Question 1

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

Accepted Answer

A) the cash balance shown on the bank's records at the close of business on December 31, without further adjustments. 
B) the cash balance shown in the company's general ledger account for this checking account at the close of business on December 31, without further adjustments. 
C) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation. 
D) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any bank service charges and/or interest income from the December 31 bank account reconciliation. 
A) the cash balance shown on the bank's records at the close of business on December 31, without further adjustments. 
B) the cash balance shown in the company's general ledger account for this checking account at the close of business on December 31, without further adjustments. 
C) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation. 
D) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any bank service charges and/or interest income from the December 31 bank account reconciliation. D

Question 2

One of the most important reasons for having a system of internal control is to:

Accepted Answer

A) improve the effectiveness and efficiency of the operations of the organization. 
B) ensure no employees have ever been convicted of fraud or embezzlement. 
C) eliminate any temptations that may be presented to employees that could lead to theft from the company. 
D) prevent a salesperson from using a company car for personal transportation. 
A) improve the effectiveness and efficiency of the operations of the organization. 
B) ensure no employees have ever been convicted of fraud or embezzlement. 
C) eliminate any temptations that may be presented to employees that could lead to theft from the company. 
D) prevent a salesperson from using a company car for personal transportation. A

Question 3

The Allowance for Bad Debts account is a(n):

Accepted Answer

A) current asset. 
B) contra current asset. 
C) expense. 
D) contra revenue. 
A) current asset. 
B) contra current asset. 
C) expense. 
D) contra revenue. B

Question 4

The following are data available for Richards Co.for the month of May:
 $$\begin{array} { l l } 
\text { Sales } & \text { 1,120 units } \
\text { Beginning inventory } & 200 \text { units @ } \$ 1.25 \
 \text { Purchases, in chronological order } & 500 \text { units @ } \$ 1.30 \
& 400 \text { units@ } \$ 1.40 \
& 700 \text { units @ } \$ 1.50
\end{array}$$ 
Calculate cost of goods sold and ending inventory under the following cost flow assumptions:
(1.)Weighted average
(2.)FIFO
(3.)LIFO

Accepted Answer

Compute goods available for sa

Question 5

At the beginning of the year, accounts receivable were $45,000 and the allowance for bad debts was $4,200.During the year, sales (all on account)were $180,000, cash collections were $165,000, bad debts expense totaled $3,100, and $2,600 of accounts receivable were written off as bad debts. The balance at the end of the year for the Accounts Receivable account was:

Accepted Answer

A) $42,400. 
B) $54,300. 
C) $57,400. 
D) $60,000. 
A) $42,400. 
B) $54,300. 
C) $57,400. 
D) $60,000.

Question 6

Which of the following is(are)a category for securities?

Accepted Answer

A) Trading. 
B) Held-to-maturity. 
C) Available-for-sale. 
D) All of the answers are correct. 
A) Trading. 
B) Held-to-maturity. 
C) Available-for-sale. 
D) All of the answers are correct.

Question 7

Which of the following is not an example of an inventory account a manufacturing firm might use?

Accepted Answer

A) Work in process inventory. 
B) Finished goods inventory. 
C) Merchandise inventory. 
D) Raw materials inventory. 
A) Work in process inventory. 
B) Finished goods inventory. 
C) Merchandise inventory. 
D) Raw materials inventory.

Question 8

Which of the following is true regarding cost flow assumptions?

Accepted Answer

A) Manufacturing firms are required to use FIFO. 
B) Service firms are required to use LIFO. 
C) If a firm uses FIFO for tax purposes, then FIFO must be used for financial reporting purposes. 
D) If a firm uses LIFO for tax purposes, then LIFO must be used for financial reporting purposes. 
A) Manufacturing firms are required to use FIFO. 
B) Service firms are required to use LIFO. 
C) If a firm uses FIFO for tax purposes, then FIFO must be used for financial reporting purposes. 
D) If a firm uses LIFO for tax purposes, then LIFO must be used for financial reporting purposes.

Question 9

When an uncollectible account receivable is written off against the Allowance for Bad Debts account:

Accepted Answer

A) total current assets decrease and expenses increase. 
B) total current assets are not affected. 
C) total current assets decrease and expenses decrease. 
D) current assets decrease and expenses are not affected. 
A) total current assets decrease and expenses increase. 
B) total current assets are not affected. 
C) total current assets decrease and expenses decrease. 
D) current assets decrease and expenses are not affected.

Question 10

When a firm uses the LIFO inventory cost flow assumption:

Accepted Answer

A) ending inventory will be greater than if FIFO were used. 
B) net income will be greater than if FIFO were used. 
C) cost of goods sold will be the same as if FIFO were used. 
D) better matching of revenue and expense is achieved than under FIFO. 
A) ending inventory will be greater than if FIFO were used. 
B) net income will be greater than if FIFO were used. 
C) cost of goods sold will be the same as if FIFO were used. 
D) better matching of revenue and expense is achieved than under FIFO.

Question 11

The balance sheet valuation of inventories is:

Accepted Answer

A) lower of cost or market. 
B) lower of selling price or cost. 
C) lower of realizable value or selling price. 
D) cost, regardless of the cost of replacing the inventory. 
A) lower of cost or market. 
B) lower of selling price or cost. 
C) lower of realizable value or selling price. 
D) cost, regardless of the cost of replacing the inventory.

Question 12

In an inflationary economic environment, the selling price set for a firm's products will:

Accepted Answer

A) not be affected by the cost flow assumption used. 
B) be higher if LIFO is used than if FIFO is used. 
C) be higher if FIFO is used than if LIFO is used. 
D) be derived from the weighted average cost of inventory. 
A) not be affected by the cost flow assumption used. 
B) be higher if LIFO is used than if FIFO is used. 
C) be higher if FIFO is used than if LIFO is used. 
D) be derived from the weighted average cost of inventory.

Question 13

The following are data available for Blue Grass for the month of June:
 $\begin{array}{ll}
\text { Sales } & 2,400 \text { units } \
\text { Beginning inventory } & 600 \text { units @ } \$ 8.00 \
 \text { Purchases, in chronological order } & 1,200 \text { units @ } \$ 8.40\
&800 \text { units@\$8.80 } \
&1,000 \text { units @\$9.00 }
\end{array}$

(a.)Calculate cost of goods sold and ending inventory under the following cost flow assumptions:
(1.)Weighted-average
(2.)FIFO
(3.)LIFO
(b.)Assume net income using the weighted average cost flow assumption was $12,800.Calculate net income under FIFO and LIFO.

Accepted Answer

(a.) Compute goods available for sale in

Question 14

For which of the following reconciling items would an adjusting entry be necessary on the company's books?

Accepted Answer

A) A deposit in transit. 
B) An error by the bank. 
C) Outstanding checks. 
D) A bank service charge. 
A) A deposit in transit. 
B) An error by the bank. 
C) Outstanding checks. 
D) A bank service charge.

Question 15

Trading and Available-for-Sale securities are reported on the balance sheet at:

Accepted Answer

A) net realizable value. 
B) historical cost. 
C) weighted average cost. 
D) market value. 
A) net realizable value. 
B) historical cost. 
C) weighted average cost. 
D) market value.

Question 16

Sales during the year were 500 units.Beginning inventory was 250 units at a cost of $5 per unit.Purchase 1 was 400 units at $6 per unit.Purchase 2 was 200 units at $7 per unit. Ending inventory under the FIFO cost flow assumption (using a periodic inventory system)was:

Accepted Answer

A) $1,850. 
B) $2,300. 
C) $2,750. 
D) $3,650. 
A) $1,850. 
B) $2,300. 
C) $2,750. 
D) $3,650.

Question 17

The accounting concept or principle applied when the cost of short-term marketable securities is adjusted to market value is:

Accepted Answer

A) objectivity. 
B) matching revenue and expense. 
C) original cost. 
D) consistency. 
A) objectivity. 
B) matching revenue and expense. 
C) original cost. 
D) consistency.

Question 18

a.If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in understating the firm's ending inventory balance by $12,000, how would the firm's cost of goods sold be affected?
b.If management wanted to overstate net income, would ending inventory be understated or overstated? Explain your answer.

Accepted Answer

a.To correct the understatement, invento

Question 19

A firm has used LIFO for several years during which costs have trended higher.If this firm achieves a substantial reduction in inventory quantities in 2020 by selling more merchandise than it purchases, the effect on 2020 net income of the inventory reduction (or LIFO liquidation), compared to having no change in inventory quantity from the beginning to the end of 2020, is:

Accepted Answer

A) net income for 2020 will be greater if the inventory quantity declines. 
B) net income for 2020 will be less if the inventory quantity declines. 
C) net income for 2020 will not be affected because of the inventory quantity decline. 
D) impossible to determine from the information given. 
A) net income for 2020 will be greater if the inventory quantity declines. 
B) net income for 2020 will be less if the inventory quantity declines. 
C) net income for 2020 will not be affected because of the inventory quantity decline. 
D) impossible to determine from the information given.

Question 20

Assume that on November 1, 2019, a 3-month rent payment for $8,000 per month (for a total of $24,000)was made with respect to a lease that the company entered into on that date as a tenant.The company took occupancy of the rented space immediately.The lease term will expire on January 31, 2020.The $72,000 payment was recorded as a debit to Prepaid Rent on November 1, 2019.The adjusting entry on December 31, 2019, is as follows:

Accepted Answer

A)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Prepaid Rent } & \mathbf { 8 , 0 0 0 } & \
\hline \text { Cr. } & \text { Rent Expense } & & \mathbf { 8 , 0 0 0 } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Prepaid Rent } & 16,000 & \
\hline \text { Cr. } & \text { Rent Expense } & & 16,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Rent Expense } & \mathbf { 8 , 0 0 0 } & \
\hline \text { Cr. } & \text { Prepaid Rent } & & \mathbf { 8 , 0 0 0 } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Rent Expense } & 16,000 & \
\hline \text { Cr. } & \text { Prepaid Rent } & & 16,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Prepaid Rent } & \mathbf { 8 , 0 0 0 } & \
\hline \text { Cr. } & \text { Rent Expense } & & \mathbf { 8 , 0 0 0 } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Prepaid Rent } & 16,000 & \
\hline \text { Cr. } & \text { Rent Expense } & & 16,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Rent Expense } & \mathbf { 8 , 0 0 0 } & \
\hline \text { Cr. } & \text { Prepaid Rent } & & \mathbf { 8 , 0 0 0 } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | c | r | r | } 
\hline \text { Dr. } & \text { Rent Expense } & 16,000 & \
\hline \text { Cr. } & \text { Prepaid Rent } & & 16,000 \
\hline
\end{array}$$

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

One of the most important reasons for having a system of internal control is to:

The Allowance for Bad Debts account is a(n):

Which of the following is(are)a category for securities?

Which of the following is not an example of an inventory account a manufacturing firm might use?

Which of the following is true regarding cost flow assumptions?

When an uncollectible account receivable is written off against the Allowance for Bad Debts account:

When a firm uses the LIFO inventory cost flow assumption:

The balance sheet valuation of inventories is:

In an inflationary economic environment, the selling price set for a firm's products will:

For which of the following reconciling items would an adjusting entry be necessary on the company's books?

Trading and Available-for-Sale securities are reported on the balance sheet at:

Sales during the year were 500 units.Beginning inventory was 250 units at a cost of $5 per unit.Purchase 1 was 400 units at $6 per unit.Purchase 2 was 200 units at $7 per unit. Ending inventory under the FIFO cost flow assumption (using a periodic inventory system)was:

The accounting concept or principle applied when the cost of short-term marketable securities is adjusted to market value is:

Accountingpresent and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

The Bookkeeping Process and Transaction Analysis

Accounting for and Presentation of Property, Plant, and Equipment,

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements,

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Cost for Decision Making

Filters

Exam 5: Accounting for and Presentation of Current Assets

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

One of the most important reasons for having a system of internal control is to:

The Allowance for Bad Debts account is a(n):

Which of the following is(are)a category for securities?

Which of the following is not an example of an inventory account a manufacturing firm might use?

Which of the following is true regarding cost flow assumptions?

When an uncollectible account receivable is written off against the Allowance for Bad Debts account:

When a firm uses the LIFO inventory cost flow assumption:

The balance sheet valuation of inventories is:

In an inflationary economic environment, the selling price set for a firm's products will:

For which of the following reconciling items would an adjusting entry be necessary on the company's books?

Trading and Available-for-Sale securities are reported on the balance sheet at:

Sales during the year were 500 units.Beginning inventory was 250 units at a cost of $5 per unit.Purchase 1 was 400 units at $6 per unit.Purchase 2 was 200 units at $7 per unit. Ending inventory under the FIFO cost flow assumption (using a periodic inventory system)was:

The accounting concept or principle applied when the cost of short-term marketable securities is adjusted to market value is:

Accountingpresent and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

The Bookkeeping Process and Transaction Analysis

Accounting for and Presentation of Property, Plant, and Equipment,

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements,

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Cost for Decision Making

Filters