This Balance Is Gaslighting Me
This item appears on the bank statement but not yet in the company’s Cash account and must be recorded by the company.
Bank service charge OR NSF check
Inventory owned by a company and held for resale is reported as what type of asset?
Current Asset
This method assumes the first goods purchased are the first goods sold.
FIFO
Net sales minus cost of goods sold equals this.
Gross Profit
Internal controls guarantee profitability.
False
Cash receipts recorded by the company but not yet shown on the bank statement are called these.
Deposits in transit
Goods shipped FOB Shipping Point are included in whose inventory while in transit?
Buyer
During periods of rising prices, which method results in the lowest net income?
LIFO
Sales of $500,000 and COGS of $350,000 produce what gross margin ratio? FREE GUESS
30%
Separating duties between handling cash and recording transactions is an example of this principle.
Establish responsibilities (segregation of duties)
If the bank mistakenly charges another company’s check to your account, this item is handled on which side of the reconciliation?
Bank side (added back)
If ending inventory is understated, net income will be:
Understated
Which inventory method best matches the physical flow of goods for most businesses?
FIFO
Which ratio measures how many times inventory is sold during a period?
Inventory turnover
Two employees using the same cash register violates which internal control principle?
Establish responsibilities
A company’s book balance is $2,300. A $40 bank fee and a $120 NSF check appear on the bank statement. What is the adjusted book balance?
$2,140
An error in ending inventory will automatically affect this account in the next period.
Beginning Inventory
Which method uses an average cost per unit for all goods available for sale?
Weighted-average
What does gross margin measure? State either formula or what specifically it can tell us.
Gross margin measures a company's profitability by showing the percentage of revenue left after subtracting the direct costs (COGS) of producing its goods or services
Which internal control protects a company against employee theft through insurance?
Bond key employees
Interest earned on a checking account is added to the _________ balance during reconciliation
Book Balance
Inventory shrinkage is recorded with a debit to which account?
Cost of Goods Sold
True or False: Inventory costing methods affect total units sold but not net income.
FALSE
Days’ sales in inventory focuses on this inventory amount rather than ending inventory.
Average Inventory
A surprise cash count reveals a shortage, but no error can be traced to the accounting records. Which account is used to record the difference?
Cash Over and Short