Financial Accounting test 2

19 terms by kevint1992 

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True

Freight Terms of FOB Destination means the seller pays the freight costs. T/F

True

Merchandise inventory is classified as a current asset in a classified balance sheet. T/F

False

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 30 days of the purchase. T/F

False

When purchasing land, the cost for clearing, draining, filling, and grading should be charged to a Land Improvements account. T/F

True

When purchasing equipment, sales taxes and installation and testing costs should be charged to equipment. T/F

True

A segregation of duties among employees minimized the possibility of collusion. T/F

True

The safeguarding of assets is an objective of a company's system of internal control. T/F

True

Allowance for Doubtful Accounts is a contra asset account. T/F

False

An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected. T/F

True

The cost of a patent should be amortized over its legal life or useful life, whichever is shorter.

Gross Profit

Sales Revenue-Cost of Goods sold = ?

Buyer

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point. the freight cost will be paid by the?

Not Sufficient Funds

Check returned by the bank marked "NSF" means

Bank Errors

Journal Entries are required after bank reconciliation for all of the following except: collection of a note recievable, bank errors, bank service charges, an NSF check.

Pay relatively small expenditures

A petty cash fund is generally established in order to?

Cash

The entry to replenish a petty cash fund includes a credit to?

Land, land improvements, buildings and equipment

4 subdivisions for plant assets are?

Asset's cost - accumulated depreciation

The book value of an asset is equal to the?

Direct write-off method and the allowance method.

Two methods of accounting for uncollectible accounts are?

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