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Accounting Exam 2
| Question | Answer |
|---|---|
| Which of the following cost flow methods makes no assumptions about the flow of inventory? Group of answer choices Specific Identification First-in, First-out (FIFO) Last-in, First-out (LIFO) Average Cost | Specific Identification |
| Which one of the following is a good example of a good for which the LIFO inventory method would be the most appropriate? Group of answer choices Coal Pile Lettuce Tractors Candy | Coal Pile |
| Which one of the following is a good example of a good for which the FIFO inventory method would be the most appropriate? Group of answer choices Coal Pile Lettuce Tractors Candy | Lettuce |
| Which company would you expect to have the highest inventory turnover? Group of answer choices The local market selling produce The real estate company The art gallery All would be approximately equal. | The local market selling Produce |
| In a period of raising prices which inventory method will generate the highest value for ending inventory? Group of answer choices FIFO LIFO Weighted Average No answer text provided. | FIFO |
| Assuming that Ending Inventory is miscounted and understated in year 1 by $10,000 but correct at the end of year 2 Year 1 Assets are overstated Year 1 Net Income is understated Year 2 Revenue is overstated Year 2 expenses are understated | Year 1 Net Income is understated and Year 2 expenses are understated |
| What is true about FIFO? | Assumes that the earliest goods purchased are the first goods sold and Unit costs is determined by using the most recent purchases and working backward until all units have been costed |
| How do you solve for outstanding checks? | the total checks subtracted by the checks presented to the bank = outstanding checks. |
| Having one person post entries to the accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of | segregation of duties |
| Internal auditors… | evaluate the system of internal controls for the companies that employ them. |
| Which of the following is not one of the main factors that contribute to fraudulent activity? Group of answer choices Opportunity Incompatible duties Financial pressure Rationalization | Incompatible duties |
| Which one of the following would not cause a bank to reduce a depositor's account? Group of answer choices Bank service charge Collection of a note receivable Wiring of funds to other locations Checks marked NSF | Collection of a note receivable |
| true or false? An effective system of internal control requires that at least two individuals be assigned to one cash drawer so that each can serve as check on the other. | False |
| true or false? Only large companies need to be concerned with a system of internal control. | false |
| true or false? The safeguarding of assets is an objective of a company's system of internal control. | true |
| true or false? Management is responsible for establishing a system of internal control. | true |
| is this correct? One of the objectives of internal control is to safeguard assets from employee theft, robbery, and unauthorized use | yes |
| is this correct? One of the objectives of internal control is to enhance the accuracy and reliability of the accounting records | yes |
| Allowance for doubtful accounts is what type of an account? | contra account, asset |
| Under the allowance method, Bad Debt Expense is debited when an account is deemed uncollectible and must be written off. | false |
| What do sales terms of 1/10, n/30 mean? | A 1 percent discount is applied if paid within 10 days otherwise the net of the invoice is due in 30 days |
| Anna's coffee roaster provides payment terms of 1/15, n/45 to all of its customers. Dom's coffee shop purchases $9,000 of dark roast coffee beans on May 1st. For how much money will Dom's coffee shop make the check out for if they pay on May 14th? | to calculate the answer, take 1% of the total amount. 9000 * .01 = 90 and subtract the total amount from the discount. 9000-90=8910 |
| Joe's emporium sold $9,000 of merchandise during the year and $8,000 in cash sales. Joe found that 5% of his sales would not be collectable. When Joe found that $122 of sales is uncollectable, how much will Joe's earning be affected by this sale? | uncollectible amount - (uncollectible amount/ 1 - tax rate) assume the tax rate 122-(122/ 1-.20) |
| Joe's emporium sold $4,000 of merchandise during the year and $4,000 in cash sales. Joe uses the direct write off method. When Joe determines that $150 of sales is uncollectable, how much will Joe's earning be affected by this uncollectable sale? | the uncollectible sales are directly written off as the amount and become an expense, a negative number. -150. |
| Joe's emporium sold $3,000 of merchandise and $8,000 in cash sales. Joe uses the allowance method for uncollectible accounts and 3% of his sales would not be collectable for the year. How much bad debt expense will Joe's emporium during the year? | the total credit sales multiplied by the uncollectible percentage. |
| How to solve for much should Doug's Chiropractic have in their allowance for uncollectable accounts? | multiply aross and add all the numbers. If there is already a balance, subtract it from your answer |
Created by:
lmgostin