Regulations
The Financial Accounting Standards Board (FASB) sets United States “GAAP”, which stands for:
a. Generic accrual accounting principles
b. Generally accepted accounting procedures
c. Generic annual accounting procedures
d. Generally accepted accounting principles
d. Generally accepted accounting principles
Suppose Dave’s Discount’s Merchandise Inventory account showed a balance of $8,000 before the year-end adjustments. The physical count of the goods on hand totaled $7,400. Dave uses a perpetual inventory system. To adjust the accounts, which entry would the company make?
When using a manual accounting information system, which of the following transactions would be recorded in the general journal?
a. Cash payment of rent
b. Depreciation of office furniture
c. Sale of merchandise inventory on account
d. Purchase of merchandise inventory on account
b. Depreciation of office furniture
The balance sheet reports the
a. Results of operations on a specific date
b. Financial position for a specific period
c. Financial position on a specific date
d. Results of operations for a specific period
c. Financial position on a specific date
The petty cash fund had an initial balance of $100. It currently has $20 and petty cash tickets totaling $75 for office supplies. The entry to replenish the fund would contain
a. A credit to Cash Short and Over for $5
b. A credit to Petty Cash for $80
c. A debit to Cash Short and Over for $5
d. A debit to Petty Cash for $ 80
c. A debit to Cash Short and Over for $5
Which principle or concept states that businesses should use the same accounting methods and procedures from period to period?
a. Disclosure
b. Conservatism
c. Consistency
d. Materiality
c. Consistency
16. Assume Nile.com began April with 14 units of inventory that cost a total of $266. During April, Nile purchased and sold goods as follows:
April 8 Purchase 42 units @ $20
14 Sale 35 units @ $40
22 Purchase 28 units @ $22
27 Sale 42 units @ $40
Under the FIFO inventory costing method and the perpetual inventory system, how much is Nile’s cost of goods sold for the sale on April 14th?
Every transaction recorded in the cash payments journal includes a
a. Credit to Cash
b. Debit to Accounts Receivable
c. Debit to Sales Discounts
d. Debit to Cash
a. Credit to Cash
Which of the following accounts would be included in the plant assets category of the classified balance sheet?
a. Land held for investment
b. Accumulated Depreciation
c. Office supplies
d. Mortgage Payable
b. Accumulated Depreciation
Separation of duties is important for internal control of
a. Cash receipts
b. Cash payments
c. Neither of the above
d. Both a and b
d. Both a and b
Which of the following benefits of an effective accounting information system provides safeguards for a business’s assets and reduces the likelihood of fraud and errors?
a. Flexibility
b. Control
c. Relevance
d. Compatibility
b. Control
21. Suppose Nile.com used the weighted average inventory costing method and the perpetual inventory system. Use the Nile.com data in question 16 to compute the weighted average unit cost of the company’s inventory on hand at April 8. Round weighted average unit cost to the nearest cent.
a. $21.00
b. $19.75
c. $19.50
d. Cannot be determined from the data given
b. $19.75
Which of the following correctly describes the posting of transactions from the sales journal?
a. Individual accounts receivable are posted daily to the general journal
b. At the end of the month, the totals of the columns are posted to the general ledger
c. Transactions are posted daily to the general ledger
d. The total of the Accounts Receivable DR, sales Revenue CR column is posted to the accounts receivable subsidiary ledger
b. At the end of the month, the totals of the columns are posted to the general ledger
A worksheet
a. Is a journal used to record transactions
b. Is a financial statement that reports net income during the period
c. Is an internal document that helps summarize data for the preparation of financial statements
d. Is a ledger listing the account balances and changes in those accounts
c. Is an internal document that helps summarize data for the preparation of financial statements
Disadvantages of an enterprise resources planning (EPR) system include
a. Helps companies adjust to changes
b. Can replace separate software systems
c. Can reduce costs
d. Implementation requires a large commitment of time and people
d. Implementation requires a large commitment of time and people
Which of the following is true of accrual basis accounting and cash basis accounting?
a. Accrual accounting is not allowed under GAAP
b. Cash basis accounting records all transactions
c. Accrual accounting records revenue only when it is earned
d. All of the above are true
c. Accrual accounting records revenue only when it is earned
JC Manufacturing purchased inventory for $5,300 and also paid a $260 freight bill. JC manufacturing returned 45 percent of the goods to the seller and later took a 2 percent purchase discount. Assume JC Manufacturing uses a perpetual inventory system. What is JC Manufacturing’s final cost of ending inventory? Round your answer to the nearest whole number.
Centex Sound Systems purchased merchandise inventory costing $8,000 from Flower Co. on account. Where should Centex record this transaction, and what account is credited?
a. Cash payment journal; credit cash
b. Sales journal; credit Sales Revenue
c. Purchases journal; credit Accounts Payable
d. General Journal; Credit Inventory
c. Purchases journal; credit Accounts Payable
Suppose Austin Sound had sales of $300,000 and sales returns of $ 45,000. Cost of goods sold was $152,000. How much gross profit did Austin Sound report?
The detailed record of all increases and decreases that have occurred in an individual asset, liability, or equity during a specific periods is called
a. A journal
b. A ledger
c. A trial balance
d. An account
d. An account
The Sarbanes-Oxley Act
a. Created the Private Company Accounting Board
b. Allows accountants to audit and to perform any type of consulting work for a public company
c. Stipulates that violators of the act may serve 20 years in prison for securities fraud
d. Requires that an outside auditor must evaluate a public company’s internal controls
d. Requires that an outside auditor must evaluate a public company’s internal controls
52. Which inventory costing method results in the lowest net income during a period of rising inventory costs?
a. Weighted Average
b. Specific Identification
c. First In, First Out
d. Last In, First Out
d. Last In, First Out
At the end of the month, the accountant totals the Account Receivable DR, Sales Revenue CR, Cost of Goods Sold DR, and Merchandise Inventory CR Columns. This is known as
a. Cross-footing
b. Posting
c. Footing
d. Controlling accounts
c. Footing
66. If a company pays rent for the month, which section would this be reported under on the statement of cash flows?
a. Operating
b. Investing
c. Financing
d. None of the above
a. Operating
During the year, the owner of a company withdrew $10,000 cash. Which section would this be reported under on the statement of cash flows?
a. Operating
b. Investing
c. Financing
d. None of the above
c. Financing