IZS4. Cipson Furniture's bank assesses a 3% service charge What journal entry does Gipson make when recording these sales? A) Cash on transactions using national credit 679,000 21,000 679,000 700,000 Loss on Sale of Receivables Sales Revenue 700,000 679,000 679,000 21,000 700,000 cash salesReceiwa21.9 B) Cash C) Cash Sales Revenue Gain on Sale of Receivables 679,000 21,000 D) Cash Service Charge Expense Sales Revenue The direct write-off method of accounting for bad debts A) B) C) D) 02. uses an allowance account. uses a contra asset account. does not require estimates of bad debt losses. is the preferred method for financial reporting under generally accepted accountin 03. A failure to adjust the accounts at the end of the accounting period for estimated of the following effects on the financial statements? Total Assets Stockholders Equity Net Income 0 Understated Overstated Understated Overstated Understated Understated Overstated Overstated A) Understated B) Understated C) Overstated D) Overstated A debit balance in the Allowance for Doubtful Accounts A) is the normal balance for that account. B) indicates that actual bad debt write-offs have exceeded previous provisions C) indicates that actual bad debt write-offs have been less than what was estim D) cannot occur if the percentage of receivables method of estimating bad deb 05 Allowing only the company treasurer to sign payel I) eparation of duties C other controls. company's lprcessed by the bank for a company's $491 utility bill was incorrectly A)add $72 to the book's balance. D) establishment of responsibility o Ian EFT correcel y Fassi9, appropriate for 729. the appropriate treatment on the bank reconciliation would be to subtract $72 from the book's balance C) ) deduet $72 from the bank's balance. D) deduct $491 from the book's balance Notification by the bank that a make the following adjusting entry A) Accounts Receivable 07. customer f kjnst tha s a deposted customer check was returned NSF requires that hu Cash Accounts Receivable Accounts Receivable B) Cash C) Miscellaneous Expense D) No adjusting entry is necessary All of the following are examples of internal control procedures exceet A) using pre-numbered documents B) reconciling the bank statement C) customer satisfaction surveys. 0S. D) insistence that employees take vacations. ted employee for over 10 years. He is responsible for ordering merchan iple, if any, is bertory items and authorizing the payment for these items. Which inte A) None, Ron has proven to be trustworthy and Establishment of responsibilities. Segregation of duties. has enough experience to do a good job. B) Documentation procedures. C) D) O. The situation that requires a departure from the cost basis of accounting to the lower of cost or in valuing inventory is necessitated by A) B) a decrease in the value of the inventory. an increase in selling price. an increase in the value of the inventory. a desire for more profit. C) D) Camara Company reported the following for 2018: beginning inventory $80,000; ending in $120,000; cost of goods sold $630,000; and sales $900,000. Camara's days in inventory in A) 40.6 days. B) 46.2 days. C) 57.9 days. ) 68.9 days. Two companies report the same cost of goods avsilable fs harleer method. If the price of goods has increased during A) LIFO will have the higher ending inventoy B) FIFO will have the higher cost of goods sold C) FIFO will have the higher ending D) LIFO will have the lower cost ch employs a different invemory e ber 13. An inventory A) cost flow assumption is used by most companies it is required by the income tax reguletion B)even when there is no change in the parchase C) only when the physical flow of goods cannot D) because price of inventory usually change, and tracking which units have been sold is diffieuls 14. Which statement is falre? Taking a physical inventory involves actually counting, welghing, or mensuring inventory on hand B) No matter whether a periodic or perpetual inventory system is used, all companies need to perform a physical inventory count at the end of each accounting period. C) Since system, a year-end physical inventory count is not necessary when using the perpetual inventory system. Inventory and cost of goods sold are recorded as sales are made in a perpetual inventory D) Companies that use a periodic inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period 5. Which of the following should net be included on the year-end balance sheet inventory of a company? A) Goods held on consignment from another company B) Goods in transit from another company shipped FOB shipping point. C) Goods shipped on consignment to another company. D) All of these answer choices should be ineluded. 6. Which of the following is a true statement about inventory systems? A) B) C) Periodic inventory systems require more detailed inventory records. Perpetual inventory systems require more detailed inventory records. A periodic system requires cost of goods sold be determined after each sale. D) A perpetual system determines cost of goods sold only at the end of the accounting period. Which of the following statements is true regarding a merchant's gross profit rate? A) The gross profit rate can be improved by decreasing and/or controlling operating expenses and other non-operating costs B) The gross profit rate does not vary across industries. Discount stores with high merchandise sales volume generally have higher gross profit rates. ) If a merchant's gross profit rate has been increasing, this suggests the merchant may have begun selling products with a higher markup. Periodic inventory systems provide better control over inventories than perpetual inventory system Computers and electronic scanners allow more companies to use a perpetual inventory system. Freight-in is debited to Inventory when a perpetual inventory system is used. Regardless of the inventory system that is used, companies should take a physical inventory cou ich statement is incorrect? 47 IZS4. Cipson Furniture's bank assesses a 3% service charge What journal entry does Gipson make when recording these sales? A) Cash on transactions using national credit 679,000 21,000 679,000 700,000 Loss on Sale of Receivables Sales Revenue 700,000 679,000 679,000 21,000 700,000 cash salesReceiwa21.9 B) Cash C) Cash Sales Revenue Gain on Sale of Receivables 679,000 21,000 D) Cash Service Charge Expense Sales Revenue The direct write-off method of accounting for bad debts A) B) C) D) 02. uses an allowance account. uses a contra asset account. does not require estimates of bad debt losses. is the preferred method for financial reporting under generally accepted accountin 03. A failure to adjust the accounts at the end of the accounting period for estimated of the following effects on the financial statements? Total Assets Stockholders Equity Net Income 0 Understated Overstated Understated Overstated Understated Understated Overstated Overstated A) Understated B) Understated C) Overstated D) Overstated A debit balance in the Allowance for Doubtful Accounts A) is the normal balance for that account. B) indicates that actual bad debt write-offs have exceeded previous provisions C) indicates that actual bad debt write-offs have been less than what was estim D) cannot occur if the percentage of receivables method of estimating bad deb 05 Allowing only the company treasurer to sign payel I) eparation of duties C other controls. company's lprcessed by the bank for a company's $491 utility bill was incorrectly A)add $72 to the book's balance. D) establishment of responsibility o Ian EFT correcel y Fassi9, appropriate for 729. the appropriate treatment on the bank reconciliation would be to subtract $72 from the book's balance C) ) deduet $72 from the bank's balance. D) deduct $491 from the book's balance Notification by the bank that a make the following adjusting entry A) Accounts Receivable 07. customer f kjnst tha s a deposted customer check was returned NSF requires that hu Cash Accounts Receivable Accounts Receivable B) Cash C) Miscellaneous Expense D) No adjusting entry is necessary All of the following are examples of internal control procedures exceet A) using pre-numbered documents B) reconciling the bank statement C) customer satisfaction surveys. 0S. D) insistence that employees take vacations. ted employee for over 10 years. He is responsible for ordering merchan iple, if any, is bertory items and authorizing the payment for these items. Which inte A) None, Ron has proven to be trustworthy and Establishment of responsibilities. Segregation of duties. has enough experience to do a good job. B) Documentation procedures. C) D) O. The situation that requires a departure from the cost basis of accounting to the lower of cost or in valuing inventory is necessitated by A) B) a decrease in the value of the inventory. an increase in selling price. an increase in the value of the inventory. a desire for more profit. C) D) Camara Company reported the following for 2018: beginning inventory $80,000; ending in $120,000; cost of goods sold $630,000; and sales $900,000. Camara's days in inventory in A) 40.6 days. B) 46.2 days. C) 57.9 days. ) 68.9 days. Two companies report the same cost of goods avsilable fs harleer method. If the price of goods has increased during A) LIFO will have the higher ending inventoy B) FIFO will have the higher cost of goods sold C) FIFO will have the higher ending D) LIFO will have the lower cost ch employs a different invemory e ber 13. An inventory A) cost flow assumption is used by most companies it is required by the income tax reguletion B)even when there is no change in the parchase C) only when the physical flow of goods cannot D) because price of inventory usually change, and tracking which units have been sold is diffieuls 14. Which statement is falre? Taking a physical inventory involves actually counting, welghing, or mensuring inventory on hand B) No matter whether a periodic or perpetual inventory system is used, all companies need to perform a physical inventory count at the end of each accounting period. C) Since system, a year-end physical inventory count is not necessary when using the perpetual inventory system. Inventory and cost of goods sold are recorded as sales are made in a perpetual inventory D) Companies that use a periodic inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period 5. Which of the following should net be included on the year-end balance sheet inventory of a company? A) Goods held on consignment from another company B) Goods in transit from another company shipped FOB shipping point. C) Goods shipped on consignment to another company. D) All of these answer choices should be ineluded. 6. Which of the following is a true statement about inventory systems? A) B) C) Periodic inventory systems require more detailed inventory records. Perpetual inventory systems require more detailed inventory records. A periodic system requires cost of goods sold be determined after each sale. D) A perpetual system determines cost of goods sold only at the end of the accounting period. Which of the following statements is true regarding a merchant's gross profit rate? A) The gross profit rate can be improved by decreasing and/or controlling operating expenses and other non-operating costs B) The gross profit rate does not vary across industries. Discount stores with high merchandise sales volume generally have higher gross profit rates. ) If a merchant's gross profit rate has been increasing, this suggests the merchant may have begun selling products with a higher markup. Periodic inventory systems provide better control over inventories than perpetual inventory system Computers and electronic scanners allow more companies to use a perpetual inventory system. Freight-in is debited to Inventory when a perpetual inventory system is used. Regardless of the inventory system that is used, companies should take a physical inventory cou ich statement is incorrect? 47