Financial Accounting Test #2

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LIFO

Ending inventory is made up of the oldest purchases when a company uses?

FIFO

Ending inventory is made up of the newest purchases when a company uses?

9070

A company using the ending inventory system has the following balances: Merchandise inventory at the beginning of the year $3,600; freight-in $650; purchases $10,700; purchases returns and allowances, $1950;purchase discounts, $330. The cost of merchandise purchased is equal to:

purchases - purchases returns and allowances-purchase discounts + freight in

how do you find cost of merchandise purchased?

under the periodic inventory system, fright-in is debited when purchasing goods FOB shipping point

What is freight-in?

COMS consists of all the costs of acquiring the merchandise and readying it for sale.

How do you calculate the cost of merchandise sold?

credit to sales $800

merchandise with a sales price of $800 is sold on account with term 2/10, n/30. the journal entry to record the sale would include a:

$5,157

Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. The seller paid freight costs of $2000 and issued a credit memo for $10,000 prior to payment. What is the amount of the cash discount available?

FOB shipping point

If the title to merchandise purchases passes tot he buyer when the goods are shipped from the seller the terms are:

quantity discounts, cash discounts, freight-in

Which of the following items would affect the cost of merchandise inventory acquired during the period? (3)

understated

Merchandise inventory at the end of the year was understated, Which of the following statements correctly states the effect of the error? - (what happen to net income)

risk assessment

An element of internal control is:

show the bank has collected a note receivable from the customer

credit memos from the bank:

a deduction from the balance per company's records

accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is

deduction from the balance per the company's records

A check drawn by a company in payment of a voucher for $635 was recorded in the journal as $365. The item would be included in the bank reconciliation as a

debit cash; credit sales

receipts from cash sales of $7500 were recorded incorrectly int he cash receipts journal as $5700. What is required int he company's accounts?

addition to the balance per bank statement

the amount of deposits in transit is included on the bank reconciliation as a

when the account is determined to be worthless

under the direct write-off method of accounting for uncollectable accounts, Bad Debt Expense is debited

management estimates the amount of uncollectable

When the allowance method is used to account for uncollectable accounts, Bed Debt Expense is debited when

debit bad debt expense $15, 800; credit Allowance for Doubtful Accounts, $15800

to record estimated uncollectable receivables using the allowance method, the adjusting entry would be a

$580

At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $640. during the year, $350 of previously written-off accounts were reinstated and accounts totaling $410 are written-off as uncollectable. The end of the eyar balance (b4 adjustments) in the Allowance for Doubtful Accounts should be:

$300

On Oct. 1, Bank Company receives a 6% interest bearing note from Reese Company to settle a $20,000 account receivable. The note is due in 6 months. At Dec. 31, Black should record interest revenue of

a credit to Interest Revenue for $150

On August 1, Kim Company accepted a 90-day note receivable as payment for services provided to Hsu Company. The terms of the note were $10,000 face value and 6% interest. On Oct. 30, the journal entry to record the collection of the note should include a credit to Interest Revenue for $150

the inventory records do not show amount available for sale of the amount sold during the period. Physically count at the end of the period.

periodic inventory system

each purchase and sale of merchandise is recorded in the inventory and the cost of merchandise sold accounts. Amounts available for sale are continually updated

perpetual inventory system

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