The company does not does not keep its inventory in a locked warehouse. An assessment of this situation indicates O physical controls is violated. documentation procedures are violated. segregation of duties is violated. independent internal verification is violated. The company does not allow the person who bills customers to handle cash receipts. Which principle of internal control is being applied? Independent internal verification. Segregation of duties. Physical controls. Documentation procedures. 4 49 Which one of the following is not an objective of a system of internal controls? Increase efficiency of operations Safeguard company assets. Understate assets in order to be conservative. Ensure compliance with laws and regulations. 5 45 Which of the following is not an internal control activity for cash? The amount of cash on hand should be kept to a minimum. Banking facilities should be used as much as possible. Employees who have access to cash should be bonded. All payments should be made with currency, not checks. Under accrual accounting, Best Company will record an expense if the company pays cash for an 18-month insurance policy. a liability if Best Company provides service as a credit transaction. Revenue if the company receives cash for services that are provided at a later date. Unearned Revenue if Best Company receives cash for services that are provided at a later date. 7 45 Which of the following is not an internal control procedure for cash? Only designated personnel are authorized to handle cash. Access to cash is limited. Surprise audits of cash on hand should be made occasionally. The same individual receives the cash and pays the bills. 8 49 Which item below is not consistent with accrual accounting? Recording Advertising Expense this period if an advertisement in this period's newspaper is paid during the following period Recording Insurance Expense if an 18-month insurance policy is purchased for cash Recording Unearned Revenue if cash is received for services provided during the next period Recording an expense at the end of the period for the amount of supplies used during the period. 9 4 Which item below results in an increase in assets and revenue? Accrued Revenue Adjusting Entry Accrued Expense Adjusting Entry Prepaid Expense Adjusting Entry Unearned Revenue Adjusting Entry 10 49 Which of the following is a true statement about inventory systems? Periodic inventory systems require more detailed inventory records. A perpetual system determines cost of goods sold after each sale. Perpetual inventory systems require less detailed inventory records. A periodic system requires cost of goods sold be determined after each sale. Great Sound Company just began business and made the following four inventory purchases in June: June 1 100 units @ $40 $ 4,000 June 10 300 units @ $48 14,400 June 15 400 units @ $68 27,200 June 28 200 units @ $92 18,400 1,000 units $64,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is O $11,200 $16,000 $15,500 $21,800 Found Company just began business and made the following four inventory purchases in June: June 1 100 units @ $30 $3,000 June 10 300 units @ $36 10,800 June 15 400 units @ $51 20,400 June 28 200 units @ $69 13,800 1,000 units $48,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO method, the amount allocated to the ending inventory on June 30 is $8,400. O $16,350 O $11,625. O $12,000. Echo Sound Company just began business and made the following four inventory purchases in June: June 1 100 units @ $10 $1,000 June 10 300 units @ $12 3,600 June 15 400 units @ $17 6,800 June 28 200 units @ $23 4,600 1,000 units $16,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the LIFO method, the amount allocated to the ending inventory on June 30 is $3,875. O $5,450 O $4,000. $2,800 Dello Company just began business and made the following four inventory purchases in June: June 1 100 units @ $20 $2,000 June 10 300 units @ $24 7,200 June 15 400 units @ $34 13,600 June 28 200 units @ $46 9,200 1,000 units $32,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to cost of goods sold for June is $24,000. $21,100 $24,250. $26,400. June 1 100 units @ $30 $3,000 June 10 300 units @ $36 10,800 June 15 400 units @ $51 20,400 June 28 200 units @ $69 13,800 1,000 units $48,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO method, the amount allocated to cost of goods sold for June is $34,800. $36,000 $31,650 O $34,875. 16 45 Dello Company just began business and made the following four inventory purchases in June: June 1 100 units @ $20 $ 2,000 June 10 300 units @ $24 7,200 June 15 400 units @ $34 13,600 June 28 200 units @ $46 9,200 1,000 units $32,000 A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the LIFO method, the amount allocated to cost of goods sold for June is O $24,000. $24,250. $26,400. $21,100