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

When credit terms for a sale are 2/15,n/40,the customer saves by paying the bill early.Approximately what percent would this savings amount to on an annual basis?

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

Albert Company uses the allowance method to account for bad debts.The entry to write-off a bad account (one that will never be collected)should be which of the following?

In 2012,T Co.'s gross profit percentage was 39.8% while their competitor,WWW's percentage was 31.8%.Which was the most likely reason for WWW's lower percentage?

One of the internal control tools to verify a company's cash balance is the bank reconciliation.

Which of the following is required for effective control of cash?

Calculate the gross profit ratio for all three years: a.2012 __________ b.2011 __________ c.2010 __________

If C Co.'s trade receivables balance was $1,666 million in 2011 and $1,798 million in 2012,what would be the impact on the statement of cash flows?

If a cheque received from a customer that has been deposited by the seller is returned with the bank statement marked "not sufficient funds "(NSF),it would appear on the seller's bank statement reconciliation as a subtraction from the ending book balance of cash.

For most merchandisers and manufacturers,the required revenue recognition point is the time of shipment or delivery of goods.

If the terms are 3/15,n/45 on a credit sale,the customer will save 3% of the invoice price by paying at least 30 days before the credit period ends.

While sales discounts and credit card discounts can only be treated as contra revenues,sales returns and allowances are treated as either a contra revenue or a selling expense.

The following information was available to the accountant of Dove Company when preparing the monthly bank reconciliation: What was the cash balance per books of Dove Company prior to beginning the bank reconciliation?

On December 31,20A,Carter Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries: Required: Present the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions: A.An aging of accounts receivable is completed.It is estimated that $1,950 of the receivables outstanding at year-end will be uncollectible.B.It is estimated that .5% of credit sales for the year will prove to be uncollectible.C.Assume the same information presented in (A)above except that prior to adjustment,the Allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200.

Liberty estimates that its annual bad debts approximate 4% of credit sales.What would the net realizable value of the receivables on Liberty's year-end balance sheet be?

A customer purchased a $200 item at Best Bike Shop,paying with a credit card (VISA).The merchant is charged a 2% fee by the credit card company.When recording this sale,the merchant would do which of the following?

On June 1,20B,Budget Appliance Company sold merchandise on credit at an invoice price of $1,000; terms 2/10,n/30.Give the journal entries to record the following: A.To record the sale. B.Assumption A: To record collection on June 28,20B. C.Assumption B: To record collection on June 9,20B.

Credit terms "2/10,n/30" mean that if payment is made in two days,a 10% discount will be given; if not paid within two days,the full invoice price will be due in thirty days.

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

In 2012,T Co.reported a receivables turnover ratio of 11.1 and their competitor,WWW Co.,reported a ratio of 4.6.Which of the following is true?