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Accounting Test 2

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