Question
When the bank takes money out of a company's account, why does the bank say that they have debited that account? The bank has decreased
When the bank takes money out of a company's account, why does the bank say that they have debited that account?
The bank has decreased the company's assets and assets decrease with debits. | |
The bank has increased its' liability to the company and liabilities increase with debits. | |
The bank has increased the company's assets and assets increase with debits. | |
The bank has decreased its liability to the company, and liabilities decrease with debits. |
Question
13 of 35
Dividends, Accounts Receivable, and Buildings have normal balances of
credit, credit, and credit, respectively. | |
credit, debit, and debit, respectively. | |
debit, debit, and debit, respectively. | |
debit, debit, and credit, respectively. |
Question
14 of 35
Safety First Supply Company purchased a 2-year insurance policy for $2,500. What would the adjusting entry be at the end of the first year?
Debit Insurance Expense $2,500, credit Prepaid Insurance $2,500 | |
Debit Insurance Expense $1,250, credit Cash $1,250 | |
Debit Insurance Expense $2,500, credit Cash $2,500 | |
Debit Insurance Expense $1,250, credit Prepaid Insurance $1,250 |
Question
15 of 35
Recording Interest Receivable would be an example of a(n)
deferred expense. | |
deferred revenue. | |
accrued expense. | |
accrued revenue. |
Question
16 of 35
A company's gross profit percentage increased from 37% to 41%. What does this mean?
This means that cost of goods sold as a percentage of net sales decreased. | |
This means that operating expenses as a percentage of net sales decreased. | |
This means that cost of goods sold as a percentage of net sales increased. | |
There is not enough information to explain the increase. |
Question
17 of 35
Under the periodic inventory system, the amount of inventory is
only known when a physical count is taken. | |
constantly updated. | |
adjusted after each sale. | |
adjusted after each purchase. |
Question
18 of 35
Under the FIFO method, the flow of costs through the accounting records will
be nearly the opposite of the physical flow of goods through the business. | |
closely match the physical flow of goods through the business. | |
exactly match the physical flow of goods through the business. | |
have no relationship to the physical flow of goods through the business. |
Question
19 of 35
Kramer and Associates has the following account balances listed in alphabetical order: Accumulated Depreciation, $23,000; Accounts Payable, $8,500; Accounts Receivable, $12,000; Cash, $3,500; Equipment, $44,000; Land, $21,000; Mortgage Payable, $45,000; Prepaid Insurance, $7,500; Supplies, $2,000; Unearned Revenue, $6,000; Wages payable, $4,500. Kramer and Associates' current liabilities are
$58,000. | |
$13,000. | |
$64,000. | |
$19,000. |
Question
20 of 35
Merchandise returned by the customer for a cash refund is called a
credit memorandum. | |
debit memorandum. | |
sales return. | |
sales allowance. |
Question
21 of 35
A company has $4,500 in net sales, $3,200 in gross profit, $1,300 in ending inventory, and $1,800 in beginning inventory. The company's cost of goods sold is
$1,300. | |
$1,400. | |
$3,200. | |
$2,700. |
Question
22 of 35
When a merchandiser sells on account, which of the following accounts is NOT needed to record the transaction?
Accounts Receivable | |
Cost of Goods Sold | |
Inventory | |
Cash |
Question
23 of 35
A company has net sales of $223,000, cost of goods sold $85,000, operating expenses of $54,000, and other expenses of $6,000. The company's operating income is
$84,000. | |
$132,000. | |
$31,000. | |
$78,000. |
Question
24 of 35
In order to pay the least income tax possible in periods of decreasing inventory costs, the company should use which of the following inventory costing methods?
FIFO | |
Average cost | |
LIFO | |
Specific identification |
Question
25 of 35
Transferring title refers to a
change of buyer. | |
change of ownership. | |
change of seller. | |
legal document. |
Question
26 of 35
Costs of Goods Sold includes which of the following?
Depreciation Expense | |
The actual cost of the item | |
Management salaries | |
Administrative fees |
Question
27 of 35
Underestimating inventory would be an example of
conservatism. | |
entity. | |
consistency. | |
materiality. |
Question
28 of 35
Inventory for a merchandising business is classified as a(n):
asset. | |
liability. | |
revenue. | |
part of Stockholders' Equity. |
Question
29 of 35
Given the following inventory activity, what is ending inventory using the perpetual LIFO costing method?
Date | Quantity | Unit Cost | |
Beginning Balance | 100 | $5.50 | |
September 17 | Purchase | 50 | $3.50 |
September 17 | Sale | 25 | |
September 29 | Purchases | 40 | $6 |
125 units @ $4.50 and 40 units @ $6.00 | |
165 units @ $4.86 | |
75 units @ $5.00 and 50 units @ $3.50 and 40 units @ $6.00 | |
100 units @ $5.00 and 25 units @ $3.50 and 40 units @ $6.00 |
Question
30 of 35
One lot of merchandise was counted at $566.34. A second count of the same merchandise showed $566.82. The difference could be ignored due to
consistency. | |
entity. | |
materiality. | |
conservatism. |
Question
31 of 35
In terms of valuation, U.S. GAAP generally uses ________, while IFRS generally uses ________.
market values, historical values | |
historical values, market values | |
market values, market values | |
historical values, historical values |
Question
32 of 35
Using IFRS, book value typically ________ market value.
is higher than | |
bears no relationship to | |
is closer to | |
is lower than |
Question
33 of 35
For accounting information to be useful it must be all of the following EXCEPT
relevant. | |
understandable. | |
economical. | |
reliable. |
Question
34 of 35
Which factor would make a person feel forced to steal money because of high medical bills?
Realization | |
Perceived opportunity | |
Rationalization | |
Perceived pressure |
Question
35 of 35
The process CPAs use to confirm that financial reports conform to GAAP is known as a(n)
confirmation. | |
audit. | |
examination. | |
review. |
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