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[answered] Merchandise inventory: Is a current asset. Must be sold wit


  1. ??? Please see attached multiple choice/true false and fill in questions. principles of accouting
  2. ?

1. Merchandise inventory:

 

A. Is a current asset.

 

B. Must be sold within one month.

 

C. Is classified with investments on the balance sheet.

 

D. Includes supplies the company will use in future periods.

 

E. Is a long-term asset.

 

2. Mathew Company provided the following data concerning its income statement: sales, $1,000,000;

 

purchases, $400,000; beginning inventory, $250,000; ending inventory, $275,000; operating expenses,

 

$95,000; freight-in, $5,000; sales discounts, $20,000; purchases discounts, $15,000; sales returns &

 

allowances, $120,000; and purchases returns & allowances, $45,000. The data are complete and

 

provide the basis for preparation of an income statement. How much are net sales for Mathew

 

Company?

 

3. A cash disbursement system with proper internal control should include a procedure which requires all

 

significant disbursements to be made by check. TRUE/FALSE

 

4. Which statement about internal control for cash disbursements is false?

 

A. All significant disbursements should be made by check.

 

B. None of these.

 

C. Cash in the ledger should be reconciled to cash reported by the bank.

 

D. Petty cash receipts should be destroyed once paid.

 

E. The individual responsible for signing checks should not also prepare the checks.

 

5. Quick assets are defined as:

 

A. Cash, inventory, and current receivables.

 

B. Cash, short-term investments, and inventory.

 

C. Accounts receivable, inventory, and prepaid expenses.

 

D. Cash, noncurrent receivables, and prepaid expenses.

 

E. Cash, short-term investments, and current receivables.

 

6. The Cash Over and Short account:

 

A. Is used to record the income effects of errors in making change and/or processing petty cash

 

transactions.

 

B. Is not necessary in a computerized accounting system.

 

C. Can never have a debit balance.

 

D. Can never have a credit balance.

 

E. Is used when the cash account reports a credit balance.

 

7. A properly designed internal control system:

 

A. Insures profitable operations.

 

B. Requires the use of non-computerized systems.

 

C. Eliminates the need for an audit.

 

D. Is not necessary if the company uses a computerized system.

 

E. Lowers the company's risk of loss.

 

8. Which of the following is not one of the policies and procedures that make up an internal control

 

system?

 

A. Ensure reliable accounting.

 

B. Promote efficient operations.

 

C. Protect assets.

 

D. Urge adherence to company policies.

 

E. Guarantee a return to investors.

 

9. Bennet Company was preparing a month-end bank reconciliation. The cash balance per the general

 

ledger was $1,645. Bennet's accountant discovered that the bank had charged $15 in service charges for the month, that outstanding checks were $60, and that there were no deposits in transit. What is the

 

correct adjusted ending cash balance?

 

10. A bank reconciliation revealed bank charges of $11, outstanding checks of $221, and NSF checks

 

of $90. The journal entry to cause the company records to match the correct adjusted ending cash

 

balance includes:

 

A. None of these.

 

B. a credit to cash for $90.

 

C. a credit to cash for $322.

 

D. a credit to cash for $11.

 

E. a credit to cash for $101.

 

11. A reconciliation shows cash per bank ($22,484), NSF checks ($322), notes collected ($5,000 plus

 

$106 interest), deposits in transit ($1,776), service charges ($35), outstanding checks ($4,717),

 

and a $1,275 disbursement recorded as $1,725.

 

A. The balance per books before adjusting entries would be $19,508.

 

B. The balance per books before adjusting entries would be $25,425.

 

C. The balance per books before adjusting entries would be $14,344.

 

D. None of these.

 

E. The balance per books before adjusting entries would be $19,543

 

12. Hastings Company replenished a $500 petty cash fund. The petty cash box contained vouchers of

 

$87 for postage, $173 for supplies, $58 for gasoline, and cash on hand of $180. The journal entry

 

to reflect replenishment would include a:

 

A. None of these.

 

B. credit to Cash or $180.

 

C. debit to Cash Short for $2.

 

D. credit to Cash for $318.

 

E. credit to Petty Cash for $2.

 

13. Separate accounts receivable information for each customer is important because it reveals all of

 

the following except:

 

A. The basis for sending bills to customers.

 

B. How much each customer has paid.

 

C. How much each customer still owes.

 

D. When the customer intends to pay outstanding balances.

 

E. How much each customer has purchased on credit.

 

14. If McCarthy should collect an account in 20X6 which was written off in 20X5, McCarthy would

 

debit Cash for the amount received and credit:

 

A. the Bad Debts Expense account.

 

B. the Accounts Receivable account.

 

C. the Accounts Receivable account after the original write-off is reestablished.

 

D. None of these.

 

E. an income account entitled Adjustment of Prior Period Earnings.

 

15. Hall uses aging to estimate uncollectibles. Accounts of $100,000 are less than 30 days old (98%

 

collectible), $50,000 are 30 to 60 days old (90% collectible), $25,000 are 61-120 days old (50%

 

collectible), and the remaining $10,000 is 10% collectible.

 

A. The Allowance for Uncollectibles should have a balance of $7,000.

 

B. None of these.

 

C. The Allowance for Uncollectibles should have a balance of $35,000.

 

D. The Allowance for Uncollectibles should have a balance of $28,500.

 

E. The Allowance for Uncollectibles should have a balance of $9,000.

 

16. The quality of receivables refers to:

 

A. The creditworthiness of sellers. 17. 18.

 

19. 20.

 

21. 22. 23. 24. 25. B. The likelihood of collection without loss.

 

C. The interest rate.

 

D. The speed of collection.

 

E. Sales turnover.

 

Pepperdine reported net sales of $8,600 million, net income of $126 million and average accounts

 

receivable of $890 million. Its accounts receivable turnover is:

 

A. 37.8.

 

B. 68.3.

 

C. 9.7.

 

D. 7.1.

 

E. 51.7.

 

Deposits with utility companies would qualify as trade receivables. TRUE/FALSE

 

If the credit balance of the Allowance for Uncollectible Accounts account exceeds the amount of

 

a bad debt being written off, the entry to record the write-off against the allowance account results

 

in:

 

A. A reduction in current liabilities.

 

B. A reduction in equity.

 

C. A reduction in current assets.

 

D. An increase in the expenses of the current period.

 

E. No effect on the expenses of the current period.

 

Inventory errors affect both the balance sheet and the income statement disclosure in the period of the

 

error. TRUE/FALSE

 

The inventory turnover ratio can be calculated by dividing the average inventory level by cost of

 

goods sold. TRUE/FALSE

 

Alta had beginning inventory of 100 units at $10 each. The purchase price increased steadily

 

during the period. Purchases during the period were 200 at $11 each, 300 at $13 each, and 150 at

 

$15 each. Sales were 500 units at $20. Using perpetual FIFO:

 

A. ending inventory is $3,550.

 

B. gross profit is $4,200.

 

C. None of these.

 

D. All of these answers are correct (except none of these)

 

E. cost of goods sold is $5,800.

 

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the

 

ending inventory valuation is:

 

A. Weighted-average.

 

B. None of these.

 

C. LIFO.

 

D. Retail.

 

E. FIFO

 

The understatement of the beginning inventory balance causes:

 

A. Cost of goods sold to be overstated and net income to be understated.

 

B. Cost of goods sold to be overstated and net income to be overstated.

 

C. Cost of goods sold to be overstated and net income to be correct.

 

D. Cost of goods sold to be understated and net income to be overstated.

 

E. Cost of goods sold to be understated and net income to be understated.

 

A company had the following purchases during the current year:

 

January: 10 units at $120

 

February: 20 units at $130 May: 15 units at $140

 

September: 12 units at $150

 

November:10 units at $160

 

On December 31, there were 26 units remaining in ending inventory. These 26 units

 

consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from

 

November. Using the specific identification method, what is the cost of the ending

 

inventory?

 

A. $3,640.

 

B. $3,960.

 

C. $3,500.

 

D. $3,800.

 

E. $3,280.

 

26. Alta had beginning inventory of 100 units at $10 each. The purchase price increased steadily

 

during the period. Purchases during the period were 200 at $11 each, 300 at $13 each, and 150 at

 

$15 each. Sales were 500 units at $20. Using periodic FIFO:

 

A. ending inventory is $2,650.

 

B. All of the answers are correct (except "none of these")

 

C. None of these.

 

D. gross profit is $4,200.

 

E. cost of goods sold is $6,233.

 


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