ACC111

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A merchandising company that sells directly to consumers is a

retailer

If a company determines cost of goods sold each time a sale occurs, it

uses a perpetual Inventory system

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

buyer

Geran Company purchased merchandise inventory with an invoice price of $5,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Geran Company pays within the discount period?

$4900

Tony's Market recorded the following events involving a recent purchase of merchandise: Received goods for $50,000, terms 2/10, n/30.
Returned $1,000 of the shipment for credit. Paid $250 freight on the shipment.Paid the invoice within the discount period.

increased by $48,270

On November 2, 2010, Griffey Company has cash sales of $4,200 from merchandise having a cost of $3,000. The entries to record the day's cash sales will include:

a $3,000 credit to Merchandise Inventory.

The collection of a $600 account after the 2 percent discount period will result in a.

credit to Accounts Receivable for $600.

Sales revenues are usually considered earned when

goods have been transferred from the seller to the buyer

lnventories affect

both the balance sheet and the income statement.

Items waiting to be used in production are considered to be

raw materials.

ln a manufacturing business, inventory that is ready for sale is called

finished goods inventory.

The factor which determines whether or not goods should be included in a physical count of inventory is

legal title.

Beginning inventory plus cost of goods purchased equals

cost of goods available for sale.

Cost of goods sold is computed from the following equation:

beginning inventory + cost of goods purchased - ending inventory

company will usually replace a manual accounting information system with an electronic system as the operations increase in

complexity.

To be useful, the information outputs of a system should be

relevant, reliable, timely, and accurate.

The balance of a control account in the general ledger

must equal the composite balance of individual accounts in a related subsidiary ledger

sales journal is used to record

only credit sales of merchandise

Which of the following is not an advantage of a subsidiary ledger?

puts greater detail in the general ledger.

Which of the following statements is incorrect

When an accounting system is designed, no consideration needs to be given to the needs and
knowledge of the various users

Entries in the purchases journal are made

from purchase invoices

The process of totaling the columns of a journal is termed

footing.

Richmond's Wholesale uses a sales journal. An entry in this journal represents a

debit to Accounts Receivable; credit to Sales

Proving the equality of the totals in the columns of multiple-column special journals is called

footing and crossfooting.

Which one of the following is not an objective of a system of internal controls

Overstate liabilities in order to be conservative

Internal controls are concerned with

safeguarding assets

Internal controls are not designed to safeguard assets from

natural disasters

From an internal control standpoint, the asset most susceptible to improper diversion and use is

cash.

In large companies, the independent internal verification procedure is often assigned to

internal auditors

If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts for disbursements when it is replenished, the journal entry to record replenishment should include credits
to the following accounts

Cash, $100

If the month-end bank statement shows a balance of $36,000, outstanding checks are $12,000, a deposit of $4,000 was in transit at month end, and a check for $500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

$28,500.

Interest is usually associated with

notes receivable

The term "receivables" refers to

amounts due from individuals or companies

Wright sells softball equipment. On November 14, they shipped $1,000 worth of softball uniforms to Paola Middle School, terms 2/10, n/30.

On November 21, they received an order from Douglas High School for $600 worth of custom printed bats to be produced in Dec.

On November 30, Paola Middle School returned $100 of defective merchandise.

Wright has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November30?

$900

Accountants refer to an economic event as a

transaction

The accounting process is correctly sequenced as

identification, recording, communications

Which of the following would not be considered an external user of accounting data for the GHI Company?

Management

The origins of accounting are generally attributed to the work of

Luca Pacioli

Generally accepted accounting principles are

standards that indicate how to report economic events

The cost principle requires that when assets are acquired, they be recorded at

historical cost

GAAP stands for

General Accepted Accounting Principals

The Duce Company has five plants nationwide that cost $100 million. The current market value of the plants is $500 million. The plants will be recorded and reported as assets at

$100 million

The proprietorship form of business organization

represent the largest number of business in the US

The economic entity assumption requires that the activities

of an entity be kept separate from the activities of its owner

A basic assumption of accounting assumes that the dollar is

the common unit of measure for all business transactions

A debit to an asset account indicates

an increase in the asset

normal balance of any account is the

side which increases that account

correctly identify normal balances of accounts

Asset
Liabilities
Owners Equity
Revenues
Expenses

Asset-Debit
Liabilities-Credit
Owners Equity - Credit
Revenues- Credit
Expenses- Debit

In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $500. The cash account has a(n)

$400 debit balance

On January 14, Ericsson Industries purchased supplies of $500 on account. The entry to record the purchase will include

a debit to supplies and a credit to accounts payable

At January 1,2010, LeAnna Industries reported owner's equity of $130,000. During 2010, LeAnna had a net loss of$30,000 and owner drawings of $20,000. At December 31, 2010, the amount of owner's equity is

$80,000

At October 1, 2010, Padilla Industries had an accounts payable balance of $30,000. During the month, the company made purchases on account of $25,000 and made payments on account of $40,000. At October 31, 2010, the accounts payable balance is

$15,000

On July 7, 2010, Anaya Enterprises performed cash services of $1,400. The entry to record this transaction

credit to Cash of $1400

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

Fiscal Year

generally accepted accounting principles

Accrual basis accounting

The revenue recognition principle dictates that revenue should be recognized in the accounting records

when it is earned

The matching principle matches

expenses with revenues

company spends $10 million dollars for an office building. Over what period should the cost be written off?

over the useful life of the building

Adjusting entries are required

every-time financial statements are prepared

Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation's net income for the year ending October 31, 2010

$134,000

An adjusting entry

affects a balance sheet account and an income statement account

Unearned revenue are

received and recorded as liabilities before they are earned.

The closing entry process consists of closing

all temp accounts

At June 1, 2010, Ramirez reported owner's equity of $35,000. The company had no owner drawings during June. At June 30, 2010, the company will report owner's equity of

$38,400

A post-closing trial balance will show

only permanent account balances

proper steps in the sequence of steps in the accounting cycle

Prepare a trial balance, prepare adjusting entries, prepare financial statements

The entry to close the expense accounts includes a

credit to Rent expense for $1,000

the entry to close the revenue account includes a

credit to income summary for $3400

Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited

when an account is determined to be uncollectible

Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

Bad Debts Expense 20,000
Allowance for Doubtful Accounts 20,000

An aging of a company's accounts receivable indicates that $9,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a

debit to Bad Debts Expense for $7,900.

The maturity value of a $90,000, 10%, 60-day note receivable dated July 3 is

$91,500.

The relationship between current liabilities and current assets is

useful in evaluating a company's liquidity

A current liability is a debt that can reasonably be expected to be paid

within one year.

A retail store credited the Sales account for the sales price and the amount of sales tax on sales. If the sales tax rate is 5% and the balance in the Sales account amounted to $315,000, what is the amount of the sales taxes owed to the taxing agency?

$15,000

Ann Ellis's regular rate of pay is $12 per hour with one and one-half times her regular rate for any hours which exceed 40 hours per week. She worked 48 hours last week. Therefore, her gross wages were

$624.

Assuming a FICA tax rate of 8% on the first $100,000 in wages, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $110,000 for the year?

$80,000

Which one of the following payroll taxes is not withheld from an employee's wages because it is not levied on the employee?

Federal unemployment tax

Nick Dent, an employee of Spottswood Company, has gross earnings for the month of October of $6,000. FICA taxes are 8% of gross earnings, federal income taxes amount to $952 for the month, state income taxes are 2% of gross earnings, and Nick authorizes voluntary deductions of $15 per month to the United Fund. What is the net pay for Nick Dent?

$4,433

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