Exam 7: Reporting and Interpreting Cost of Goods Sold and Inventory

If a company uses the completed contract method rather than the percentage of completion method, the total profit the company recognizes from the beginning of the project throughout its completion will be which of the following?

Uncollectible accounts must be estimated because it is not possible to know which accounts will not be collected.

The responsibility for keeping the records for an asset should be separate from the physical custody of that asset.

A company had the following partial list of account balances at year-end: What amount of Net Sales would be shown on the income statement?

Under the allowance method for uncollectible accounts,

To aid internal control, the individual authorized to sign cheques should be which of the following?

Net realizable value is determined by adding the Allowance for Doubtful Accounts to Trade Accounts Receivable.

Control over cash disbursements is improved if all expenditures are paid by cheque or through use of electronic funds transfers.

What is the impact of treating sales returns and allowances as a contra revenue but treating sales discounts and credit card discounts as selling expenses?

Deposits in transit to the bank have not been recorded in the depositor's books but they have been recorded by the bank.

Which of the following would not be considered an element of good internal control?

What are "cash equivalents"? Specifically where would they appear on the financial statements?

Under the allowance method for uncollectible accounts, when a specific account is written off

The percentage of trade receivables basis of estimating uncollectible accounts ignores the existing balance in the allowance account when the bad debts adjusting entry is recorded.

Cash equivalents typically include investments with original maturities of which of the following?

What do credit terms of 2/10, n/30 indicate?

The gross profit percentage measures the ability to charge premium prices and produce goods and services at lower cost.

Robertson's Toy World sells a variety of toys at discount prices. The following transactions occurred on May 16. Consider credit card discount a selling expense. Required: a. Present journal entries for each of the above transactions. b. Compute the net sales for the day.

Prior to the write off of a $30 customer account, Kraft Company had the following account balances: What was the net realizable value of the receivables before and after the write-off?

The gross profit percentage is computed by taking operating profit divided by net sales.