During June, the following changes in inventory item 27 took place under a PERPETUAL INVENTORY SYSTEM:
|
June 1
|
Balance
|
1,400 units
|
@
|
$24
|
|
14
|
Purchased
|
800 units
|
@
|
$36
|
|
24
|
Purchased
|
800 units
|
@
|
$30
|
|
8
|
Sold
|
400 units
|
@
|
$50
|
|
10
|
Sold
|
1,000 units
|
@
|
$40
|
|
29
|
Sold
|
600 units
|
@
|
$54
|
1. Calculate the cost of the ending inventory at June 30 for item 27under FIFO.
A) $32,100
B) $31,200
C) $24,000
D) $34,100
2. Calculate the cost of the ending inventory at June 30 for item 27 under LIFO.
A) $34,800
B) $38,400
C) $32,400
D) $33,200
3. An overstated cost of goods sold will result in an:
A) overstated gross margin and overstated net income.
B) understated gross margin and overstated net income.
C) overstated gross margin and understated net income.
D) understated gross margin and understated net income.
4. During periods of falling prices, perpetual inventory procedure always will result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?
|
|
FIFO
|
LIFO
|
|
A
|
Yes
|
No
|
|
B
|
Yes
|
Yes
|
|
C
|
No
|
Yes
|
|
D
|
No
|
No
|
5. Purchase of merchandise under perpetual inventory procedure results in a:
A) debit to Purchases.
B) credit to Accounts Receivable.
C) debit to Accounts Payable.
D) debit to Merchandise Inventory.
6. Mechanical devices such as check protectors, cash registers, and time clocks, serve as:
A) expensive but reasonably effective control devices.
B) relatively inexpensive yet effective control devices.
C) only symbolic warnings to potential white collar criminals.
D) ineffective control devices because they are overused.
7. Which of the following items appears on a bank statement?
A) Deposits in transit
B) Bank service charges
C) Outstanding checks
D) All of the other answers appear on a bank statement
8. The accountant for the Johnson Company was able to prepare the bank reconciliation for August 31, 2006, using the following information:
|
Balance per ledger
|
$5,770
|
|
Deposit in transit
|
2,400
|
|
Balance per bank statement
|
5,700
|
|
Bank service charges
|
10
|
|
Checks outstanding
|
3,250
|
|
NSF check returned
|
1,000
|
|
Deposit of $1,100 recorded by company as $1,010
|
90
|
9. What is the amount of cash that should be reported in the balance sheet for August 31?
A) $4,650
B) $5,750
C) $5,660
D) $4,850
9. Which of the following might cause a depositor to receive a credit memorandum from the bank?
A) A service charge
B) An NSF check
C) A deposit in transit
D) A note collected by the bank for the depositor
10.Bridget Company employs a petty cash fund in the amount of $200. On August 14, a count of the fund disclosed the following:
|
Voucher for postage stamps
|
$ 34
|
|
|
Vouchers for transportation-in
|
72
|
|
|
Vouchers for sales returns
|
46
|
|
|
Currency
|
22
|
|
|
Coins
|
18
|
|
|
Total
|
$192
|
|
|
The correct entry to record replenishing the fund is:
|
|
A)
|
Postage Expense
|
34
|
|
|
|
|
Transportation-in
|
72
|
|
|
|
|
Sales Returns and Allowances
|
46
|
|
|
|
|
Accounts Payable
|
|
152
|
|
|
B)
|
Postage Expense
|
34
|
|
|
|
|
Transportation-in
|
72
|
|
|
|
|
Sales Returns and Allowances
|
46
|
|
|
|
|
Cash Short and Over
|
8
|
|
|
|
|
Cash
|
|
160
|
|
|
C)
|
Petty Cash
|
160
|
|
|
|
|
Cash
|
|
160
|
|
|
D)
|
Postage Expense
|
34
|
|
|
|
|
Transportation-in
|
72
|
|
|
|
|
Sales Returns and Allowances
|
46
|
|
|
|
|
Cash Short and Over
|
|
8
|
|
|
|
Cash
|
|
144
|
|
| |
|
|
|
|
|
|
Use the following to answer questions 11-12:
The Rodino Video Shop had the following account balances at the end of 2007:
|
Sales
|
$2,000,000
|
Cr.
|
|
Accounts Receivable
|
10,000
|
Dr.
|
|
Allowance for Uncollectible Accounts
|
200
|
Dr.
|
11.The company decided that uncollectible accounts are estimated at one-fourth of one percent of sales. Which of the following is the appropriate journal entry at the end of the period?
|
A)
|
Uncollectible Accounts Expense
|
5,000
|
|
|
|
Allowance for Uncollectible Accounts
|
|
5,000
|
|
B)
|
Uncollectible Accounts Expense
|
5,200
|
|
|
|
Allowance for Uncollectible Accounts
|
|
5,200
|
|
C)
|
Allowance for Uncollectible Accounts
|
5,000
|
|
|
|
Accounts Receivable
|
|
5,000
|
|
D)
|
Uncollectible Accounts Expense
|
5,000
|
|
|
|
Accounts Receivable
|
|
5,000
|
12. The company decided that 6 percent of accounts receivable would become uncollectible. Which of the following is the appropriate adjusting entry?
|
A)
|
Uncollectible Accounts Expense
|
600
|
|
|
|
Allowance for Uncollectible Accounts
|
|
600
|
|
B)
|
Uncollectible Accounts Expense
|
800
|
|
|
|
Allowance for Uncollectible Accounts
|
|
800
|
|
C)
|
Uncollectible Accounts Expense
|
400
|
|
|
|
Accounts Receivable
|
|
400
|
|
D)
|
Allowance for Uncollectible Accounts
|
600
|
|
|
|
Accounts Receivable
|
|
600
|
13. Assume there is a sufficiently large credit balance in the Allowance for Uncollectible Accounts. The act of writing off an uncollectible account will:
A) have no effect on total current assets.
B) reduce total current assets.
C) reduce net income for the period.
D) reduce current assets and retained earnings.
14. Which of the following items is associated only with credit sales and not cash (excluding checks) sales?
A) Sales returns
B) Uncollectible accounts
C) Sales revenue
D) Sales allowances
15. Which of the following would most likely NOT be listed under current liabilities?
A) Salaries payable
B) Taxes payable
C) Bonds payable
D) Accrued liabilities
16. The cost of land may include all of the following except:
A) title insurance premiums.
B) permanent landscaping.
C) back taxes.
D) paved driveways.
17. The fundamental difference between "tangible" assets and "intangible" assets is:
A) the size of the asset.
B) the value of the asset.
C) both the size and value of the asset.
D) the presence of physical characteristics.
18. On January 1, 2006, office equipment was purchased and placed into service. The equipment cost $200,000, has an estimated useful life of 10 years, and has an estimated salvage value of $24,000. The depreciation expense under the sum-of-the-years'-digits method for 2007 (the second year) is:
A) $36,364
B) $32,000
C) $18,000
D) $28,800
19. A machine with a cost of $40,000, an estimated useful life of four years, and an estimated salvage value of $8,000 is being depreciated using the straight-line method. How much depreciation will be charged for the third year?
A) $16,000
B) $10,000
C) $ 8,000
D) $ 4,000
20. The accumulated depreciation account represents:
A) a pool of cash to be used for asset replacement.
B) a reserve protecting against dividend payments.
C) an expense.
D) the amount of aasset's cost that has been charged to expense.
21. Equipment with a cost of $180,000 and $144,000 of accumulated depreciation is sold for $24,000. Removal costs of $6,000 were incurred to dismantle and remove the machine prior to sale. The loss recorded on the disposal of this equipment is:
A) $36,000
B) $42,000
C) $12,000
D) $18,000
22. A plant asset cost $187,200 and has $129,600 accumulated depreciation recorded. If the plant asset is sold for $46,800, the company should recognize:
A) no gain or loss.
B) a gain of $10,800.
C) a loss of $10,800.
D) a gain of $57,600.
23. A company paid $1,080,000 to install machinery at a mine estimated to contain 900,000 recoverable tons of ore. The machinery has an estimated life of 12 years and is capable of exhausting the mine in 10 years. If, in the first year of operations, 112,500 tons of ore were mined, the units-of-production depreciation to be recorded is:
A) $90,000
B) $108,000
C) $135,000
D) The other answers are all incorrect.
24. The method used for calculating depletion of natural resources is similar to which depreciation method?
A) Units-of-production
B) Straight-line
C) Double-declining-balance
D) Sum-of-the-years'-digits
25. Which of the following is most likely to be reported among "Plant Assets" in the balance sheet?
A) Goodwill
B) Patents
C) Leasehold improvements
D) Trademarks
26. Which of the following is an advantage of a corporation?
A) The corporation's income is only taxed once.
B) There is a little government regulation of corporations.
C Management is highly responsive to stockholder's wishes and may be easily replaced.
D) Stockholders may transfer their ownership interests easily.
27. As owners of a corporation, stockholders have a right to elect the:
A) president of the corporation.
B) treasurer of the corporation.
C) board of directors of the corporation.
D) officers of the corporation.
28. The market value of stock is the:
A) predetermined fixed price per share at which a corporation may repurchase its stock.
B) stockholders' equity per share.
C) price at which shares of stock are bought and sold in the open market.
D) same as the stated value.
29. The Quinton Company has 25,000 shares of 8 percent, $50 par value preferred stock and 75,000 shares of $100 par value common stock. The preferred stock is cumulative. Retained earnings are $1,500,000. If no dividends are in arrears from previous years, what portion of the $450,000 in dividends to be declared this year would go to each class of stock?
A) Preferred $ 50,000, common $400,000
B) Preferred $100,000, common $350,000
C) Preferred $ 75,000, common $375,000
D) Preferred $200,000, common $250,000
30. Unissued shares of stock are:
A) authorized but not outstanding.
B) equal to issued shares in basic rights.
C) a liability to the corporation.
D) outstanding shares.
31. Paid-in capital does not include:
A) capital contributed to the extent of par or stated value of the shares outstanding.
B) paid-in capital in excess of par or stated value on common and preferred stock.
C) preferred stock.
D) capital accumulated by the retention of income.
32. Paid-in capital does not include:
A) capital contributed to the extent of par or stated value of the shares outstanding.
B) paid-in capital in excess of par or stated value on common and preferred stock.
C) preferred stock.
D) capital accumulated by the retention of income.
33. Treasury stock is stock that:
A) has never been issued.
B) must be offered to existing stockholders first in amounts proportional to their shareholdings of the issuer's stock.
C) is apportioned to cover special projects such as the construction of a new building.
D) has been issued but was reacquired by the corporation.
34. Treasury stock is shown as a(n):
A) asset on the balance sheet.
B) reduction in retained earnings.
C) reduction in the total shareholders' equity at the bottom of the balance sheet.
D) liability of the corporation.
35. The correction of the effects of the improper use of an accounting method is called a(n):
A) prior period adjustment.
B) change in accounting principle.
C) extraordinary item.
D) stock dividend.