midterm exam

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1. A company had expenses other than cost of goods sold of $250,000. Determine sales and gross profit given cost of goods sold was $100,000 and net income was $150,000. (Points : 1)       Sales: $350,000; Gross Profit: $150,000

      Sales: $350,000; Gross Profit: $50,000

      Sales: $500,000; Gross Profit: $400,000

      Sales: $500,000; Gross Profit: $50,000

      Sales: $400,000; Gross Profit: $500,000

Question 2. 2. The operating cycle for a merchandiser that sells only for cash moves from: (Points : 1)       Purchases of merchandise to inventory to cash sales       Purchases of merchandise to inventory to accounts receivable to cash sales       Inventory to purchases of merchandise to cash sales       Accounts receivable to purchases of merchandise to inventory to cash sales       Accounts receivable to inventory to cash sales

Question 3. 3. A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000. (Points : 1)       Net Purchases: $15,000; Ending Inventory: $7,000       Net Purchases: $10,000; Ending Inventory: $15,000       Net Purchases: $9,000; Ending Inventory: $6,000       Net Purchases: $6,000; Ending Inventory: $7,000       Net Purchases: $16,000; Ending Inventory: $20,000

Question 4. 4. The acid-test ratio: (Points : 1)       Is also called the quick ratio       Measures profitability       Measures inventory turnover       Is generally greater than the current ratio       Is not used by merchandise companies

Question 5. 5. A company's current assets were $17,980, its quick assets were $11,420 and its current liabilities were $12,190. Its quick ratio equals: (Points : 1)       0.94       1.07       1.48       1.57       2.40

Question 6. 6. A company's gross profit was $83,750 and its net sales were $347,800. Its gross margin ratio equals: (Points : 1)       4.2%       24.1%       75.9%       $83,750       $264,050

Question 7. 7. A trade discount is: (Points : 1)       A term used by a purchaser to describe a cash discount given to customers for prompt payment       A reduction in price below the list price       A term used by a seller to describe a cash discount granted to customers for prompt payment       A reduction in price for prompt payment       Also called a rebate

Question 8. 8. A company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is: (Points : 1)       $6,479.60       $6,482.00       $7,275.00       $7,355.00       $6,680.00

Question 9. 9. A company purchased $6,000 of merchandise on credit with terms 4/15, n/30. How much will be debited to Accounts Payable if the company pays $800 cash on this account within ten days? (Points : 1)       $833.33       $800       Nothing will debited to Accounts Payable, the account should be credited in this situation       $5,760       $5,333.33

Question 10. 10. Sales less sales discounts less sales returns and allowances equals: (Points : 1)       Net purchases       Cost of goods sold       Net sales       Gross profit       Net income

Question 11. 11. An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a: (Points : 1)       Balanced income statement       Single-step income statement       Multiple-step income statement       Combined income statement       Simplified income statement

Question 12. 12. A company had cash sales of $49,527, credit sales of $38,540, sales returns and allowances of $7,100 and sales discounts of $4,375. The company's net sales for this period equal: (Points : 1)       $80,967       $83,692       $88,067       $76,592       $99,542

Question 13. 13. On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 60. If the company borrows money at 12% to pay for the purchase on the last day of the discount period and pays the loan off on the last day of the credit period, what would be the net savings for the company? (Points : 1)       $99.50       $-20.43       $84.57       $20.43       $-84.57

Question 14. 14. A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the gross profit/margin for the period? (Points : 1)       $ 806,000       $1,031,000       $1,182,000       $1,080,000       $ 855,000

Question 15. 15. A company has the following accounts. What is the acid test ratio? Cash $ 10,000 Wages Payable $ 2,000 Accounts receivable $ 20,500 Consulting fees earned $ 13,718 Office supplies $ 2,625 Rent expense $ 3,673 Land $ 37,153 Salaries expense $ 6,642 Office equipment $ 14,535 Telephone expense $ 560 Accounts payable $ 18,352 Miscellaneous expense $ 280 Common stock $ 54,490 (Points : 1)       4.50%       2.30%       1.75%       4.00%       1.50%

Question 16. 16. Goods in transit are included in a purchaser's inventory: (Points : 1)       At any time during transit       When the purchaser is responsible for paying freight charges       When the supplier is responsible for freight charges       If the goods are shipped FOB destination       After the half-way point between the buyer and seller

Question 17. 17. The inventory valuation method that results in the lowest taxable income in a period of inflation is: (Points : 1)       LIFO method       FIFO method       Weighted-average cost method       Specific identification method       Gross profit method

Question 18. 18. The understatement of the ending inventory balance causes: (Points : 1)       Cost of goods sold to be overstated and net income to be understated       Cost of goods sold to be overstated and net income to be overstated       Cost of goods sold to be understated and net income to be understated       Cost of goods sold to be understated and net income to be overstated       Cost of goods sold to be overstated and net income to be correct

Question 19. 19. The inventory turnover ratio is calculated as: (Points : 1)       Cost of goods sold divided by average merchandise inventory       Sales divided by cost of goods sold       Ending inventory divided by cost of goods sold       Cost of goods sold divided by ending inventory

Question 20. 20. Days' sales in inventory is calculated as: (Points : 1)       Ending inventory divided by sales times 365       Cost of goods sold divided by ending inventory       Ending inventory divided by cost of goods sold times 365       Cost of goods sold divided by ending inventory times 365       Ending inventory divided by cost of goods sold

Question 21. 21. A company had gross profit of $134,200 on net sales of $205,000. If ending inventory was $8,000 and average inventory was $7,080, what is the company's inventory turnover? (Points : 1)       10.0       8.85       16.77       18.95       28.95

Question 22. 22. Acme-Jones Corporation uses a FIFO perpetual inventory system. August 2, 25 units were purchased at $12 per unit. August 5, 10 units were purchased at $13 per unit August 15, 12 units were sold at $25 per unit. August 18, 15 units were purchased at $14 per unit. What was the amount of the ending inventory for the month of August? (Points : 1)       $496.00       $486.00       $492.57       $300.00       $510.00

Question 23. 23. Given the following information, determine the cost of ending inventory at December 31 using the Weighted Average perpetual inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit (Points : 1)       $51.75       $83.22       $41.30       $49.75       $50.75

Question 24. 24. GAAP requires that the inventory of a company be reported at: (Points : 1)       Market value       Historical cost       Lower of cost or market       Replacement cost       Retail value

Question 25. 25. A company normally sells its product for $40 per unit. However, the selling price has fallen to $30 per unit. This company's current inventory consists of 200 units purchased at $32 per unit. Replacement cost has now fallen to $26 per unit. Calculate the value of this company's inventory at the lower of cost or market. (Points : 1)       $5,200       $6,400       $6,000       $8,000

Question 26. 26. Given the following information, determine the cost of goods sold for December 31 using the FIFO periodic inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit (Points : 1)       $282.15       $332.10       $281.25       $297.00

Question 27. 27. Given the following information, determine the cost of goods sold at December 31 using the Weighted Average periodic inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit (Points : 1)       $282.15       $332.10       $284.70       $290.70       $210.30

Question 28. 28. A company's warehouse was destroyed by a tornado on March 15. The following information was the only information that was salvaged: Inventory, beginning: $28,000 Purchases for the period: $17,000 Sales for the period: $55,000 Sales returns for the period: $700 The company's average gross profit ratio is 35%. What is the estimated cost of the lost inventory? (Points : 1)       $9,705       $25,995       $29,250       $44,000       $45,000

Question 29. 29. A company's internal control system: (Points : 1)       Eliminates the risk of loss       Monitors and controls business activities       Eliminates human error       Eliminates the need for audits

Question 30. 30. Pre-numbered printed checks are an example of which internal control principle? (Points : 1)       Technological controls       Maintain adequate records       Perform regular and independent reviews       Establish responsibilities

Question 31. 31. Cash equivalents: (Points : 1)       Include savings accounts       Include checking accounts       Are short-term investments sufficiently close to their maturity date that their value is not sensitive to interest rate changes       Include time deposits

Question 32. 32. The days' sales uncollected ratio is used to: (Points : 1)       Measure how many days of sales remain until the end of the year       Determine the number of days that have passed without collecting on accounts receivable       Identify the likelihood of collecting sales on account       Estimate how much time is likely to pass before the amount of accounts receivable is collected       Measure the amount of layaway sales for a period

Question 33. 33. Mattel had net sales of $4,235 million and ending accounts receivable of $775 million its days' sales uncollected is equal to: (Points : 1)       298 days       66.8 days       19.4 days       81.8 days       65.2 days

Question 34. 34. At the end of the day, the cash register's record shows $1,000 but the count of cash in the register is $1,035. The proper entry to record this excess includes a: (Points : 1)       Credit to Cash for $35       Debit to Cash for $35       Credit to Cash Over and Short for $35       Debit to Cash Over and Short for $35       Debit to Petty Cash for $35

Question 35. 35. Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include: (Points : 1)       A debit to Cash for $377.50       A credit to Cash Over and Short for $5.00       A debit to Petty Cash for $382.50       A credit to Cash for $387.50

Question 36. 36. Outstanding checks refer to checks that have been: (Points : 1)       Written, recorded, sent to payees and received and paid by the bank       Written and not yet recorded in the company books       Held as blank checks       Written, then recorded on the company books and sent to the customer, supplier, or creditor, but have not yet been paid by the bank       Issued by the bank

Question 37. 37. A company made a bank deposit on September 30 that did not appear on the bank statement dated September 30. In preparing the September 30 bank reconciliation, the company should: (Points : 1)       Deduct the deposit from the bank statement balance       Send the bank a debit memorandum       Deduct the deposit from the September 30 book balance and add it to the October 1 book balance       Add the deposit to the book balance of cash       Add the deposit to the bank statement balance

Question 38. 38. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for November's rent was correctly written and drawn for $3,790, but was erroneously entered in the accounting records as $7,390. When preparing the November bank statement, the company should: (Points : 1)       Deduct $3,600 from the book balance of cash       Add $3,700 to the bank statement balance       Add $7,390 to the book balance of cash       Deduct $3,600 from the bank statement balance       Add 3,600 to the book balance of cash

Question 39. 39. The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the (Points : 1)       Purchase requisition       Purchase order       Invoice       Receiving report       Invoice approval

Question 40. 40. Given the following information: Petty cash balance $ 530.00 Courier receipt $ 74.22 Postage receipt $ 25.00 Office Supplies receipt $ 95.64 Business Meal receipt $ 54.21 Cash on hand at the end of the month $299.71 What is the amount that needs to be reimbursed? (Points : 1)       $365.27       $289.06       $280.73       $181.22       $230.29

Question 41. 41. Given the following information: Petty cash balance $ 530.00 Courier receipt $ 74.22 Postage receipt $ 25.00 Office Supplies receipt $ 95.64 Business Meal receipt $ 54.21 Cash on hand at the end of the month $299.71 What is the amount that needs to be recorded for cash over and short? (Points : 1)       debit $23.29       credit $23.29       debit $18.78       no cash over and short is necessary       credit $18.78

Question 42. 42. The number of days' sales uncollected: (Points : 1)       Is used to evaluate the liquidity of receivables       Is calculated by dividing accounts receivable by sales       Measures a company's ability to pay its bills on time       Measures a company's debt to income       Is calculated by dividing sales by accounts receivable

Question 43. 43. Which of the following list of events properly reflects the early steps taken in the accounting process? (Points : 1)       Record relevant transactions, Post journal information to ledger accounts Analyze each transaction, Prepare and analyze the trial balance       Post journal information to ledger accounts, Analyze each transaction, Post journal information to ledger accounts, Prepare and analyze the trial balance       Prepare and analyze the trial balance, Analyze each transaction, Post journal information to ledger accounts, Record relevant transactions       Analyze each transaction, Post journal information to ledger accounts, Record relevant transactions, Prepare and analyze the trial balance       Analyze each transaction, Record relevant transactions, Post journal information to ledger accounts, Prepare and analyze the trial balance

Question 44. 44. A ledger is: (Points : 1)       A record containing all accounts (with amounts) for a business       A journal in which transactions are first recorded       A collection of documents that describe transactions and events during the accounting process       A list of all accounts with their debit balances at a point in time

Question 45. 45. The right side of a T-account is a(n): (Points : 1)       Debit       Increase       Credit       Decrease       Account balance

Question 46. 46. Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Wisconsin Rentals will include a: (Points : 1)       Debit to Accounts Payable       Debit to Accounts Receivable       Credit to Cash       Credit to Accounts Payable

Question 47. 47. A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters or years is the: (Points : 1)       Operating cycle of a business       Time period principle       Going-concern principle       Matching principle       Accrual basis of accounting

Question 48. 48. Interim financial statements refer to financial reports: (Points : 1)       That cover less than one year, usually spanning one, three or six-month periods       That are prepared before any adjustments have been recorded       That show the assets above the liabilities and the liabilities above the equity       Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid       Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues

Question 49. 49. Western Company has an annual reporting period that runs from July 1st through June 30th. Based on this information which of the following is a true statement? (Points : 1)       Western probably has little seasonal variation in their sales       Western has violated the time period principle       Western must prepare financial statements as of December 31 each year       Western has adopted a fiscal year       Western does not have an accountant

Question 50. 50. The accounting principle that requires revenue to be reported when earned is the: (Points : 1)

      Matching principle

      Revenue recognition principle

      Time period principle

      Accrual reporting principle

      Going-concern principle

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