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Accounting Question

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Question 1.1. If a company is given credit terms of 2/10, n/30, it should (Points : 1)

       hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time.
       pay within the discount period and recognize a savings.
       pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill.
       recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price.

 

Question 2.2. Manufacturers usually classify inventory into all the following general categories except: (Points : 1)

       work in process.
       finished goods.
       merchandise inventory.
       raw materials.

 

Question 3.3. Which of the following should be included in the physical inventory of a company? (Points : 1)

       Goods held on consignment from another company
       Goods in transit to another company shipped FOB shipping point
       Goods in transit from another company shipped FOB shipping point
       Both b and c above

 

Question 4.4. Which of the following statements is true regarding inventory cost flow assumptions? (Points : 1)

       A company may use more than one costing method concurrently.
       A company must comply with the method specified by industry standards.
       A company must use the same method for domestic and foreign operations.
       A company may never change its inventory costing method once it has chosen a method.

 

Question 5.5. If a company determines cost of goods sold each time a sale occurs, it (Points : 1)

       must have a computer accounting system.
       uses a combination of the perpetual and periodic inventory systems.
       uses a periodic inventory system.
       uses a perpetual inventory system.

 

Question 6.6. A company just starting business made the following four inventory purchases in June:

June 1

150 Units $390

June 10

200 units  585

June 15

200 units  630

June 28

150 units  510

Total

$2,115



A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is (Points : 1)

       $536.
       $668.
       $1,447.
       $1,564.

 

Question 7.7. Jake's Market recorded the following events involving a recent purchase of merchandise:


Received goods for $50,000, terms 2/10,n/30
Returned $1,000 of the shipment for credit
Paid $250 freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company's inventory increased by

(Points : 1)

       $48,020.
       $48,265.
       $48,270.
       $49,250.

 

Question 8.8. A perpetual inventory system would likely be used by a(n) (Points : 1)

       automobile dealership.
       hardware store.
       drugstore.
       convenience store.

 

Question 9.9. Costner's Market recorded the following events involving a recent purchase of merchandise:


Received goods for $20,000, terms 2/10,n/30
Returned $400 of the shipment for credit
Paid $100 freight on the shipment
Paid the invoice within the discount period

As a result of these events, the company's inventory

(Points : 1)

       increased by $19,208.
       increased by $19,306.
       increased by $19,308.
       increased by $19,700.

 

Question 10.10. Which of the following is a true statement about inventory systems? (Points : 1)

       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.
       A perpetual system determines cost of goods sold only at the end of the accounting period.

 

Question 11.11. At May 1, 2012, Kibbee Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows:


400 units at $7
300 units at $8

The company sold 500 units during the month for $12 per unit. Kibbee uses the average cost method. The average cost per unit for May is

(Points : 1)

       $7.000.
       $7.375.
       $7.500.
       $8.000.

 

Question 12.12. Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2012 are as follows:


                        Units   Per unit price   Total

Balance,  1/1/12    200   $5.00          $1,000
Purchase, 1/15/12 100     5.30             530
Purchase, 1/28/12 100     5.50             550

An end of the month (1/31/12) inventory showed that 140 units were on hand. How many units did the company sell during January, 2012?

(Points : 1)

       60
       140
       200
       260

 

Question 13.13. Fetherston Company's goods in transit at December 31 include:

Sales Made                          

Purchases made

1) FOB Destination   

3) FOB destination

2) FOB Shipping point 

4) FOB shipping point



Which items should be included in Fetherston's inventory at December 31? (Points : 1)

       (2) and (3)
       (1) and (4)
       (1) and (3)
       (2) and (4)

 

Question 14.14. Which one of the following inventory methods is often impractical to use? (Points : 1)

       Specific identification
       LIFO
       FIFO
       Average cost

 

Question 15.15. Eneri Company's inventory records show the following data:

 

Units

Unit Cost

Inventory, January 1

5,000

$9.20

Purchases: June 18

4,500

 8.00

November 8

3,000

 7.00



A physical inventory on December 31 shows 2,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. What is the difference in taxes if LIFO rather than FIFO is used? (Points : 1)

       $880 additional taxes
       $496 additional taxes
       $384 additional taxes
       $496 tax savings

 

Question 16.16. Which of the following items will increase inventoriable costs for the buyer of goods? (Points : 1)

       Purchase returns and allowances granted by the seller
       Purchase discounts taken by the purchaser
       Freight charges paid by the seller
       Freight charges paid by the purchaser

 

Question 17.17. The cost of goods available for sale is allocated between (Points : 1)

       beginning inventory and ending inventory.
       beginning inventory and cost of goods on hand.
       ending inventory and cost of goods sold.
       beginning inventory and cost of goods purchased.

 

Question 18.18. Beginning inventory plus the cost of goods purchased equals (Points : 1)

       cost of goods sold.
       cost of goods available for sale.
       net purchases.
       total goods purchased.

 

Question 19.19. Priscilla has the following inventory information.

July 1

Beginning Inventory       20 units at $19          $380

July 7

Purchases                   70 units at $20         1,400

July 22

Purchases                   10 units at $23           230

 

                                                                $2,010



A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is (Points : 1)

       $1,380.
       $1,390.
       $1,407.
       $1,430.

 

Question 20.20. Under a consignment arrangement, the (Points : 1)

       consignor has ownership until goods are sold to a customer.
       consignor has ownership until goods are shipped to the consignee.
       consignee has ownership when the goods are in the consignee's possession.
       consigned goods are included in the inventory of the consignee.

 

Question 21.21. Partridge Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows:

Date

Purchases

Sales

Jan 14

 

375@$28

Jan 17

250 @ $20

 

Jan 25

250 @ $22

 

Jan 29

 

260 @ $32



Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31.
The cost of the inventory at January 31, under the LIFO method is: (Points : 1)

       $6,570.
       $7,300.
       $7,800.
       $8,030.

 

Question 22.22. A buyer would record a payment within the discount period under a perpetual inventory system by crediting (Points : 1)

       Accounts Payable.
       Inventory.
       Purchase Discounts.
       Sales Discounts.

 

Question 23.23. Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2012 are as follows:


                           Units   Per unit price  Total
Balance,  1/1/12    200       $5.00          $1,000
Purchase, 1/15/12 100         5.30             530
Purchase, 1/28/12 100         5.50             550

An end of the month (1/31/12) inventory showed that 140 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

(Points : 1)

       $700
       $728
       $742
       $762

 

Question 24.24. Which of the following is not a common cost flow assumption used in costing inventory? (Points : 1)

       First-in, first-out
       Middle-in, first-out
       Last-in, first-out
       Average cost

 

Question 25.25. A company just starting business made the following four inventory purchases in June:

June 1

150 Units $390

June 10

200 units  585

June 15

200 units  630

June 28

150 units  510

Total

$2,115



A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is (Points : 1)

       $536.
       $604.
       $668.
       $1,511.

Question 1.1. The relationship between current assets and current liabilities is important in evaluating a company's (Points : 1)

       profitability.
       liquidity.
       market value.
       accounting cycle.

 

Question 2.2. The income statement for the month of June, 2012 of Camera Obscura Enterprises contains the following information:

Revenues          $7,000

 

Expenses:

Salaries and Wages Expense    $3,000

Rent Expense      1,000

Advertising Expense     800

Supplies Expense  300

Insurance Expense     100

Total expenses            5,200

Net income (loss)       $1,800



The entry to close the revenue account includes a (Points : 1)

       debit to Income Summary for $1,800.
       credit to Income Summary for $1,800.
       debit to Income Summary for $7,000.
       credit to Income Summary for $7,000.

 

Question 3.3. Current liabilities (Points : 1)

       are obligations that the company is to pay within the forthcoming year.
       are listed in the balance sheet in order of their expected maturity.
       are listed in the balance sheet, starting with accounts payable.
       should not include long-term debt that is expected to be paid within the next year.

 

Question 4.4. The income statement for the month of June, 2012 of Camera Obscura Enterprises contains the following information:

Revenues          $7,000

 

Expenses:

Salaries and Wages Expense    $3,000

Rent Expense      1,000

Advertising Expense     800

Supplies Expense  300

Insurance Expense     100

Total expenses            5,200

Net income (loss)       $1,800



The entry to close Income Summary to Ramirez, Capital includes (Points : 1)

       a debit to Revenues for $7,000.
       credits to Expenses totalling $5,200.
       a credit to Income Summary for $1,800
       a credit to Owner's Capital for $1,800.

 

Question 5.5. Office Equipment is classified in the balance sheet as (Points : 1)

       a current asset.
       property, plant, and equipment.
       an intangible asset.
       a long-term investment.

 

Question 6.6. Which of the following would not be classified a long-term liability? (Points : 1)

       Current maturities of long-term debt
       Bonds payable
       Mortgage payable
       Lease liabilities

 

Question 7.7. On September 23, Sebagoh Company received a $350 check from Surfer Rosa Inc. for services to be performed in the future. The bookkeeper for Sebadoh Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should (Points : 1)

       debit Cash $350 and credit Unearned Service Revenue $350.
       debit Accounts Receivable $350 and credit Unearned Service Revenue $350.
       debit Accounts Receivable $350 and credit Cash $350.
       debit Accounts Receivable $350 and credit Service Revenue $350.

 

Question 8.8. Correcting entries are made (Points : 1)

       at the beginning of an accounting period.
       at the end of an accounting period.
       whenever an error is discovered.
       after closing entries.

 

Question 9.9. The income statement and balance sheet columns of Iron and Wine Company's worksheet reflect the following totals:

                          Income Statement  Balance Sheet     
                         Dr.            Cr.            Dr.            Cr.  
      Totals      $72,000     $48,000     $60,000     $84,000

To enter the net income (or loss) for the period into the above worksheet requires an entry to the (Points : 1)

       income statement debit column and the balance sheet credit column.
       income statement credit column and the balance sheet debit column.
       income statement debit column and the income statement credit column.
       balance sheet debit column and the balance sheet credit column.

 

Question 10.10. The income statement for the month of June, 2012 of Camera Obscura Enterprises contains the following information:

Revenues          $7,000

 

Expenses:

Salaries and Wages Expense    $3,000

Rent Expense      1,000

Advertising Expense     800

Supplies Expense  300

Insurance Expense     100

Total expenses            5,200

Net income (loss)       $1,800



After the revenue and expense accounts have been closed, the balance in Income Summary will be (Points : 1)

       $0.
       a debit balance of $1,800.
       a credit balance of $1,800.
       a credit balance of $7,000.

 

Question 11.11. What is the order in which assets are generally listed on a classified balance sheet? (Points : 1)

       Current and long-term
       Current; property, plant, and equipment; long-term investments; intangible assets
       Current; property, plant, and equipment; intangible assets; long-term investments
       Current; long-term investments; property, plant, and equipment; intangible assets

 

Question 12.12. The following information is for Sunny Day Real Estate:

Balance Sheet

December 31, 2012

Cash                  $  25,000

Accounts Payable         $  60,000

Prepaid Insurance           30,000

Salaries and Wages Payable      15,000

Accounts Receivable     50,000

Mortgage Payable            85,000

Inventory                      70,000

Total Liabilities         $160,000

Land Held for Investment      85,000

 

Land                    120,000

 

Building                     $100,000

 

 

 

Less Accumulated Depreciation                 (20,000)

                            80,000

Owner’s Capital            370,000

Trademark                      70,000

 

Total Assets              $530,000

Total Liabilities and Owner’s Equity                      $530,000



The total dollar amount of assets to be classified as investments is (Points : 1)

       $0.
       $70,000.
       $85,000.
       $155,000.

 

Question 13.13. The post-closing trial balance contains only (Points : 1)

       income statement accounts.
       balance sheet accounts.
       balance sheet and income statement accounts.
       income statement, balance sheet, and owner's equity statement accounts.

 

Question 14.14. Which one of the following statements concerning the accounting cycle is incorrect? (Points : 1)

       The accounting cycle includes journalizing transactions and posting to ledger accounts.
       The accounting cycle includes only one optional step.
       The steps in the accounting cycle are performed in sequence.
       The steps in the accounting cycle are repeated in each accounting period.

 

Question 15.15. All of the following are owner's equity accounts except (Points : 1)

       the Capital account.
       Capital Stock.
       Investment in Stock.
       Retained Earnings.

 

Question 16.16. Which statement about long-term investments is not true? (Points : 1)

       They will be held for more than one year.
       They are not currently used in the operation of the business.
       They include investments in stock of other companies and land held for future use.
       They can never include cash accounts.

 

Question 17.17. The following information is for Bright Eyes Auto Supplies:

Balance Sheet

December 31, 2012

Cash                  $  20,000

Accounts Payable         $  65,000

Prepaid Insurance           40,000

Salaries and Wages Payable      25,000

Accounts Receivable     50,000

Mortgage Payable           75,000

Inventory                      70,000

Total Liabilities         $165,000

Land Held for Investment      90,000

 

Land                    125,000

Building                     $100,000

 

Less Accumulated

Depreciation      (30,000)  70,000

Owner’s Capital            370,000

                                             

Trademark                      70,000

 

Total Assets              $535,000

Total Liabilities and Owner’s Equity                      $535,000



The total dollar amount of liabilities to be classified as current liabilities is (Points : 1)

       $25,000.
       $65,000.
       $90,000.
       $165,000.

 

Question 18.18. Which of the following liabilities are not related to the operating cycle? (Points : 1)

       Wages payable
       Accounts payable
       Utilities payable
       Bonds payable

 

Question 19.19. Balance sheet accounts are considered to be (Points : 1)

       temporary owner's equity accounts.
       permanent accounts.
       capital accounts.
       nominal accounts.

 

Question 20.20. Intangible assets include each of the following except (Points : 1)

       copyrights.
       goodwill.
       land improvements.
       patents.

 

Question 21.21. The following information is for Sunny Day Real Estate:

Balance Sheet

December 31, 2012

Cash                  $  25,000

Accounts Payable         $  60,000

Prepaid Insurance           30,000

Salaries and Wages Payable      15,000

Accounts Receivable     50,000

Mortgage Payable            85,000

Inventory                      70,000

Total Liabilities         $160,000

Land Held for Investment      85,000

 

Land                    120,000

 

Building                     $100,000

 

 

 

Less Accumulated Depreciation                 (20,000)

                            80,000

                                        Owner’s Capital           370,000

Trademark                      70,000

 

Total Assets              $530,000

Total Liabilities and Owner’s Equity                      $530,000



The total dollar amount of assets to be classified as current assets is (Points : 1)

       $105,000.
       $175,000.
       $190,000.
       $260,000.

 

Question 22.22. The most important information needed to determine if companies can pay their current obligations is the (Points : 1)

       net income for this year.
       projected net income for next year.
       relationship between current assets and current liabilities.
       relationship between short-term and long-term liabilities.

 

Question 23.23. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2012:

Accounts payable                                              $  19,000

Accounts receivable                                               11,000

Accumulated depreciation – equipment                    28,000

Advertising expense                                               21,000

Cash                                                                    11,000

Owner’s capital (1/1/12)                                         105,000

Owner’s drawings                                                   14,000

Depreciation expense                                             12,000

Equipment                                                            190,000

Insurance expense                                                   3,000

Note payable, due 6/30/13                                       70,000

Patent                                                                   20,000

Prepaid insurance (12-month policy)                          6,000

Rent expense                                                         17,000

Salaries and wages expense                                   32,000

Service revenue                                                     125,000

Supplies                                                                  4,000

Supplies expense                                                     6,000


Accounts payable


What is total liabilities and owner's equity at December 31, 2012? (Points : 1)

 

       $194,000
       $214,000
       $228,000
       $231,000

 

Question 24.24. The income statement and balance sheet columns of Iron and Wine Company's worksheet reflect the following totals:

                  Income Statement            Balance Sheet     
                         Dr.            Cr.            Dr.            Cr.  
      Totals      $72,000     $48,000     $60,000     $84,000

The net income (or loss) for the period is (Points : 1)

       $48,000 income.
       $24,000 income.
       $24,000 loss.
       not determinable.

 

Question 25.25. The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2012:

Accounts payable                                              $  19,000

Accounts receivable                                               11,000

Accumulated depreciation – equipment                    28,000

Advertising expense                                               21,000

Cash                                                                    11,000

Owner’s capital (1/1/12)                                        105,000

Owner’s drawings                                                  14,000

Depreciation expense                                            12,000

Equipment                                                          190,000

Insurance expense                                                  3,000

Note payable, due 6/30/13                                      70,000

Patent                                                                  20,000

Prepaid insurance (12-month policy)                         6,000

Rent expense                                                        17,000

Salaries and wages expense                                  32,000

Service revenue                                                    125,000

Supplies                                                                 4,000

Supplies expense                                                    6,000



The sub-classifications for assets on the company's classified balance sheet would include all of the following except: (Points : 1)

       Current Assets.
       Property, Plant, and Equipment.
       Intangible Assets.
       Long-term Assets.

 



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    Accounting

    Submitted by PROFSTAN on April 26th, 2016 15:56

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