Question 1

The entry to record a $750 sale with terms of 2/10,n/30 would include a(n)

Accepted Answer

A)  decrease to Accounts Receivable for $750. 
B)  increase to Sales for $750. 
C)  increase to Sales Discounts for $15. 
D)  decrease to Sales for $735. 
A)  decrease to Accounts Receivable for $750. 
B)  increase to Sales for $750. 
C)  increase to Sales Discounts for $15. 
D)  decrease to Sales for $735.

Question 2

The amount of goods available for sale during the year depends on the amounts of

Accepted Answer

A)  beginning merchandise inventory, net cost of purchases, and ending merchandise inventory. 
B)  beginning merchandise inventory and cost of goods sold. 
C)  beginning merchandise inventory, cost of goods sold, and ending merchandise inventory. 
D)  beginning merchandise inventory and net cost of purchases. 
A)  beginning merchandise inventory, net cost of purchases, and ending merchandise inventory. 
B)  beginning merchandise inventory and cost of goods sold. 
C)  beginning merchandise inventory, cost of goods sold, and ending merchandise inventory. 
D)  beginning merchandise inventory and net cost of purchases.

Question 3

Given the following information,prepare in good form the cost of goods sold section of an income statement for 2010.
 $\begin{array}{lr}
\text { Freight-In } & \$ 8000 \
\text { Merchandise Inventory, December 31, } 2009 & 30,000 \
\text { Merchandise Inventory, December 31, } 2010 & 32,000 \
\text { Purchases } & 76,000 \
\text { Purchases Returns and Allowances } & 3,600
\end{array}$

Accepted Answer

None

Question 4

The change in merchandise inventory level from the beginning to the end of the year affects cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 5

Why is the separation of duties an important control activity in a good system of internal control?

Accepted Answer

When only one employee is responsible fo

Question 6

Each of the following companies is a merchandising business except a

Accepted Answer

A)  candy store. 
B)  car wash. 
C)  wholesale parts company. 
D)  furniture store. 
A)  candy store. 
B)  car wash. 
C)  wholesale parts company. 
D)  furniture store.

Question 7

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 8

The entry to record payment of a $1,500 purchase within the 2 percent discount period would include a(n)

Accepted Answer

A)  decrease to Accounts Payable for $1,470. 
B)  increase to Purchases Discounts for $30. 
C)  increase to Accounts Payable for $1,500. 
D)  increase to Cash for $1,500. 
A)  decrease to Accounts Payable for $1,470. 
B)  increase to Purchases Discounts for $30. 
C)  increase to Accounts Payable for $1,500. 
D)  increase to Cash for $1,500.

Question 9

A formal request for a purchase from the requesting department of a business is known as a purchase requisition.

Accepted Answer

A) True 
 B)False

Question 10

A retail operation would not have to take a physical inventory if it uses a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 11

Scuilli Corporation purchased $5,000 worth of merchandise,terms n/30,from the Zupcic Corporation on June 4.The cost of the merchandise to Zupcic was $3,600.On June 10,Scuilli returned $700 worth of goods to Zupcic for full credit.The goods had a cost of $450 to Zupcic.On June 12,the account was paid in full.Prepare journal entries without explanations to record these transactions in (a)Scuilli's records and (b)Zupcic's records.Assume use of the perpetual inventory system by both companies.
a. Scuilli's records:
 
b. Zupcic's records:

Accepted Answer

a.Scuilli'

Question 12

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Accepted Answer

A) 
$\begin{array}{llr}
  \text { Accounts Payable } &100\
 \text {  Purchases Returns and Allowances} &&100\

\end{array}$ 
B) 
$\begin{array}{l}
\text { Accounts Payable }&100 \
\text { Merchandize Inventory }&&100
\end{array}$ 
C) 
$\begin{array}{l}
\text { Merchandize Inventory }&100 \
\text { Purchases Returns and Allowances }&&100
\end{array}$ 
D) 
$\begin{array}{llr}
  \text { Purchases Returns and Allowances } &100\
 \text {Merchandize Inventory  } & &100\
\end{array}$ 
A) 
$\begin{array}{llr}
  \text { Accounts Payable } &100\
 \text {  Purchases Returns and Allowances} &&100\

\end{array}$ 
B) 
$\begin{array}{l}
\text { Accounts Payable }&100 \
\text { Merchandize Inventory }&&100
\end{array}$ 
C) 
$\begin{array}{l}
\text { Merchandize Inventory }&100 \
\text { Purchases Returns and Allowances }&&100
\end{array}$ 
D) 
$\begin{array}{llr}
  \text { Purchases Returns and Allowances } &100\
 \text {Merchandize Inventory  } & &100\
\end{array}$

Question 13

Compute the dollar amount of each item indicated by a letter in the following table.Treat each horizontal row of numbers as a separate problem.

Accepted Answer

a.$60,000
g.$180,000
b.$85,000

Question 14

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows:
$$\begin{array} { l r } 
\text { Advertieing Esguense } & 14,000 \
\text { Common Stock } & 100,000 \
\text { Dividends } & 21,000 \
\text { Fraight-In } & 7,000 \
\text { Freight-Out Esgense } & 10,000 \
\text { Interest Income } & 24,000 \
\text { Merchandise Inventory (Jan. 1) } & 70,000 \
\text { Merchandise Inventory (Dec. 31) } & 56,000 \
\text { Purchases } & 60,000 \
\text { Purchases Returns and Allowances } & 4,000 \
\text { Rent Exgense } & 9,000 \
\text { Retained Earning } & 40,000 \
\text { Sales } & 150,000 \
\text { Sales Returns and Allowances } & 19,000 \
\text { Wages Engense } & 32,000
\end{array}$$ The amount of net sales on the income statement would be

Accepted Answer

A)  $169,000. 
B)  $144,000. 
C)  $131,000. 
D)  $137,000. 
A)  $169,000. 
B)  $144,000. 
C)  $131,000. 
D)  $137,000.

Question 15

Which of the following is not an internal control activity for cash?

Accepted Answer

A)  Employees who have access to cash should be bonded. 
B)  Recordkeeping and physical custody of cash should be performed by the same person. 
C)  The amount of cash on hand should be kept to a minimum. 
D)  Banking facilities should be used as much as possible. 
A)  Employees who have access to cash should be bonded. 
B)  Recordkeeping and physical custody of cash should be performed by the same person. 
C)  The amount of cash on hand should be kept to a minimum. 
D)  Banking facilities should be used as much as possible.

Question 16

The document prepared by a department requesting the company to buy something is called a(n)

Accepted Answer

A)  invoice. 
B)  purchase requisition. 
C)  receiving report. 
D)  purchase order. 
A)  invoice. 
B)  purchase requisition. 
C)  receiving report. 
D)  purchase order.

Question 17

A purchase order is sent from a company's

Accepted Answer

A)  requesting department to the supplier. 
B)  treasurer to the supplier. 
C)  requesting department to its accounting department. 
D)  purchasing department to the supplier. 
A)  requesting department to the supplier. 
B)  treasurer to the supplier. 
C)  requesting department to its accounting department. 
D)  purchasing department to the supplier.

Question 18

Good internal control dictates that key employees be rotated among different jobs.

Accepted Answer

A) True 
 B)False

Question 19

Profitability management involves planning a business's cash receipts and cash payments.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?

Accepted Answer

A)  Adequate design of documents 
B)  Sound personnel procedures 
C)  Periodic independent verification 
D)  Separation of duties 
A)  Adequate design of documents 
B)  Sound personnel procedures 
C)  Periodic independent verification 
D)  Separation of duties

Exam 5: The Operating Cycle and Merchandising Operations

The entry to record a $750 sale with terms of 2/10,n/30 would include a(n)

The amount of goods available for sale during the year depends on the amounts of

Given the following information,prepare in good form the cost of goods sold section of an income statement for 2010. Freight-In \ 8000 Merchandise Inventory, December 31, 2009 30,000 Merchandise Inventory, December 31, 2010 32,000 Purchases 76,000 Purchases Returns and Allowances 3,600

The change in merchandise inventory level from the beginning to the end of the year affects cost of goods sold.

Why is the separation of duties an important control activity in a good system of internal control?

Each of the following companies is a merchandising business except a

The entry to record payment of a $1,500 purchase within the 2 percent discount period would include a(n)

A formal request for a purchase from the requesting department of a business is known as a purchase requisition.

A retail operation would not have to take a physical inventory if it uses a perpetual inventory system.

Chancellor Company purchased merchandize worth $900 on credit,terms n/30 and returned merchandize worth $100 on next day.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

Compute the dollar amount of each item indicated by a letter in the following table.Treat each horizontal row of numbers as a separate problem.

Which of the following is not an internal control activity for cash?

The document prepared by a department requesting the company to buy something is called a(n)

A purchase order is sent from a company's

Good internal control dictates that key employees be rotated among different jobs.

Profitability management involves planning a business's cash receipts and cash payments.

Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?

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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