Question 1

Prepaid expenses classified as current assets represent:

Accepted Answer

A) current year expenses that have been accrued. 
B) cash payments in the current year that will be recognized as expenses and matched against revenues of the next year. 
C) cash that has been segregated to pay for future expenses. 
D) expenses of the current year that have been paid in advance. 
A) current year expenses that have been accrued. 
B) cash payments in the current year that will be recognized as expenses and matched against revenues of the next year. 
C) cash that has been segregated to pay for future expenses. 
D) expenses of the current year that have been paid in advance.

Question 2

The current assets of most companies are usually made up of:

Accepted Answer

A) assets that are currently used in the operations of the company. 
B) cash and assets expected to be converted to cash within a year. 
C) a very small proportion (less than 10%)of the total assets of the entity. 
D) cash, marketable securities, and accounts and notes receivable. 
A) assets that are currently used in the operations of the company. 
B) cash and assets expected to be converted to cash within a year. 
C) a very small proportion (less than 10%)of the total assets of the entity. 
D) cash, marketable securities, and accounts and notes receivable.

Question 3

The principal reason for converting a customer's account receivable to a note receivable is:

Accepted Answer

A) the note receivable earns interest and the account receivable does not. 
B) the receivable is less likely to have to be written off as uncollectible. 
C) working capital is immediately increased. 
D) the customer is more likely to continue purchasing the company's products. 
A) the note receivable earns interest and the account receivable does not. 
B) the receivable is less likely to have to be written off as uncollectible. 
C) working capital is immediately increased. 
D) the customer is more likely to continue purchasing the company's products.

Question 4

An organization's system of internal control is designed primarily to:

Accepted Answer

A) ensure that no employees steal the organization's property. 
B) increase efficiency by letting one employee handle all aspects of a transaction from beginning to end. 
C) ensure that the organization's balance sheet will always balance. 
D) provide an operating framework for all employees as they work to achieve the organization's goals. 
A) ensure that no employees steal the organization's property. 
B) increase efficiency by letting one employee handle all aspects of a transaction from beginning to end. 
C) ensure that the organization's balance sheet will always balance. 
D) provide an operating framework for all employees as they work to achieve the organization's goals.

Question 5

An accounts receivable results from the sale of:

Accepted Answer

A) property, plant, and equipment for cash. 
B) goods and services to customers on account. 
C) goods and services to customers for cash. 
D) the firm's common stock. 
A) property, plant, and equipment for cash. 
B) goods and services to customers on account. 
C) goods and services to customers for cash. 
D) the firm's common stock.

Question 6

The reason for recording a prepaid expense as a current asset is:

Accepted Answer

A) that the prepaid item will be returned for a cash refund. 
B) that the prepaid item has not yet become an expense. 
C) that the expense has been incurred but not yet paid. 
D) to avoid recognizing an expense so net income will be higher for the current accounting period. 
A) that the prepaid item will be returned for a cash refund. 
B) that the prepaid item has not yet become an expense. 
C) that the expense has been incurred but not yet paid. 
D) to avoid recognizing an expense so net income will be higher for the current accounting period.

Question 7

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 LIFO cost flow assumption (using a periodic inventory system)was:

Accepted Answer

A) $1,250. 
B) $1,850. 
C) $2,300. 
D) $3,200. 
A) $1,250. 
B) $1,850. 
C) $2,300. 
D) $3,200.

Question 8

Agrico, Inc., accepted a 6-month, 9% (annual rate), $8,000 note from one of its customers on November 1, 2019; interest is payable with the principal at maturity.
Required:
a.Use the horizontal model or write the journal entry to record the interest earned
by Agrico during its year ended December 31, 2019.
b.Use the horizontal model or write the journal entry to record collection of the note
and interest at maturity.

Accepted Answer

a. Interest earned = $8,000 × 9% × 2/12

Question 9

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

Accepted Answer

A) net income will be higher. 
B) income taxes will be lower. 
C) balance sheet inventory values will be higher. 
D) a higher selling price can be established. 
A) net income will be higher. 
B) income taxes will be lower. 
C) balance sheet inventory values will be higher. 
D) a higher selling price can be established.

Question 10

Prepare a bank reconciliation for Grace, Inc., as of January 31, from the following information:
 (a.) The January 31 cash balance in the general ledger is $ \$ 5,088 $.
(b.) The January 31 balance shown on the bank statement is $ \$ 4,544 $.
(c) Checks issued but not returned with the bank statement were No. 435 for $ \$ 452 $ and No. 448 for $ \$ 182 $.
(d.) A deposit made on January 31 for $ \$ 1,280 $ was included in the general ledger balance but not in the bank statement balance.
(e.) Interest credited to the account during January but not recorded on the company's books amounted to $ \$ 72 $.
(f.) A bank charge of $ \$ 24 $ for printing new checks was made to the account during January. Although the company was expecting a charge, the amount was not Known until the bank statement arrived.
(g.) In the process of reviewing canceled checks, it was determined that a check issued to a supplier in payment of an account payable of $ \$ 139 $ was recorded as a $ \$ 193 $ cash disbursement
 Required:
(1.)Prepare the bank reconciliation for Grace, Inc., as of January 31.
(2.)Prepare the appropriate adjusting entry(ies)or show the reconciling items in a horizontal model for Grace, Inc., related to the bank reconciliation.

Accepted Answer

The answer of Prepare a bank reconciliation for Grace, Inc.,...

Question 11

The inventory cost flow assumption describes the flow of product cost:

Accepted Answer

A) from the warehouse to the customer. 
B) from the asset (inventory)account and to the expense (cost of goods sold)account. 
C) from the revenue (sales)account and to the expense (cost of goods sold)account. 
D) from the asset (inventory)account and to the revenue (sales)account. 
A) from the warehouse to the customer. 
B) from the asset (inventory)account and to the expense (cost of goods sold)account. 
C) from the revenue (sales)account and to the expense (cost of goods sold)account. 
D) from the asset (inventory)account and to the revenue (sales)account.

Question 12

Accounts receivable are reported 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 13

When costs are rising over time:

Accepted Answer

A) LIFO results in higher profits that FIFO. 
B) cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold. 
C) ending inventory balances will be greater under LIFO. 
D) FIFO results in higher profits than LIFO. 
A) LIFO results in higher profits that FIFO. 
B) cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold. 
C) ending inventory balances will be greater under LIFO. 
D) FIFO results in higher profits than LIFO.

Question 14

The Allowance for Bad Debts account had a balance of $8,500 at the beginning of the year and $7,200 at the end of the year.During the year (including the year-end adjustment), bad debts expense of $16,000 was recognized.The total amount of past-due accounts receivable that were written off as uncollectible during the year were:

Accepted Answer

A) $14,700. 
B) $16,000. 
C) $17,300. 
D) $23,200. 
A) $14,700. 
B) $16,000. 
C) $17,300. 
D) $23,200.

Question 15

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. Cost of goods sold under the FIFO cost flow assumption (using a periodic inventory system)was:

Accepted Answer

A) $2,300. 
B) $2,750. 
C) $3,200. 
D) $3,650. 
A) $2,300. 
B) $2,750. 
C) $3,200. 
D) $3,650.

Question 16

If an organization purchases $3,000 of supplies on account, with terms of 2/10, n30:

Accepted Answer

A) $2,880 must be paid within 10 days of the invoice date. 
B) $2,994 must be paid within 30 days of the invoice date. 
C) $2,940 can be paid within 10 days of the invoice date, or $3,000 must be paid within 30 days of the invoice date. 
D) $2,940 can be paid within 10 days of the invoice date, or $3,060 must be paid within 30 days of the invoice date. 
A) $2,880 must be paid within 10 days of the invoice date. 
B) $2,994 must be paid within 30 days of the invoice date. 
C) $2,940 can be paid within 10 days of the invoice date, or $3,000 must be paid within 30 days of the invoice date. 
D) $2,940 can be paid within 10 days of the invoice date, or $3,060 must be paid within 30 days of the invoice date.

Question 17

The accrual of interest on short-term marketable securities results in:

Accepted Answer

A) an increase in current assets and a decrease in net income. 
B) an increase in current assets and an increase in net income. 
C) an increase in noncurrent assets and an increase in liabilities. 
D) an increase in current liabilities and an increase in net income. 
A) an increase in current assets and a decrease in net income. 
B) an increase in current assets and an increase in net income. 
C) an increase in noncurrent assets and an increase in liabilities. 
D) an increase in current liabilities and an increase in net income.

Question 18

When a manufacturer invests in short-term marketable securities:

Accepted Answer

A) the return on investment is more important than the risk involved. 
B) the securities are likely to have a maturity date more than a year in the future. 
C) the market value of the securities is likely to fluctuate significantly. 
D) risk avoidance is of great importance. 
A) the return on investment is more important than the risk involved. 
B) the securities are likely to have a maturity date more than a year in the future. 
C) the market value of the securities is likely to fluctuate significantly. 
D) risk avoidance is of great importance.

Question 19

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. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system)was:

Accepted Answer

A) $1,850. 
B) $2,750. 
C) $3,200. 
D) $3,800. 
A) $1,850. 
B) $2,750. 
C) $3,200. 
D) $3,800.

Question 20

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

Accepted Answer

A) Periodic. 
B) Physical. 
C) Perpetual. 
D) Punctual. 
A) Periodic. 
B) Physical. 
C) Perpetual. 
D) Punctual.

Prepaid expenses classified as current assets represent:

The current assets of most companies are usually made up of:

The principal reason for converting a customer's account receivable to a note receivable is:

An organization's system of internal control is designed primarily to:

An accounts receivable results from the sale of:

The reason for recording a prepaid expense as a current asset is:

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 LIFO cost flow assumption (using a periodic inventory system)was:

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

The inventory cost flow assumption describes the flow of product cost:

Accounts receivable are reported at:

When costs are rising over time:

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. Cost of goods sold under the FIFO cost flow assumption (using a periodic inventory system)was:

If an organization purchases $3,000 of supplies on account, with terms of 2/10, n30:

The accrual of interest on short-term marketable securities results in:

When a manufacturer invests in short-term marketable securities:

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. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system)was:

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

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

Prepaid expenses classified as current assets represent:

The current assets of most companies are usually made up of:

The principal reason for converting a customer's account receivable to a note receivable is:

An organization's system of internal control is designed primarily to:

An accounts receivable results from the sale of:

The reason for recording a prepaid expense as a current asset is:

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 LIFO cost flow assumption (using a periodic inventory system)was:

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

The inventory cost flow assumption describes the flow of product cost:

Accounts receivable are reported at:

When costs are rising over time:

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. Cost of goods sold under the FIFO cost flow assumption (using a periodic inventory system)was:

If an organization purchases $3,000 of supplies on account, with terms of 2/10, n30:

The accrual of interest on short-term marketable securities results in:

When a manufacturer invests in short-term marketable securities:

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. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system)was:

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

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