Exam 1 -3

Front 1

Which of the following factors is assessed using the debt ratio?

Back 1

risk

Front 2

T or F Revenues increase stockholders' equity; so a revenue account's normal balance is a credit balance.

Back 2

True

Front 3

Which of the following statements best defines financial statements?

Back 3

Financial statements are documents that report on a business in monetary terms, providing information to help people make informed business decisions.

Front 4

Which of the following accounts decreases with a debit?

Back 4

Notes Payable

Front 5

Which of the following statements is true of a trial balance?

Back 5

A trial balance presents data in debit and credit format.

Front 6

Which of the following financial statements is used to analyze the economic resources, debt, and overall financial position of a company?

Back 6

balance sheet

Front 7

Equity of a corporation is broken out into two components. Which of the following are the two components of the equity of a corporation?

Back 7

contributed capital and retained earnings

Front 8

In a limited-liability company, the ________.

Back 8

members pay tax on their share of earnings

Front 9

The following extract was taken from the worksheet of Kelly Bakers for the year 2014.

Kelly Bakers

Worksheet

December 31, 2014

Unadjusted TrialBalance

Cash(debit)6,000 Equipment (debit)15,000 Accumulated Depreciation- equipment(credit)7,500

Adjusted TrialBalance

Cash (debit) 6,000 Equipment (debit)15,000 Accumulated Depreciation- equipment(credit)9,000

For the above information, determine the amount of Depreciation Expense for theequipment used in the business.

Back 9

1500

Front 10

An adjusting entry is completed ________.

Back 10

at the end of the accounting period

Front 11

Maywood Inc. has a current ratio of 2.00. This indicates that the company has $2 in ________.

Back 11

current assets for every $1 of current liabilities

Front 12

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year are called ________ assets.

Back 12

current

Front 13

The assets of Moon Company are $150,000 and liabilities are $90,000. The equity will be ________.

Back 13

$60,000

Front 14

Marsh Supply Services paid $350 cash to a materials supplier that it owed from the previous month. Which of the following accounts decreases?

Back 14

Accounts Payable

Front 15

Financial statements are prepared after an entity's transactions are analyzed and recorded. Which of the following reports is one of the required financial statements?

Back 15

statement of cash flows

Front 16

Hamilton Lawn Services incurred $800 as repair expense and paid for it in cash. This transaction will ________.

Back 16

decrease the stockholders' equity

Front 17

In accounting, depreciation refers to the ________.

Back 17

method of spreading the cost of a plant asset over its useful life

Front 18

The balance sheet is a snapshot of the entity. Which of the following items are included on the balance sheet?

Back 18

assets

Front 19

Which of the following account's balance is carried forward to the next accounting period?

Back 19

Accumulated Depreciation

Front 20

On January 1, 2015, the Accounts Receivable of Linda Inc. had a debit balance of $20,000. During January, the company provided services for $600,000 on account. The company collected $250,000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of January?

Back 20

$370,000

Front 21

Which of the following groups of accounts normally have a debit balance?

Back 21

assets and expenses

Front 22

The amount of net income is transferred from ________ to ________.

Back 22

the income statement; the statement of retained earnings

Front 23

A business makes a payment in cash for advertising expense. Which of the following accounts will be debited?

Back 23

Advertising Expense

Front 24

Rosewood Inc. earned revenues of $15,000 and incurred expenses of $9,000. The company declared and paid cash dividends of $3,000. What is the balance in the Income Summary account prior to closing net income or loss to the Retained Earnings account?

Back 24

credit balance of $6,000

Front 25

The time period concept states that ________.

Back 25

financial statements can be prepared for specific periods

Front 26

Which of the following statements is true of accrual basis accounting?

Back 26

Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).

Front 27

Joshua Thomas Corporation manufactures and retails computer hardware. The president of the corporation bought a new car as a gift for his daughter and paid for it using cash from the business. Since the corporation paid for the car, it was recorded in its books as an asset. Which of the following concepts or principles of accounting did the corporation violate?

Back 27

economic entity assumption

Front 28

Which of the following entries will be necessary to close the appropriate depreciation account at the end of the year?

Back 28

debit Income Summary and credit Depreciation Expense

Front 29

According to the ________, the acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

Back 29

cost principle

Front 30

If an adjusting entry includes a debit to Rent Expense, that would indicate that the payment of rent had been previously recorded as a(n) ________.

Back 30

prepaid expense

Front 31

If a company is using the accrual basis accounting method, when should it record its earned revenue?

Back 31

when services are rendered, even though cash may be received at a later date

Front 32

The first step in the journalizing and posting process is to ________.

Back 32

identify each account involved and its type

Front 33

Which of the following transactions will affect the balance of retained earnings?

Back 33

paid rent expense for the month

Front 34

Under which of the following categories would bonds held as an investment for more than a year appear?

Back 34

long-term assets

Front 35

Which of the following users would rely on management accounting information for decision-making purposes?

Back 35

company managers

Front 36

Vista Camera Services started the year with total assets of $80,000 and total liabilities of $40,000. The revenues and the expenses for the year amounted to $120,000 and $70,000, respectively. During the year, the company did not issue any common stock, but it distributed dividends of $60,000. What is the amount of stockholders' equity at the end of the year?

Back 36

$30,000

Front 37

Which of the following is a plant asset?

Back 37

equipment

Front 38

A business pays $500 cash for office supplies. Which of the following accounts will be credited?

Back 38

Cash

Front 39

Which of the following is a collection of all the accounts, the changes in those accounts, and their balances?

Back 39

a ledger

Front 40

A shortened form of an account in the ledger is called a ________.

Back 40

T-account

Front 41

Genity Inc., located in Texas, records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?

Back 41

monetary unit assumption

Front 42

The account title used for recording the payment of rent in advance for an office building is ________.

Back 42

prepaid rent

Front 43

As per the ________, the entity will remain in operation for the foreseeable future.

Back 43

going concern assumption

Front 44

Which of the following statements is true of the accounting cycle?

Back 44

It is a process by which financial statements for a period are produced.

Front 45

A business purchases equipment by paying $8,000 in cash and issuing a note payable of $12,000. Which of the following occurs?

Back 45

Cash is credited for $8,000, Equipment is debited for $20,000, and Notes Payable is credited for $12,000.

Front 46

The balances of select accounts of Sandra Inc. as ofDecember 31, 2015 are given below:

Building(Debit) $120,000

Cash(Debit) 5,000

Office Supplies(Debit) 700 Furniture(Debit) 3,000

Prepaid Insurance(Debit) 450 Accumulated Depreciation—Furniture (Credit) $1,000 Land(Debit) 35,000 Accumulated Depreciation—Building(Credit) 4,800 Accounts Receivable(Debit) 2,500

The insurance has been prepaid for the next half year.Determine the amount of total current assets reported on the balance sheet.

Back 46

$8,650

Hint 46

Cash $ 5,000

Office Supplies 700

Prepaid Insurance 450

Accounts Receivable 2,500

Total current assets $8,650

Front 47

A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries and includes only permanent accounts is called ________.

Back 47

post-closing trial balance

Front 48

A business makes a cash payment of $12,000 to a creditor. Which of the following accounts will be credited?

Back 48

Cash

Front 49

To match expenses against revenues means to ________.

Back 49

subtract expenses incurred during one period from revenues earned during that same period

Front 50

Accrued revenue is revenue that ________.

Back 50

the business has earned, but not yet collected in cash

Front 51

Which of the following is the key significance of the acid-test ratio?

Back 51

It measures a company's ability to pay its current liabilities if they are due immediately.

Front 52

At the maturity of a note payable, a borrower will pay ________.

Back 52

the principal plus interest

Front 53

Which of the following exists if the maker of a promissory note fails to pay the note on the due date?

Back 53

a dishonored note

Front 54

On October 1, 2015, Android Inc. made a loan to one of its customers. The customer signed a 4-month note for $100,000 at 15%. How much interest revenue did the company record in the year 2016 for this note?

Back 54

$1,250

Front 55

Which of the following is an example of exercising internal control over receivables?

Back 55

separating cash collection and credit allowance duties

Front 56

A company reports net accounts receivable of $150,000 on its December 31, 2015 balance sheet. The Allowance for Bad Debts has a credit balance of $15,000. What is the balance in Accounts Receivable?

Back 56

$165,000

Front 57

A $30,000, three-month, 7% note payable was issued on December 1, 2015. What is the amount of accrued interest on December 31, 2015?

Back 57

175

Front 58

Acer Inc. plans to develop a shopping center. In the first quarter, they spent the following amounts: Acquisition of land $15,000; Surveys and legal fees 600; Land clearing 200; Fencing 1,000; Install lighting and signage 860

What is the cost of land improvements

Back 58

$1,860

Front 59

Hastings Corporation has purchased a group of assets for $15,000. The assets and their relative market values are listed below. Land $6,500; Equipment 2,000; Building 9,000

Back 59

$5,571

Front 60

Danube Corp. purchased a used machine for $10,000. The machine required installation costs of $1,000 and insurance while in transit of $500. At which of the following amounts would the machine be recorded?

Back 60

$11,500

Front 61

The type of intangible asset related to the rights of original music and media is known as a ________.

Back 61

Copyright

Front 62

Which of the following accounts will be credited by the borrower when a promissory note is issued?

Back 62

Note Payable

Front 63

Which of the following is a characteristic of a plant asset, such as a building?

Back 63

It is used in the operation of a business.

Front 64

Which of the following is true of the asset turnover ratio?

Back 64

It measures how efficiently a business uses its average total assets to generate sales.

Front 65

A truck costs $300,000 and is expected to run 100,000 miles during its 5-year life. Residual value is expected to be zero because the truck was used when acquired. If the truck runs 24,000 miles the first year, how much depreciation should the corporation record under the units-of-production method?

Back 65

$72,000

Front 66

Which of the following is true of the proper balance sheet treatment of the Allowance for Bad Debts with a credit balance?

Back 66

It is shown as a contra account related to accounts receivable.

Front 67

Where does unearned revenue to be earned in six months appear on the balance sheet?

Back 67

under current liabilities

Front 68

Which of the following liabilities is created when a company receives cash for services to be provided in the future?

Back 68

Unearned Revenue

Front 69

On October 1, 2015, Nurix Inc. purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2016?

Back 69

$180,000

Front 70

Which of the following statements is true of the direct write-off method?

Back 70

It is only suitable for small companies that have very few uncollectible receivables.

Front 71

Which of the following is true of goodwill?

Back 71

Goodwill is not amortized.

Front 72

The following information is from the 2015 records of Armand Camera Shop: Accounts Receivable, December 31, 2015 $40,000 (debit), Allowance for Bad Debts, December 31, 2015; prior to adjustment 1,500 (debit); Net credit sales for 2015 175,000; Accounts written off as uncollectible during 2015 15,000; Cash sales during 2015 27,000 Bad debts expense is estimated by the percent-of-sales method. The management estimates that 3% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2015

Back 72

$5,250

Front 73

Which of the following accounting principles requires that warranty expenses must be estimated and recognized in the same period when the related sales revenue is recognized?

Back 73

the matching principle

Front 74

Which of the following correctly describes the accounting treatment for interest payable?

Back 74

It is shown on the balance sheet as a current liability.

Front 75

It is mandatory for both the employer and employee to pay ________.

Back 75

FICA

Front 76

Refer to the following list of liability balances at December 31, 2015.

Accounts Payable $ 13,000; Employee Health Insurance Payable 450;

Employee Income Tax Payable 400;

Estimated Warranty Payable 600;

Long-Term Notes Payable(Due 2019) 33,000;

FICA—OASDI Taxes Payable 560;

Sales Tax Payable 370;

Mortgage Payable(Due 2020) 6,000;

Bonds Payable(Due 2021) 53,000;

Current Portion of Long-Term Notes Payable 3,500

What is the amount of total current liabilities

Back 76

$18,880

Hint 76

Accounts Payable $13,000 + Employee Health Insurance Payable 450 + Employee Income Tax Payable 400 + Estimated Warranty Payable 600 + FICA—OASDI Taxes Payable 560 + Sales Tax Payable 370 + Current Portion of Long-Term Notes Payable 3,500 = Total Current Liabilities $18,880

Front 77

The expected cash value of an asset at the end of its useful life is known as ________.

Back 77

residual value

Front 78

On August 31, 2013, Peter Services received $3,500 in advance from a customer. Which of the following would be the journal entry to record the receipt of cash?

Back 78

debit Cash $3,500 and credit Unearned Revenue $3,500

Front 79

On December 1, 2015, Parsons Inc. sold machinery to a customer for $20,000. The customer could not pay at the time of sale, but agreed to pay 9 months later, and signed a 9-month note at 9% interest. What was the total amount of cash collected by Parsons on the maturity of the note?

Back 79

$21,350

Hint 79

$20,000 + [(20,000 × 9%) × 9 / 12] = $21,350

Front 80

Which of the following is a major control risk in the payroll area?

Back 80

fictitious persons cashing paychecks

Front 81

Which of the following is true of a contingent liability?

Back 81

It is a potential liability that depends on a future event.

Front 82

A company with significant amounts of accounts receivable, experiences uncollectible accounts from time to time. If the company uses the direct write-off method, the effect of writing off an uncollectible receivable will be ________.

Back 82

a reduction in net income

Front 83

Under the direct write-off method, the entry to write off an uncollectible account will include ________.

Back 83

a debit to Bad Debts Expense account

Front 84

A coal mine costs $1,000,000 and is estimated to hold 50,000 tons of coal. There is no residual value. 3,000 tons are extracted and sold during the first year of operations. Calculate depletion per unit.

Back 84

$20

Hint 84

Depletion per unit = (Cost - Residual value) ÷ Estimated total units; Depletion per unit = ($1,000,000 - 0) ÷ 50,000 tons = $20 per ton

Front 85

Gem Corp. had sales of $3,500 for cash. The state sales tax rate is 8.2%. What amount will be debited to the Cash account?

Back 85

$3,787

Hint 85

Cash 3,787 (debit) Sales Revenue 3,500 (credit) Sales Tax Payable (8.2% × $3,500) 287 (credit)

Front 86

Extra compensation items that are not paid directly to an employee are called ________.

Back 86

benefits

Front 87

Which of the following is included in the denominator of the acid-test ratio?

Back 87

Total current liabilities

Front 88

Which of the following accounts is credited by the seller when tax is collected on retail sales?

Back 88

Sales Tax Payable

Front 89

GAAP requires most companies to use the ________.

Back 89

allowance method to estimate bad debts

Front 90

Which of the following occurs when a company records accrued interest expense on a note payable?

Back 90

Interest Payable is credited

Front 91

Which of the following is a control procedure to prevent fictitious persons from cashing paychecks?

Back 91

requiring photo IDs for employees picking up their paychecks

Front 92

Calculate the interest on a 90-day, 9% note for $36,000. (Use a 360-day year to compute interest.)

Back 92

$810

Hint 92

($36,000 × 9%) × 90/360 = $810

Front 93

The Statewide Sales Inc. has gross pay for March of $45,000. Which of the following would be included in the journal entry in the payroll cycle to record salary expense?

Back 93

debit Salaries and Wages Expense

Front 94

The cost of an asset is $1,000,000 and its residual value is $100,000. Estimated useful life of the asset is four years. Calculate depreciation for the first year using the double-declining-balance method of depreciation.

Back 94

$500,000

Front 95

Which of the following accounting principles requires businesses to record depreciation?

Back 95

the matching principle

Front 96

Ivery coast Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was 5 years, and its estimated residual value was $90,000. Iverycoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2015.

Back 96

$658,000

Hint 96

Depreciation per year = (Cost - Residual value) / Useful life; Depreciation per year = ($800,000 - $90,000) ÷ 5 = $142,000; Book value at the end of first year = $800,000 - $142,000 = $658,000

Front 97

An asset was purchased for $24,000. The asset's estimated useful life was 5 years, and its residual value was $4,000. The straight-line method of depreciation was used. Calculate the gain or loss on sale if the asset is sold for $18,000 at the end of the first year.

Back 97

$2,000 loss

Front 98

The journal entry for accrued interest on a note payable by the borrower includes ________.

Back 98

a debit to Interest Expense and credit to Interest Payable

Front 99

Which of the following is paid by the employer only?

Back 99

Federal unemployment tax

Front 100

Which of the following accounting methods is usually used to compute amortization expense?

Back 100

straight-line

Front 101

Which of the following is classified as a current asset in the balance sheet?

Back 101

marketable securities

Front 102

Which of the following is an application of the conservatism principle?

Back 102

reporting inventory at the lower of cost or market

Front 103

Merchandise Inventory and Cost of Goods Sold appear ________.

Back 103

on the balance sheet and income statement, respectively

Front 104

A check of $300,000, deposited by a company, was returned to the bank for nonsufficient funds. How would this information be included on the bank reconciliation?

Back 104

a deduction on the book side

Front 105

Lewis Inc. had the following balances and transactions during 2014: Beginning Merchandise Inventory 100 units at $80 March 10 Sold 50 units June 10 Purchased 200 units at $82 October 30 Sold 150 units use the weighted average to solve this

Back 105

$16,240

Front 106

A merchandiser had sales returns and allowances of $300, sales discounts of $700, cost of goods sold of $12,000, and all other expenses of $4,500. The merchandiser uses a perpetual inventory system. The second entry in the closing process would include ________.

Back 106

a debit to Income Summary for $17,500

Front 107

A company sold merchandise for $1,000 on account with terms of 2/10, n/30. The company uses a perpetual inventory system. Defective merchandise of $200 was returned 2 days later. If the payment was received after 20 days, the journal entry to record the cash receipt will include ________.

Back 107

a debit to Cash for $800 and a credit to Accounts Receivable for $800.

Front 108

Which of the following is the most basic internal control measure for cash?

Back 108

keeping money in a bank account

Front 109

Best Value Inc. started its operations on January 1, 2015. It engages in buying and selling different types of electronic gadgets. The first step in its operating cycle would be to ________.

Back 109

purchase inventory from vendors

Front 110

The materiality concept states that a company must ________.

Back 110

perform strictly proper accounting only for significant items

Front 111

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

Back 111

disclosure principle

Front 112

Which of the following inventory costing methods results in the highest value of ending inventory during a period of rising inventory costs?

Back 112

first-in, first-out

Front 113

The Merchandise Inventory account of a company shows a balance of $50,000 but a physical count of inventory shows $48,000. Which of the following entries is required to record the shrinkage? (Assume a perpetual inventory system)

Back 113

Cost of Goods Sold 2,000(debit) Merchandise Inventory 2,000 (credit)

Front 114

Which of the following is the last step in the daily control over cash receipts by mail?

Back 114

The controller compares the records of the day's bank deposit amount from the treasurer and the debit to cash from the accounting department.

Front 115

In a large company, the person who is responsible for comparing cash and the bank balance is the ________.

Back 115

controller

Front 116

Which of the following is a benefit provided by internal control?

Back 116

It promotes operational efficiency.

Front 117

VB Specialty Foods, a grocery merchandiser, purchased goods and paid transportation to bring them to the company warehouse. The transportation cost is known as ________.

Back 117

freight in

Front 118

A check was written by a business for $507, but was recorded in the cash payments journal as $705. How would this error be included on the bank reconciliation?

Back 118

an addition on the book side

Front 119

A company using the perpetual inventory system purchased inventory worth $500,000 on account with terms of credit being 3/15, n/45. Defective inventory of $50,000 was returned 2 days later and the accounts were appropriately adjusted. If the company paid the invoice 25 days later, the journal entry to record the payment would be ________.

Back 119

$450,000 debit to Accounts Payable and $450,000 credit to Cash

Front 120

A petty cash fund was established with a $500 balance. It currently has cash of $19 and petty cash tickets as shown below. Travel expense $110; Office supplies $290; Equipment rental expense $80; Which of the following would be the journal entry to replenish the Petty Cash account?

Back 120

debit to Cash Short & Over for $1

Front 121

A petty cash fund was established with a $350 balance. It currently has cash of $41 and petty cash tickets totaling $309. Which of the following would be included in the entry to replenish the fund?

Back 121

a credit to Cash for $309

Front 122

The cost of goods available for sale is equal to the ________.

Back 122

cost of goods sold plus the ending inventory

Front 123

The tracking of inventory shrinkage due to theft, damage, or errors is done with the help of a (n) ________ of inventory.

Back 123

physical count

Front 124

Which of the following is an attribute of the internal control procedure—competent, reliable, and ethical personnel?

Back 124

the need of training and supervision of employees

Front 125

Up-to-date Merchandisers has the following transactions for the month of July. Sales revenue $460,000 Cost of goods sold 300,000 Operating expenses 85,000 Sales discounts 20,000 Sales returns and allowances 15,000 Interest revenue 5,000 Calculate Gross Profit.

Back 125

$125,000

Front 126

The Sales Discounts account is a contra account to the ________

Back 126

Sales Revenue account

Front 127

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. Which of the following journal entries correctly records the sales revenue?

Back 127

Accounts Receivable 9,000 (debit) Sales Revenue 9,000 (credit)

Front 128

At Radiant Inc., the operations department is also responsible for recording cash transactions as it does not have a separate accounting department. In the above situation, which internal control procedure needs strengthening?

Back 128

separation of duties

Front 129

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise. The terms in this case are:

Back 129

FOB shipping point.

Front 130

The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed. Which of the following is to be credited to close the Income Summary account?

Back 130

Retained Earnings

Front 131

The ending Merchandise Inventory for the current accounting period is understated by $2,700. What effect will this error have on Cost of Goods Sold and Net Income?

Back 131

Cost of Goods Sold Overstated and Net Income Understated

Front 132

Under a perpetual inventory system, merchandise returned by a customer to the seller is recorded as a ________ in the books of seller.

Back 132

sales return

Front 133

On January 21, 2014, Bessant Inc. received merchandise from Mullies Inc. On that date, it found a few of these goods to be damaged. On January 22, it returned the damaged goods to the seller. Such returns will be treated as ________ by Bessant.

Back 133

purchase returns

Front 134

Rodriguez Inc. had the following balances and transactions during 2015: Beginning Merchandise Inventory as of January 1, 2015 100 units at $80 March 10 Sold 50 units June 10 Purchased 200 units at $82 October 30 Sold 150 units What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31, 2015 if the perpetual first-in, first-out costing method is used?

Back 134

$8,200

Hint 134

Ending Merchandise Inventory = (purchased) $24,400 – (cost of goods sold) $16,200 = $8,200

Front 135

The revenue, expenses, Sales Returns and Allowances, and Sales Discounts will be closed via the ________.

Back 135

Income Summary account

Front 136

Harris Inc. had the following balances and transactions during 2014: Beginning Merchandise Inventory as of January 1, 2014 100 units at $75 March 10 Sold 50 units June 10 Purchased 200 units at $80 October 30 Sold 150 units What would the cost of goods sold be as reported on the income statement for the year ending December 31, 2014 if the perpetual, last-in, first-out costing method is used? (Round your answer to two decimal places.)

Back 136

$15,750

Front 137

Merchandise inventory accounting systems can be broadly categorized into two types. They are ________.

Back 137

perpetual and periodic

Front 138

A company that uses the perpetual inventory system purchases inventory for $65,000 on account, with terms of 2/10, n/30. Which of the following is the journal entry to record the payment made within 10 days?

Back 138

a debit to Accounts payable for $65,000, a credit to Merchandise Inventory for $1,300, and a credit to Cash for $63,700

Front 139

Which of the following inventory valuation methods should be used for unique items?

Back 139

specific identification

Front 140

Which of the following statements is true of the Sarbanes-Oxley Act?

Back 140

The Public Company Accounting Oversight Board oversees the work of auditors of public companies.

Front 141

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be ________.

Back 141

Cost of Goods Sold 5,500(debit) Merchandise Inventory 5,500 (credit)

Front 142

Which of the following is included in a voucher?

Back 142

the invoice number

Front 143

The bank recorded a $3,000 deposit as $300. How would this information be included on the bank reconciliation?

Back 143

an addition on the bank side

Front 144

Under the perpetual inventory system, the journal entries to record sales returns (the original sale was on account) would be ________.

Back 144

Sales Returns and Allowances(Debit) Accounts Receivable (credit) Merchandise Inventory (debit) Cost of Goods Sold (credit)

Front 145

Which of the following statements about internal control is true?

Back 145

Internal auditors ensure that the employees follow company policies.

Front 146

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

Back 146

specific identification

Front 147

Which of the following is the correct order of subtotals that appear on a multi-step income statement?

Back 147

Gross profit, Operating income, Net income

Front 148

Gross profit represents the mark-up on ________.

Back 148

merchandise inventory

Front 149

Journal entries are required for the reconciling items on the book side because ________.

Back 149

those transactions have not yet been recorded on the company books

Front 150

A document authorizing a cash payment is a(n) ________.

Back 150

voucher