Question 1

Which of the following is not a primary concern of internal control?

Accepted Answer

A)  Efficiency of company operations 
B)  Fairness of financial statements 
C)  Accuracy of accounting records 
D)  Safeguarding assets 
A)  Efficiency of company operations 
B)  Fairness of financial statements 
C)  Accuracy of accounting records 
D)  Safeguarding assets

Question 2

At the end of each day,the cashier should be the one responsible for comparing the amount on the cash register tape with the day's cash additions to the cash register.

Accepted Answer

A) True 
 B)False

Question 3

The computerization has helped taking physical inventory to a great extent under the periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 4

Match between columns
                        Premises:  Beginning inventory for 2010
 Cost of goods sold for 2009
 Stockholders' equity at the end of 2010
 Income before income taxes for 2010
 Stockholders' equity at the end of 2009
 Cost of goods sold for 2010
 Income before income taxes for 2009

Accepted Answer

The Answer of understated (U) and overstated (O) and not is...

Question 5

An accountant is responsible for the following activities: (1)receiving all cash; (2)maintaining the general ledger; (3)maintaining the accounts receivable subsidiary ledger that includes the individual records of each customer; (4)maintaining the journals for recording sales,purchases,and cash receipts; and (5)preparing monthly statements to be sent to customers.As a service to customers and employees,the company allows the accountant to cash checks of up to $50 with money from the cash receipts.When deposits are made,the checks are included in place of the cash receipts.What weaknesses in internal control exist in this system?

Accepted Answer

In this case,the principle of separation

Question 6

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

Accepted Answer

A)  increase Merchandise Inventory and decrease Cost of Goods Sold. 
B)  increase Cost of Goods Sold and decrease Purchases. 
C)  increase Cost of Goods Sold and decrease Merchandise Inventory. 
D)  make no additional entry until the end of the period. 
A)  increase Merchandise Inventory and decrease Cost of Goods Sold. 
B)  increase Cost of Goods Sold and decrease Purchases. 
C)  increase Cost of Goods Sold and decrease Merchandise Inventory. 
D)  make no additional entry until the end of the period.

Question 7

Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000,purchases of $75,000,and sales of $125,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Accepted Answer

A)  indeterminate. 
B)  less than $5,000. 
C)  more than $5,000. 
D)  equal to $5,000. 
A)  indeterminate. 
B)  less than $5,000. 
C)  more than $5,000. 
D)  equal to $5,000.

Question 8

Indicate the letter of where each of the following documents would be prepared and the letter of where it would be sent.
a. Requesting department
b. Purchasing department
c. Receiving department
d. Accounting department
e. Treasurer
f. Vendor
_____ 1. Purchase requisition
_____ 2. Receiving report
_____ 3. Invoice
_____ 4. Check authorization
_____ 5. Check

Accepted Answer

The answer of Indicate the letter of where each of...

Question 9

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following documents would be prepared (by a buyer of goods)after the others?

Accepted Answer

A)  Receiving report 
B)  Check 
C)  Purchase requisition 
D)  Purchase order 
A)  Receiving report 
B)  Check 
C)  Purchase requisition 
D)  Purchase order

Question 11

All of the following are the goals of internal controls over merchandising transactions except

Accepted Answer

A)  To keep credit losses at a minimum 
B)  To retain enough cash to take advantage of cash discounts 
C)  To keep the appropriate amount of inventory on hand 
D)  To decide on the quality of materials to be purchased 
A)  To keep credit losses at a minimum 
B)  To retain enough cash to take advantage of cash discounts 
C)  To keep the appropriate amount of inventory on hand 
D)  To decide on the quality of materials to be purchased

Question 12

Merchandising businesses do not need as good a system of internal control as service companies.

Accepted Answer

A) True 
 B)False

Question 13

Demmler Corporation entered into the transactions listed below.In the journal provided,prepare Demmler's journal entries,assuming use of the periodic inventory system.Omit explanations.

Accepted Answer

The answer of Demmler Corporation entered into the transactions listed...

Question 14

Bonding means insuring a company against employee theft.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are examples of internal control activities except

Accepted Answer

A)  rotation of key personnel. 
B)  company picnics for all employees. 
C)  bank reconciliations. 
D)  insistence that employees take earned vacations. 
A)  rotation of key personnel. 
B)  company picnics for all employees. 
C)  bank reconciliations. 
D)  insistence that employees take earned vacations.

Question 16

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Accepted Answer

\[\begin{array} { l r } 
\text { Inventa

Question 17

Which of the following documents is sent to the vendor (seller)of goods?

Accepted Answer

A)  Purchase requisition 
B)  Purchase order 
C)  Receiving report 
D)  Invoice 
A)  Purchase requisition 
B)  Purchase order 
C)  Receiving report 
D)  Invoice

Question 18

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 10. What is the required journal entry to record the payment received under the periodic inventory system?

Accepted Answer

A) 
$\begin{array}{lcc}
\text { Accounts Receivable } & 784 & \
\text { Sales Discounts } & 16 & \
\quad \text { Cash } & & 800
\end{array}$ 
B) 
$\begin{array}{lr}\text { Accounts Receivable }&800\
\text { Sales Discounts } && 16 \
\text { Cash } && 784
\end{array}$ 
C) 
$\begin{array}{lcc}
\text { Cash } & 784 & \
\text { Sales Discounts } & 16 & \
\quad \text { Accounts Receivable } & & 800
\end{array}$ 
D) 
$\begin{array}{lcl}
\text { Cash } & 800 & \
\text { Sales Discounts } & 16 & \
\quad \text { Accounts Receivable } & & 816
\end{array}$ 
A) 
$\begin{array}{lcc}
\text { Accounts Receivable } & 784 & \
\text { Sales Discounts } & 16 & \
\quad \text { Cash } & & 800
\end{array}$ 
B) 
$\begin{array}{lr}\text { Accounts Receivable }&800\
\text { Sales Discounts } && 16 \
\text { Cash } && 784
\end{array}$ 
C) 
$\begin{array}{lcc}
\text { Cash } & 784 & \
\text { Sales Discounts } & 16 & \
\quad \text { Accounts Receivable } & & 800
\end{array}$ 
D) 
$\begin{array}{lcl}
\text { Cash } & 800 & \
\text { Sales Discounts } & 16 & \
\quad \text { Accounts Receivable } & & 816
\end{array}$

Question 19

Assuming the use of the periodic inventory system,use the data below to calculate the net cost of purchases and the goods available for sale for the year ended December 31,2010.
 $\begin{array}{llr}
  \text { Merchandise Inventory, December 31, 2009 } &\$2,830\
 \text { Merchandise Inventory, December 31, 2010 } &3,482\
 \text { Cost of Goods Sold } &18,048
\end{array}$

Accepted Answer

\[\begin{array}{ll}
2,830 & \text { Begn

Question 20

All systems of internal control are identical and,once established,do not need to be changed.

Accepted Answer

A) True 
 B)False

Exam 5: The Operating Cycle and Merchandising Operations

Which of the following is not a primary concern of internal control?

At the end of each day,the cashier should be the one responsible for comparing the amount on the cash register tape with the day's cash additions to the cash register.

The computerization has helped taking physical inventory to a great extent under the periodic inventory system.

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

It is unlikely that a company would want to bond its employees who handle cash or inventory.

Which of the following documents would be prepared (by a buyer of goods)after the others?

All of the following are the goals of internal controls over merchandising transactions except

Merchandising businesses do not need as good a system of internal control as service companies.

Demmler Corporation entered into the transactions listed below.In the journal provided,prepare Demmler's journal entries,assuming use of the periodic inventory system.Omit explanations.

Bonding means insuring a company against employee theft.

All of the following are examples of internal control activities except

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Which of the following documents is sent to the vendor (seller)of goods?

On June 3,Win-Tel Company sold merchandize worth $800 on credit,terms 2/10,n/30.The merchandize sold had cost $550.The customer paid the amount on June 10. What is the required journal entry to record the payment received under the periodic inventory system?

Assuming the use of the periodic inventory system,use the data below to calculate the net cost of purchases and the goods available for sale for the year ended December 31,2010. Merchandise Inventory, December 31, 2009 \2 ,830 Merchandise Inventory, December 31, 2010 3,482 Cost of Goods Sold 18,048

All systems of internal control are identical and,once established,do not need to be changed.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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