1) The term F.O.B. means: A) freight order billing. B) freight or bill. C) found on base. D) free on board. 2) A purchase order is used to: A) requisition goods. B) sale goods. C) order goods. D) pay bills. 3) The account used to record the purchase of goods is: A) Purchase Returns and Allowances. B) Purchase Discounts. C) Accounts Payable. D) Purchases. 4) On March 30, Baileys Dog Bakery purchased $1,000 of merchandise on account from the Williams Company. The goods were shipped F.O.B. shipping point. The freight charge of $80 was paid by Williams Company and added to the invoice. The amount to record in the Accounts Payable account is: A) $l,080. B) $l,070. C) $1,000. D) $990. 5) The entry to record a payment on a $900 account within the 1% discount period would include a: A) credit to Purchases for $909. B) debit to Cash for $891. C) debit to Accounts Payable for $891. D) debit to Accounts Payable for $900. 6) A purchase discount was recorded as a credit to the Purchases account - the remainder was correctly recorded. This error will cause: A) net income will be understated. B) net income will be overstated. C) total assets will be overstated. D) None of these are correct. 7) The freight paid on equipment purchased F.O.B. shipping point was debited to the Freight-In account. This error will cause: A) net income will be understated. B) net income will be overstated. C) total assets will be overstated. D) None of these are correct. 8) A purchase discount that was earned and taken was never recorded. This error will cause: A) total assets will be overstated. B) net income will be understated. C) net income will be overstated. D) None of these are correct. 9) Returned merchandise paid for within the discount period for a cash refund. This will be recorded with: A) a credit to an asset. B) a debit to a liability. C) a credit to a liability. D) a debit to an asset. 10) Purchase returns and allowances: A) increase net income. B) have no effect on net income. C) decrease net income. 11) Returned merchandise for credit. The perpetual inventory system is in use. This will: A) decrease a liability and decrease an asset. B) increase a liability and increase an asset. C) increase an expense and increase a liability. D) decrease an expense and decrease a liability 12) Under the perpetual system, the purchase of merchandise is recorded by a(n): A) increase to Cost of Goods Sold; increase to Accounts Payable. B) decrease to Accounts Payable; decrease to Purchases. C) increase to Purchases; increase to Accounts Payable. D) increase to Merchandise Inventory; increase to Accounts Payable. 13) The inventory method where the cost flows tend to follow the physical flows is: A) weighted-average. B) FIFO. C) LIFO. D) All of these answers are correct. 14) The inventory method that matches old costs with current selling prices is: A) specific invoice. B) FIFO. C) weighted-average. D) LIFO. 15) The advantage of the LIFO method is: A) an equal cost is assigned to each unit so net income does not fluctuate as much as with other methods. B) it matches current selling prices and current costs. C) flow of goods and flow of costs are the same. D) old costs are matched against current income. 16) The principle of consistency states that: A) by using the same method, the financial statements are more meaningful. B) a company should switch from LIFO to FIFO every other period. C) changes in accounting methods should occur from one fiscal period to the next. D) a company cannot change from one inventory valuation method to another. 17) If the ending inventory is overstated, A) gross profit is overstated. B) cost of goods sold is overstated. C) gross profit is understated. D) None of these answers are correct. 18) The ending inventory for this year is understated. This error would cause: A) the periods net income will be understated. B) the period end assets will be overstated. C) the periods net income will be overstated. D) None of these are correct. 19) A business is using LIFO when FIFO should have been used during an inflationary period. This error would cause: A) the periods net income to be overstated. B) the period end assets to be understated. C) the period end assets to be overstated. D) None of these are correct. 20) Which of the following is an example of a land improvement? A) Parking lot B) Driveway C) Sprinkler system D) All of these answers are correct. 21) Which depreciation method deducts residual value when computing depreciation expense? A) Units-of-production B) Straight-line C) Double-declining-balance D) Both a and b are correct. 22) Capital expenditures would include: A) extraordinary repairs. B) additions. C) betterments. D) All of these answers are correct. 23) Greetings Online disposed of a van that cost $22,000 with accumulated depreciation o $15,000. The journal entry would be to: A) debit Accumulated Depreciation $15,000; debit Depreciation Expense $7,000; credit Van $22,000. B) debit Loss Disposal of Plant Asset $7,000; debit Accumulated Depreciation $15,000; credit Van $22,000. C) debit Accumulated Depreciation $15,000; credit Van $15,000. D) None of these answers are correct. 24) All of the following are intangible assets except: A) organization costs. B) goodwill. C) franchise. D) equipment. 25) When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause: A) the periods net income will be understated. B) the period end assets will be understated. C) the periods net income will be overstated. D) None of these are correct