Question
Question 1 (4 points) One advantage to using a perpetual inventory system is that the company never has to physically count the inventory. Question 1
One advantage to using a perpetual inventory system is that the company never has to physically count the inventory.
Question 1 options:True |
False |
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Question 2(4 points)
The weighted-average inventory method will likely result in neither the highest nor the lowest ending inventory.
Question 2 options:True |
False |
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Question 3(4 points)
When calculating accounts receivable turnover, a company would prefer a higher number rather than a lower number (within reason).
Question 3 options:True |
False |
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Question 4(4 points)
When performing a bank reconciliation, checks outstanding are added back to the bank balance.
Question 4 options:True |
False |
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Question 5(4 points)
Usually the quick ratio will be a lower number than the current ratio.
Question 5 options:True |
False |
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Multiple ChoiceSelect the best answer for each of the following questions.
Question 6(4 points)
The bad-debt method that uses the accounts receivable aging report is _______________.
Question 6 options: the percentage-of-sales method |
the bad-debt expense method |
the percentage-of-receivables method |
the direct write-off method |
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Question 7(4 points)
When it is determined that too much money has been set aside for uncollectible accounts, we will _______________.
Question 7 options: credit cash |
debit reserve for uncollectible accounts |
debit accounts receivable |
credit reserve for uncollectible accounts |
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Question 8(4 points)
A customer whose account was previously written off unexpectedly pays us. If we are using the allowance method we would _______________.
Question 8 options: debit reserve for uncollectible accounts and credit cash |
debit cash and credit bad-debt expense |
debit accounts receivable and credit allowance for uncollectible accounts AND debit cash and credit accounts receivable |
debit bad-debt expense and credit cash |
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Question 9(4 points)
When a retailer accepts a bank card (VISA or MasterCard), they will make what entry for the days receipts?
Question 9 options: debit cash and credit sales |
debit accounts receivable and credit sales |
debit cash and debit credit card expense; credit sales |
debit accounts receivable; credit sales, and credit credit card expense |
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Question 10(4 points)
The company prepares, but does not yet pay, its first payroll of the new year. Salaries total $10,000 and 7.65% is withheld from paychecks for FICA tax. Ignore all other payroll deductions. The journal entries will be _______________.
Question 10 options: debit wage expense $10,000 and debit payroll tax expense $765; credit wages payable $9,235 and credit FICA tax payable $1,530 |
debit wage expense $10,000 and credit wages payable $10,000; debit payroll tax expense for $765 and credit FICA tax payable $765 |
debit wage expense $10,000 and credit wages payable 10,000; debit payroll tax expense for $1,530 and credit FICA tax payable $1,530 |
debit wage expense $10,000; credit wages payable $8,470 and FICA tax payable $1,530 |
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Question 11(4 points)
A company buys a $10,000 bond at 102 as an investment. The correct entry is _______________.
Question 11 options: credit investment in bonds and debit cash for $9,800 |
debit investment in bonds and credit cash for $10,200 |
credit investment in bonds and debit cash for $10,200 |
debit investment in bonds and credit cash for $9,800 |
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Question 12(4 points)
A company issues bonds having a stated value of $100,000 for $102,500. At maturity, the company will _______________.
Question 12 options: credit bonds payable for $102,500 |
credit bonds payable for $100,000 |
debit bonds payable for $102,500 |
debit bonds payable for $100,000 |
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Question 13(4 points)
A company uses the percentage-of-receivables method for establishing the bad-debt reserve. They want the reserve balance to equal 0.5% of debts 30 days old or less, 2% of debts aged 31 to 60 days, and 4% of debts aged over 60 days. An aging report shows $780,000 relating to the past month, $232,600 relating to the prior month, and $89,200 relating to more than two months ago. The balance in the reserve account before adjustment is $10,175. What is the adjusting journal entry?
Question 13 options: debit bad-debt expense, credit accounts receivable $1,945 |
debit bad-debt expense, credit allowance for bad debts $1,945 |
debit bad-debt expense, credit allowance for bad debts $12,120 |
debit allowance for bad debts, credit bad-debt expense $1,945 |
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Question 14(4 points)
A company is closing out the accounting period. The inventory balance at the beginning of the period was $222,750, and at the end of the period it was $215,600. Purchases of goods for resale during the period equaled $682,500. What was the cost of goods sold total?
Question 14 options: $675,350 |
$905,250 |
$689,650 |
$682,500 |
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Question 15(4 points)
A merchandising company has beginning inventory of 50 units with a total cost of $500. The following transactions during the month of January: 1/5 bought 10 units at $11.00 each; 1/8 bought 15 units at $11.25 each; 1/15 sold 8 units for $16 each; 1/22 bought 10 units at $11.50 each and sold 12 units for $16.50 each. The ending inventory is $693.75. What inventory costing method is the company using?
Question 15 options: LIFO perpetual |
FIFO |
weighted average |
LIFO periodic |
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Short AnswerPrepare the following journal entries. Dates and descriptions are not required.
Question 16(4 points)
What is the difference between the periodic-inventory and perpetual-inventory methods?
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Question 17(4 points)
Name two costs, in addition to the purchase price, that are added to merchandise inventory cost.
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Question 18(4 points)
What will be the result to inventory values, cost of goods sold, and net income if the LIFO method is used during times of inflation?
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Question 19(4 points)
A company has an accounts receivable balance of $300,000 as of the end of the year. Credit sales for the year totaled $2,000,000. What were the accounts receivable days outstanding as of the end of the year (not average for the year)?
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Question 20(4 points)
How is gross margin or gross profit calculated on a merchandizing company income statement?
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Question 21(4 points)
If a retail store has a sale with everything listed at 30% off, and a rack of clothing is also marked as "an additional 20% off," what is the total discount offered?
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Question 22(4 points)
What does 1/10, n/30 mean?
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Question 23(4 points)
What cash control is compromised when the purchasing manager is one of the authorized check signers?
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Question 24(4 points)
Name at least three out of the four documents that the accounting department should have access to in order to pay an invoice.
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Question 25(4 points)
What item from the companys records must be added to the bank balance when reconciling the bank statement?
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