26. The Income Summary account is used: (Points : 2)To adjust and update asset and liability accountsTo close the revenu...
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26. The Income Summary account is used: (Points : 2)
To adjust and update asset and liability accounts
To close the revenue and expense accounts
To determine the appropriate dividend amount
In some situations to replace the income statement
To replace the retained earnings account in some businesses
27. A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? (Points : 2)
$75
$125
$175
$250
$325
28. A trial balance prepared after adjustments have been recorded is called a(n): (Points : 2)
Balance sheet
Adjusted trial balance
Unadjusted trial balance
Classified balance sheet
Unclassified balance sheet
29. The accrual basis of accounting: (Points : 2)
Is generally accepted for external reporting since it is more useful for most business decisions
Is flawed because it gives complete information about cash flows
Recognizes revenues when received in cash
Recognizes expenses when paid in cash
Eliminates the need for adjusting entries at the end of each period
30. The main purpose of adjusting entries is to: (Points : 2)
Record external transactions and events
Record internal transactions and events
Recognize assets purchased during the period
Recognize debts paid during the period
Correct errors
31. Multiple-step income statements: (Points : 2)
Are required by the FASB
Contain more detail than a simple listing of revenues and expenses
Are required for the perpetual inventory system
List cost of goods sold as an operating expense
Can only be used in perpetual inventory systems
32. The full disclosure principle: (Points : 2)
Requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income
Requires that companies use the same accounting method for inventory valuation period after period
Is not subject to the materiality principle
Is only applied to retailers
Is also called the consistency principle
33. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: (Points : 2)
$3,725.00
$3,925.00
$3,995.00
$4,000.50
$4,075.00
34. A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000. (Points : 2)
Sales: $136,000; Gross Profit: $111,000
Sales: $136,000; Gross Profit: $85,000
Sales: $85,000; Gross Profit: $136,000
Sales: $111,000; Gross Profit: $136,000
Sales: $60,000; Gross Profit: $25,000
35. Days' sales in inventory: (Points : 2)
Is also called days' stock on hand
Focuses on average inventory rather than ending inventory
Is used to measure solvency
Is calculated by dividing cost of goods sold by ending inventory
Is a substitute for the acid-test ratio
36. Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity? (Points : 2)
$55,000
$110,000
$165,000
$220,000
Cannot be determined from the given information
37. A remittance advice is: (Points : 2)
An explanation for a payment by check
A bank statement
A voucher
An EFT
A cancelled check
38. The impact of technology on internal controls includes which of the following: (Points : 2)
Reduced processing errors
Elimination of the need for regular audits
Elimination of the need to bond employees
More efficient separation of duties
Elimination of fraud
39. A company had $43 missing from petty cash which was not accounted for by petty cash receipts. The correct procedure is to: (Points : 2)
Debit Cash Over and Short for $43
Credit Cash Over and Short for $43
Debit Petty Cash for $43
Credit Petty Cash for $43
Credit Cash for $43
40. Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. The inventory turnover equals: (Points : 2)
0.21
4.51
4.79
76.1 days
80.9 days
41. Cash equivalents: (Points : 2)
Are short-term, highly liquid investments
Include 6-month CDs
Include checking accounts
Are recorded in petty cash
Include money orders
42. Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses? (Points : 2)
FIFO
Weighted average
LIFO
Specific identification
First In Still Here
43. A seller of goods or services, usually a manufacturer or wholesaler is known as a: (Points : 2)
Vendor
Payee
Vendee
Creditor
Debtor
44. A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold? (Points : 2)
$120
$124
$128
$130
$140
45. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals: (Points : 2)
$200
$1,564
$1,568
$1,600
$1,800
46. The conservatism principle: (Points : 2)
Requires that when there are more than one equally likely estimate of amounts expected to be received or paid in the future, then the less optimistic amount should be used
Requires that a company use the same accounting methods period after period
Requires that revenues and expenses be reported in the period in which they are earned or incurred
Requires that all items of a material nature be included in financial statements
Requires that all inventory items be reported at full cost
47. A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period? (Points : 2)
$1,500,000
$1,275,000
$1,725,000
$1,521,000
$1,479,000
48. ABC Corporation had total quick assets $5,888,000, current assets $11,700,000 and current liabilities $8,000,000. Its acid-test ratio equals: (Points : 2)
0.50
0.68
0.74
1.50
2.20
49. A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they purchased 10 units at $13 per unit. On August 12 they purchased 20 units at $14 per unit. On August 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at August 15 after the sale? (Points : 2)
$140
$160
$210
$380
$590
50. Which of the following is the most serious limitation of internal controls? (Points : 2)
Computer error
Human fraud or human error
Cost-benefit principle
Cybercrime
Management fraud
To adjust and update asset and liability accounts
To close the revenue and expense accounts
To determine the appropriate dividend amount
In some situations to replace the income statement
To replace the retained earnings account in some businesses
27. A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? (Points : 2)
$75
$125
$175
$250
$325
28. A trial balance prepared after adjustments have been recorded is called a(n): (Points : 2)
Balance sheet
Adjusted trial balance
Unadjusted trial balance
Classified balance sheet
Unclassified balance sheet
29. The accrual basis of accounting: (Points : 2)
Is generally accepted for external reporting since it is more useful for most business decisions
Is flawed because it gives complete information about cash flows
Recognizes revenues when received in cash
Recognizes expenses when paid in cash
Eliminates the need for adjusting entries at the end of each period
30. The main purpose of adjusting entries is to: (Points : 2)
Record external transactions and events
Record internal transactions and events
Recognize assets purchased during the period
Recognize debts paid during the period
Correct errors
31. Multiple-step income statements: (Points : 2)
Are required by the FASB
Contain more detail than a simple listing of revenues and expenses
Are required for the perpetual inventory system
List cost of goods sold as an operating expense
Can only be used in perpetual inventory systems
32. The full disclosure principle: (Points : 2)
Requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income
Requires that companies use the same accounting method for inventory valuation period after period
Is not subject to the materiality principle
Is only applied to retailers
Is also called the consistency principle
33. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: (Points : 2)
$3,725.00
$3,925.00
$3,995.00
$4,000.50
$4,075.00
34. A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000. (Points : 2)
Sales: $136,000; Gross Profit: $111,000
Sales: $136,000; Gross Profit: $85,000
Sales: $85,000; Gross Profit: $136,000
Sales: $111,000; Gross Profit: $136,000
Sales: $60,000; Gross Profit: $25,000
35. Days' sales in inventory: (Points : 2)
Is also called days' stock on hand
Focuses on average inventory rather than ending inventory
Is used to measure solvency
Is calculated by dividing cost of goods sold by ending inventory
Is a substitute for the acid-test ratio
36. Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity? (Points : 2)
$55,000
$110,000
$165,000
$220,000
Cannot be determined from the given information
37. A remittance advice is: (Points : 2)
An explanation for a payment by check
A bank statement
A voucher
An EFT
A cancelled check
38. The impact of technology on internal controls includes which of the following: (Points : 2)
Reduced processing errors
Elimination of the need for regular audits
Elimination of the need to bond employees
More efficient separation of duties
Elimination of fraud
39. A company had $43 missing from petty cash which was not accounted for by petty cash receipts. The correct procedure is to: (Points : 2)
Debit Cash Over and Short for $43
Credit Cash Over and Short for $43
Debit Petty Cash for $43
Credit Petty Cash for $43
Credit Cash for $43
40. Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. The inventory turnover equals: (Points : 2)
0.21
4.51
4.79
76.1 days
80.9 days
41. Cash equivalents: (Points : 2)
Are short-term, highly liquid investments
Include 6-month CDs
Include checking accounts
Are recorded in petty cash
Include money orders
42. Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses? (Points : 2)
FIFO
Weighted average
LIFO
Specific identification
First In Still Here
43. A seller of goods or services, usually a manufacturer or wholesaler is known as a: (Points : 2)
Vendor
Payee
Vendee
Creditor
Debtor
44. A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold? (Points : 2)
$120
$124
$128
$130
$140
45. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals: (Points : 2)
$200
$1,564
$1,568
$1,600
$1,800
46. The conservatism principle: (Points : 2)
Requires that when there are more than one equally likely estimate of amounts expected to be received or paid in the future, then the less optimistic amount should be used
Requires that a company use the same accounting methods period after period
Requires that revenues and expenses be reported in the period in which they are earned or incurred
Requires that all items of a material nature be included in financial statements
Requires that all inventory items be reported at full cost
47. A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period? (Points : 2)
$1,500,000
$1,275,000
$1,725,000
$1,521,000
$1,479,000
48. ABC Corporation had total quick assets $5,888,000, current assets $11,700,000 and current liabilities $8,000,000. Its acid-test ratio equals: (Points : 2)
0.50
0.68
0.74
1.50
2.20
49. A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they purchased 10 units at $13 per unit. On August 12 they purchased 20 units at $14 per unit. On August 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at August 15 after the sale? (Points : 2)
$140
$160
$210
$380
$590
50. Which of the following is the most serious limitation of internal controls? (Points : 2)
Computer error
Human fraud or human error
Cost-benefit principle
Cybercrime
Management fraud
