliability
5. Change From LIFO to FIFO over two accounting periods could beviewed as violation of what accounting concept or principle ?
A. Entity C. Consistency
B. Materiality D. Conservatism
6. Cost of goods sold is shown on the :
A. Statement of retained earnings
B. Balance sheet as asset
C. Income statement before gross profit
D. Income Statement after gross profit
Related questions
Question 31
Corresponds to CLO 7(c) Rupert Hobby's accounting records showthe following for the year ending December 31, 2014: PurchaseDiscountsâ¦$13,400; Freight-inâ¦$12,000; Purchasesâ¦$450,500;Beginning Inventoryâ¦$35,600; Ending Inventoryâ¦$24,200; PurchaseReturnsâ¦$15,000. Using the periodic inventory system, what is thecost of goods sold?
$445,500 | ||
$469,700 | ||
$433,500 | ||
$461,900 |
3 points
Question 32
Corresponds to CLO 7(d) Bay Company sold $100,000 of merchandisein the month of April, 2013. Returns that month totaled $5,000. BayCompany uses the periodic method to determine ending inventory eachDecember 31. For interim financial statements, cost of goods soldis estimated based on the previous year's gross profit rate. If BayCompany's gross profit rate for 2012 was 60%, what is the cost ofgoods sold for the month of April?
$57,000 | ||
$60,000 | ||
$38,000 | ||
$40,000 |
3 points
Question 33
Corresponds to CLO 8(a) We Love Pets, Inc. has the followinginventory data: January 1, beginning inventory of 50 units at $25;January 10, purchases of 70 units at $27; January 25, purchases of40 units at $28. A physical count of inventory on January 31reveals that there are 45 units on hand. Using the FIFO inventorymethod, cost of goods sold for January is
$3,135 | ||
$3,005 | ||
$2,875 | ||
$1,255 |
3 points
Question 34
Corresponds to CLO 8(b) Party Retailers has the followinginventory data: May 1, beginning inventory of 200 units at $10; May14, purchases of 300 units at $12; May 23, purchases of 250 unitsat $15. A physical count of inventory on May 31 reveals that thereare 300 units on hand. Using the LIFO inventory method, endinginventory for May is
$3,000 | ||
$6,150 | ||
$4,350 | ||
$3,200 |
3 points
Question 35
Corresponds to CLO 8(c) Halting Corporation has the followinginventory data: September 1, beginning inventory of 430 units at$11; September 8, purchases of 350 units at $12; September 21,purchases of 460 units at $14. A physical count of inventory onSeptember 30 reveals that there are 400 units on hand. Using theweighted average inventory method, rounding the unit cost to thenearest penny, what is cost of goods sold for September?
$10,357 | ||
$4,960 | ||
$10,416 | ||
$4,932 |
3 points
Question 36
Corresponds to CLO 8(d) Unleash Corporation is a retaileroperating in an industry currently experiencing high inflation.Unleash wants to show the lowest cost of goods sold on its incomestatement in order to show higher profits. Which inventory costingmethod should Unleash use?
FIFO because cost of goods sold represents the earliestcosts. | ||
Average because cost of goods sold will represent an averageamount. | ||
Specific identification because it involves the actualcosts. | ||
LIFO because cost of goods sold represents the latest costs. |
3 points
Question 37
Corresponds to CLO 9(a) The following balance sheet and incomestatement data is available for Gold River Corporation: Currentassetsâ¦$125,000; Total assetsâ¦$520,000; Net incomeâ¦$345,000;Current liabilitiesâ¦$80,000; Total liabilitiesâ¦$150,000;Stockholders' equityâ¦$370,000; Average common shares outstandingâ¦10,000. What is Gold River's current ratio?
3.47 | ||
1.64 | ||
1.56 | ||
0.83 |
3 points
Question 38
Corresponds to CLO 9(b) The following balance sheet data isavailable for Pinpoint Products: Current assetsâ¦$50,000; Property,plant, and equipment,â¦$70,000â¦Other assetsâ¦$10,000; Currentliabilitiesâ¦$30,000; Long-term liabilitiesâ¦$22,000; Stockholders'equityâ¦$78,000; Average common shares outstanding⦠10,000. What isPinpoint's debt to total assets, shown as a percentage?
60% | ||
45% | ||
67% | ||
40% |
3 points
Question 39
Corresponds to CLO 9(c) The following balance sheet and incomestatement data is available for Frame Manufacturing: Totalassetsâ¦$520,000; Total liabilitiesâ¦$250,000; Stockholders'equityâ¦$270,000; Gross profitâ¦$55,000; Net incomeâ¦$40,000; Averagecommon shares outstanding⦠25,000. What is Frame Manufacturing'searnings per share?
$10.80 | ||
$3.50 | ||
$1.60 | ||
$2.20 |
3 points
Question 40
Corresponds to CLO 9(d) The following financial information isavailable for Maroon Corporation: Sales revenueâ¦$200,000; Cost ofgoods soldâ¦$120,000; Operating expensesâ¦$40,000. What is Maroon'sgross profit rate, shown as a percentage?
20% | ||
80% | ||
60% | ||
40% |
| 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 | ||||||||||
