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Accounting Test 2

92 Questions  I  By Djjensen44
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1.  Income from operations is:
A.
B.
C.
D.
2.  Which of the following accounts is NOT closed to Income Summary?
A.
B.
C.
D.
3.  Under a periodic system, the company uses seperate accounts to record freight costs, returns, and discounts.
A.
B.
4.  Cost of goods available for sale consists of two elements: beginning inventory and:
A.
B.
C.
D.
5.  Which of the following is not part of the journal entries made when merchandise is sold on credit?
A.
B.
C.
D.
6.  All of the following would be classified as inventory except:
A.
B.
C.
D.
7.  A merchandiser using a perpetual system will require one additional adjusting entry to make the record agree with the actual inventory on hand.
A.
B.
8.  Manufacturing companies usually classify inventory into three catagories.
A.
B.
9.  Sales Returns and Allowances is a contra revenue account to Sales and has a normal debit balance.
A.
B.
10.  Which of the following should not be included in the physical inventory of a company?
A.
B.
C.
D.
11.  Which of these would cause the inventory turnover ratio to increase the most?
A.
B.
C.
D.
12.  FOB destination means that the seller places the goods free on board the common carrier and the buyer pays the freight costs.
A.
B.
13.  In a period of inflatino, which cost flow method produces the highest net income?
A.
B.
C.
D.
14.  To record the sale of goods for cash in a perpetual inventory system:
A.
B.
C.
D.
15.  The income statement for retailers contains one expense catergory just like the income statement of a service company.
A.
B.
16.  In a perpetual inventory system, which of the following would be debited when goods are purchased with the intent of being resold?
A.
B.
C.
D.
17.  On a bank reconciliation, outstanding checks are:
A.
B.
C.
D.
18.  In a periodic inventory system, companies keep detailed inventory records of the goods on hand throughout the period.
A.
B.
19.  Net sales is sales less:
A.
B.
C.
D.
20.  In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting:
A.
B.
C.
D.
21.  Permitting only designated personnel to handle cash receipts is an application of the principle of:
A.
B.
C.
D.
22.  Income from operations appears on:
A.
B.
C.
D.
23.  The sales accounts that normally have a debit balance are:
A.
B.
C.
D.
24.  Which of the following is used to estimate the cost of ending inventory?
A.
B.
C.
D.
25.  Which of the following is not an element of the fraud triangle?
A.
B.
C.
D.
26.  The reconciling item in a bank reconciliation that will result in an adjusting entry by the depositor is:
A.
B.
C.
D.
27.  In a perpetual inventory system, a company determines the cost of goods sold each time a sale occurs.
A.
B.
28.  Which of the following is shown on both a multiple-step and a single-step income statement?
A.
B.
C.
D.
29.  In a periodic inventory system the entry to record the credit sale of merchandise affects which of the following accounts?
A.
B.
C.
D.
30.  Gross profit will result if:
A.
B.
C.
D.
31.  Under the lower of cost or market basis, market is defined as current replacement cost.
A.
B.
32.  Of the following persons, the best choice for preparing the monthly bank reconciliations would be:
A.
B.
C.
D.
33.  All of the following would involve a debit memorandum except:
A.
B.
C.
D.
34.  Some argue that the use of FIFO in a period of inflation enables a company to avoid reporting paper (phantom) profit as economic gain.
A.
B.
35.  Gross profit is:
A.
B.
C.
D.
36.  Overstating beginning inventory will overstate:
A.
B.
C.
D.
37.  There is an accounting requirement that the cost flow assumption be consistent with the physical movement of the goods.
A.
B.
38.  The steps in the accounting cycle for a merchandising company are the same as those in a service company except:
A.
B.
C.
D.
39.  Under a perpetual inventory system, when goods are purchased for resale by a company:
A.
B.
C.
D.
40.  The cost flow method that often parallels the actual physical flow of merchandise is the:
A.
B.
C.
D.
41.  A single-step income statement:
A.
B.
C.
D.
42.  Which of the following was not a result of the Sarbanes-Oxley Act?
A.
B.
C.
D.
43.  A voucher system is an example of:
A.
B.
C.
D.
44.  The inventory turnover ratio is computed by dividing cost of goods sold by:
A.
B.
C.
D.
45.  A bank issues a debit memorandum when it collects a note receivable for a depositor.
A.
B.
46.  When preparing a worksheet for a merchandising company, which of the following accounts should not be reported in the Income Statement columns?
A.
B.
C.
D.
47.  The account Sales Discounts is a:
A.
B.
C.
D.
48.  A multiple-step income statement distinguishes between operating and non-operating activities.
A.
B.
49.  In a multiple-step income statement, which of the following would not be reported in the operating expenses section?
A.
B.
C.
D.
50.  The results under FIFO in a perpetual system are the same as in a periodic system.
A.
B.
51.  If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is:
A.
B.
C.
D.
52.  An error in the ending inventory of the current period will have no effect on net income of the next accounting period.
A.
B.
53.  In a perpetual inventory system,
A.
B.
C.
D.
54.  Songbird Company has sales of $150,000 and cost of goods available for sale of $135,000. If the gross profit rate is 30%, the estimated cost of the ending inventory under the gross profit method is:
A.
B.
C.
D.
55.  Which of the following appears on both a single-step and a multiple-step income statement?
A.
B.
C.
D.
56.  The multiple-step income statement for a merchandising company shows each of the following features except:
A.
B.
C.
D.
57.  All of the following items would be reported as other revenues and gains except:
A.
B.
C.
D.
58.  Rickety Company purchased 1,000 widgets and has 200 widgets in its ending inventory at a cost of $91 each and a current replacement cost of $80 each. The ending inventory under lower of cost or market is:
A.
B.
C.
D.
59.  A company determines the cost of goods sold each time a sale occurs in:
A.
B.
C.
D.
60.  In determining cost of goods sold:
A.
B.
C.
D.
61.  When goods are purchased for resale by a company using a periodic inventory system:
A.
B.
C.
D.
62.  There are more steps involved in preparing a worksheet for a merchandising company than for a service company.
A.
B.
63.  Sales revenue less cost of goods sold is called net profit.
A.
B.
64.  The principles of internal control do not include:
A.
B.
C.
D.
65.  Factors that affect the selection of an inventory costing method do not include:
A.
B.
C.
D.
66.  A company has the following account balances: Sales, $1,000,000; Sales Returns and Allowances, $180,000; Sales Discounts, $20,000; and Cost of Goods Sold, $600,000. What is the company's gross profit rate?
A.
B.
C.
D.
67.  Under LIFO, companies obtain the cost of the ending inventory by taking the cost of the latest goods available for the sale and working backward until all the units have been costed.
A.
B.
68.  When the terms of sale are FOB shipping point, ownership of the goods remains with the seller until the goods reach the buyer.
A.
B.
69.  FOB shipping point means that the:
A.
B.
C.
D.
70.  In a worksheet, Merchandise Inventory is shown in the following columns:
A.
B.
C.
D.
71.  Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
A.
B.
C.
D.
72.  Making payments from a petty cash fund requires:
A.
B.
C.
D.
73.  The following amounts relate to Amato Company for the current year: Beginning Inventory, $20,000; Ending Inventory, $28,000; Purchases, $166,000; Purchase Returns, $4800; and Freight-Out, $6,000. The amount of Cost of Goods Sold for the period is
A.
B.
C.
D.
74.  The FIFO method assumes that the earlies goods purchased are the first to be sold.
A.
B.
75.  Villa Sales Company had the following amounts related to its business: Beginning Inventory, $12,000; Purchases, $42,000; Net Sales, $50,000; and Gross Profit, $15,000. The amount of the ending inventory is
A.
B.
C.
D.
76.  International accounting standards do not allow the use of:
A.
B.
C.
D.
77.  In a bank reconciliation, deposits in transit are:
A.
B.
C.
D.
78.  Days in inventory measures the average number of days inventory is held.
A.
B.
79.  An organization uses internal control to enhance the accuracy and reliability of its accounting records and to:
A.
B.
C.
D.
80.  All of the following are classified as cash except:
A.
B.
C.
D.
81.  Companies using a periodic inventory system take a physical inventory for each of the following purposes except to determine the:
A.
B.
C.
D.
82.  Few internal control systems provide for independent internal verification
A.
B.
83.  If sales revenues are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000 the gross profit is:
A.
B.
C.
D.
84.  A credit sale of $750 is made on June 13, term 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is:
A.
B.
C.
D.
85.  The use of prenumbered checks in disbursing cash is an application of the principle of:
A.
B.
C.
D.
86.  The control features of a bank account do not include:
A.
B.
C.
D.
87.  A company writes a check to replenish a $100 petty cash fund when the fund contains receipts of $94 and $3 in cash. In recording the check, the company should:
A.
B.
C.
D.
88.  Which of the following is shown for both merchandising and service companies?
A.
B.
C.
D.
89.  In periods of rising prices, LIFO will produce:
A.
B.
C.
D.
90.  Goods in transit should be included in the inventory of the buyer when the:
A.
B.
C.
D.
91.  On a bank reconciliation, collection of a note receivable by the bank is:
A.
B.
C.
D.
92.  Atlantis Company's ending inventory is understated $4,000. The effects of this error on the current year's cost of goods sold and net income, respectively, are:
A.
B.
C.
D.
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