The purpose of internal controls includes all of the following except:
A) improving efficiency.
B) producing timely accounting information.
C) minimizing errors.
D) completely eliminating fraud.
Blossom Inc. has an unadjusted debit balance of $3,500 in its Allowance for Doubtful
Accounts. The company has experienced bad debt losses of 2% of credit sales in prior
periods. Blossom reported net credit sales of $1,500,000 for the current period. The
required journal entry to record Bad Debt Expense should include a debit to:
A) Allowance for Doubtful Accounts for $30,000.
B) Allowance for Doubtful Accounts for $33,500.
C) Bad Debt Expense for $33,500.
D) Bad Debt Expense for $30,000.
The college campus bookstore uses a periodic inventory system. The bookstore
purchases 400 copies of a textbook at $70 each in June, 1,000 copies in August at $72
each, and 600 copies in December at $75 each. The bookstore sold 1,900 copies of the
textbook during the year.
Required:
Calculate the company’s ending inventory and cost of goods sold using the each of
following inventory costing methods.
Part a. FIFO
Part b. LIFO
Part c. Weighted Average
Which of the following statements about a fiscal year is correct?
A) Companies can choose to end their fiscal year on any date they feel is most relevant.
B) Companies must end their fiscal year on March 31, June 30, September 30, or
December 31.
C) Companies can select any date except a holiday to end their fiscal year.
D) Companies must end their fiscal year on December 31.
Accounts Receivable had beginning balance of $4,210 and an ending balance of $3,495,
and collections on account were $9,600. What was the amount of services that were
performed on account?
A) $8,885.
B) $17,305.
C) $10,315.
D) $1,895.
When interest is calculated for periods shorter than a year, the formula to calculate
interest is:
A) I = P x R x T, where I = interest calculated, P = principal, R = annual interest rate,
and T = number of months.
B) I = P x R x T, where I = interest calculated, P = principal, R = annual interest rate,
and T = (number of months / 12).
C) I = P x R x T, where I = interest calculated, P = principal, R = monthly interest rate,
and T = (number of months / 12).
D) I = (MV – P)/T, where I = interest calculated, MV = maturity value, P = principal and
T = number of months.
Unearned revenues are liabilities because:
A) no cash has changed hands.
B) goods or services have been paid for, but not yet provided to the customer.
C) the company is transferring them to another period for tax reasons.
D) the customer may someday return items purchased for a refund.
Your company has 500 units in inventory that were purchased for $12 each. These units
have a current market value of $15 each. Your supplier has just announced a price
increase to $16.50 that will go into effect at the beginning of next year. Management
should:
A) make no adjustments to the inventory account.
B) adjust the inventory account using the lower of the recent market values, which is
$15.
C) adjust the inventory account using the cost, which is $12.00.
D) adjust the inventory account using the average of the recent market values, which is
$14.50.
A company reported the following information at December 31, Year 1:
Use the information above to answer the following question. What is the amount of
current assets on the classified balance sheet?
A) $113,540.
B) $64,040.
C) $32,840.
D) $82,170.
The process of buying and selling inventory is known as inventory:
A) circulation.
B) management.
C) turnover.
D) allocation.
A company has outstanding 10 million shares of $2 par common stock and 1 million
shares of $4 par preferred stock. The preferred stock has an 8% dividend rate. The
company declares $300,000 in total dividends for the year. Which of the following is
correct if the preferred stockholders only have a current dividend preference?
A) Preferred stockholders will receive the entire $300,000, and they must also be paid
$20,000 before the end of the current accounting period. Common stockholders will
receive nothing.
B) Preferred stockholders will receive $24,000 or 8% of the total dividends. Common
stockholders will receive the remaining $276,000.
C) Preferred stockholders will receive the entire $300,000, and they must also be paid
$20,000 sometime in the future before common stockholders will receive anything.
D) Preferred stockholders will receive the entire $300,000, but will receive nothing
more relating to this dividend declaration. Common stockholders will receive nothing.
A company ‘s cash receipts procedures include the following. Cashiers collect cash and
issue a receipt at the point of sale. Supervisors take custody of the cash at the end of
each cashier ‘s shift and deposit it in the bank. Accounting staff then ensure the receipts
from cash sales are properly recorded in the accounting system. Which internal control
principle is most evident with these procedures?
A) Restrict access
B) Segregate duties
C) Document procedures
D) Independently verify
T-account:
Partial list of account balances at the end of the year:
Use the information above to answer the following question. Which of the following is
an accurate description of the economic events involving Accounts Receivable as
documented in the T-account above?
A) Sales to customers on account exceeded the payments received from customers on
account.
B) Payments received from customers on account exceeded the sales made to customers
on account.
C) The company paid off its debt more than it incurred new debt.
D) The company incurred more debt than it paid off.
Which of the following statements is correct?
A) FIFO results in a lower net income than LIFO when costs are rising.
B) LIFO results in a higher net income than FIFO when costs are rising.
C) LIFO results in a higher net income than FIFO when costs are falling.
D) LIFO results in the same net income as FIFO when costs are rising.
Expenses include all of the following except:
A) using supplies.
B) making a payment on account.
C) paying for electricity used during the current period.
D) paying wages for production workers for work performed during the current period.