1) The term "FOB Shipping Point" means: a. b. c. d. The seller records transportation-out cost. The seller pays the shipping cost. The buyer pays the shipping cost. The buyer records transportation cost as an expense. 2) Which of the following is considered a product cost? a. Utility expense for the current month. b. Salaries paid to employees of a retailer c. Transportation cost on goods shipped to customers. d. Transportation cost on goods received from suppliers. 3) Which of the following is not a commonly accepted internal control activity? a) Hiring only college graduates b) Separation of duties c) Requiring employee absences d) Using prenumbered documents 4) Which of the following statements concerning internal controls is true? a. Internal accounting controls are limited to the policies and procedures used to b. Strong internal controls provide reasonable assurance that the objectives of a c. The control procedure, separation of duties, prohibits the employment of a d. Internal administrative controls are designed to limit the amount of funds spent on protect the company from embezzlement. company will be accomplished. husband and wife or other closely related parties within the same company investments Which of the following is not a generally recognized internal control procedure? a. b. c. d. 5) Requiring regular vacations for certain employees Establishment of clear lines of authority Customer service comment cards Having employees covered by a fidelity bond Abbott Company purchased $6,500 of merchandise inventory on account. Abbott uses the perpetual inventory method. How does this transaction affect the financial statements? a. Increase cost of goods sold and increase accounts payable b. Increase inventory and increase accounts payable. c. Decrease accounts payable and decrease purchases. d. Decrease accounts payable and decrease inventory 6)