Question 1

The separation-of-duties feature of internal control can be negated when several employees are involved in a scheme.

Accepted Answer

A) True 
 B)False

Question 2

Using the following information,calculate for 2010 (a)net sales,(b)cost of goods sold,(c)gross margin,and (d)net income.
 $\begin{array}{lr}
\text { Freight-In } & \$ 200 \
\text { Merchandise Inventory, December 31, } 2009 & 15,000 \
\text { Sales } & 60,000 \
\text { Purchases Returns and Allowances } & 300 \
\text { Advertising Expense } & 4,000 \
\text { Purchases } & 20,000 \
\text { Merchandise Inventory, December 31, } 2010 & 5,000 \
\text { Sales Returns and Allowances } & 500 \
\text { General and Administrative Expenses } & 7,000
\end{array}$

Accepted Answer

a.$59,500

Question 3

In a small business,because it is often cost-prohibitive to hire extra employees,the lack of certain separations of duties can best be overcome by

Accepted Answer

A)  hiring only honest employees. 
B)  bonding the employees. 
C)  holding one person responsible for a given set of transactions. 
D)  getting the owner actively involved. 
A)  hiring only honest employees. 
B)  bonding the employees. 
C)  holding one person responsible for a given set of transactions. 
D)  getting the owner actively involved.

Question 4

Another term for an invoice is a bill.

Accepted Answer

A) True 
 B)False

Question 5

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 319,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 68,000 & \
\text { Purchases Returns and Allowances } & & 8,000\
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Income before income taxes for the period was

Accepted Answer

A)  $199,000. 
B)  $119,000. 
C)  $89,000. 
D)  $229,000. 
A)  $199,000. 
B)  $119,000. 
C)  $89,000. 
D)  $229,000.

Question 6

Which of the following sets of documents are in the correct sequence?

Accepted Answer

A)  Purchase order, check, receiving report 
B)  Purchase requisition, receiving report, purchase order 
C)  Purchase order, purchase requisition, invoice 
D)  Purchase requisition, purchase order, invoice 
A)  Purchase order, check, receiving report 
B)  Purchase requisition, receiving report, purchase order 
C)  Purchase order, purchase requisition, invoice 
D)  Purchase requisition, purchase order, invoice

Question 7

Cost of goods sold is considered an expense of a merchandising business.

Accepted Answer

A) True 
 B)False

Question 8

The fee paid by a retailer to a credit card company is considered a contra-revenue account by the retailer.

Accepted Answer

A) True 
 B)False

Question 9

The periodic inventory system provides an up-to-date amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 10

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 11

The difference between gross sales and net sales is equal to the sum of sales discounts and sales returns and allowances.

Accepted Answer

A) True 
 B)False

Question 12

Merchandise inventory becomes part of cost of goods sold when a company

Accepted Answer

A)  receives payment from the customer. 
B)  pays for the inventory. 
C)  purchases the inventory. 
D)  sells the inventory. 
A)  receives payment from the customer. 
B)  pays for the inventory. 
C)  purchases the inventory. 
D)  sells the inventory.

Question 13

In addition to keeping the records of a purchase transaction,the accounting department should prepare and mail checks in payment of invoices.

Accepted Answer

A) True 
 B)False

Question 14

Use this information to answer the following question. $$\begin{array} {| l | r | r | } 
\hline \text { Account Name } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Sales } & & 300,000 \
\text { Sales Retums and Allowances } & 10,000 & \
\text { Purcha5es } & 53,000 & \
\text { Purchases Returns and Allowances } & & 8,000\
\text { Freight-In } & 12,000 &  \
\text { Selling Exgenses } & 30,000 & \
\text { General and Administrative Exgenses } & 110,000 &\
\hline
\end{array}$$ In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Cost of goods sold for the period was

Accepted Answer

A)  $74,000. 
B)  $62,000. 
C)  $88,000. 
D)  $58,000. 
A)  $74,000. 
B)  $62,000. 
C)  $88,000. 
D)  $58,000.

Question 15

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 16

The treasurer should prepare and sign a check only after a proper check authorization has been provided.

Accepted Answer

A) True 
 B)False

Question 17

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 18

For each description below,state which document is being described.
a. Document issued to permit the treasurer to make a payment
b. Bill sent by the vendor to the purchaser
c. Written request prepared by a department asking the purchasing department to make a purchase
d. Document accompanying money put in the bank
e. Document describing items in a shipment of goods delivered
f. Document sent to a vendor requesting shipment of goods

Accepted Answer

a.Check authorization
d.Deposi

Question 19

Service businesses can be classified as wholesalers and retailers.

Accepted Answer

A) True 
 B)False

Question 20

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

Goods Available for Sale must be found f

Exam 5: The Operating Cycle and Merchandising Operations

The separation-of-duties feature of internal control can be negated when several employees are involved in a scheme.

In a small business,because it is often cost-prohibitive to hire extra employees,the lack of certain separations of duties can best be overcome by

Another term for an invoice is a bill.

Which of the following sets of documents are in the correct sequence?

Cost of goods sold is considered an expense of a merchandising business.

The fee paid by a retailer to a credit card company is considered a contra-revenue account by the retailer.

The periodic inventory system provides an up-to-date amount of inventory on hand.

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

The difference between gross sales and net sales is equal to the sum of sales discounts and sales returns and allowances.

Merchandise inventory becomes part of cost of goods sold when a company

In addition to keeping the records of a purchase transaction,the accounting department should prepare and mail checks in payment of invoices.

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

The treasurer should prepare and sign a check only after a proper check authorization has been provided.

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.

Service businesses can be classified as wholesalers and retailers.

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

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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