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

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

School Supplies Company made the following journal entries (1)to write off an account judged to be uncollectible and (2)to record bad debt expense for 20A: As a result of the first entry only,the book value (net realizable value)of trade receivables was (a); as a result of the second entry only,the book value (net realizable value)of tradereceivable was (b):

Bad debts expense is an estimated amount recorded in an adjusting entry.This estimate is necessary so we can record the cost of uncollectible accounts in the period relating to the sales that were recorded as earned.

The cash amount reported on the statement of financial position should include cash deposited and cash on hand (undeposited),and other instruments that meet the definition of a cash equivalent.

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?

For accounting purposes,cash includes which of the following?

One might infer from a debit balance in Allowance for Doubtful Accounts that

When do most companies usually recognize revenue as earned and record the revenue?

On a multiple-step income statement,what happens to the amount of sales returns and allowances?

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?

Using the following information,prepare a bank reconciliation for Yip Inc.for May 31,2012. a.The bank statement balance is $7,200. b.The cash account balance is $6,024. c.Outstanding cheques totalled $1,600. d.Deposits in transit are $800. e.The bank service charge is $24. f.Electronic collections on account totalled $400.

Accrual accounting requires that the loss resulting from the failure of credit customers to pay their bills should be which of the following?

Sales revenue is measured as the market value of the consideration received,or the book value of the item sold,whichever is more reliable.

A high receivables turnover ratio indicates

When the bank returns a NSF (not sufficient funds)cheque to a depositor,that depositor should decrease the cash balance in its accounting system.

When preparing the monthly bank reconciliation,the accountant for Tiffany Toys noted that a cheque received from a customer last month for $89 was marked NSF and returned along with the bank statement.To correct the cash account balance,the accountant recorded an adjusting entry.This entry required a debit to which of the following accounts?

You are the new manager of Muff Company.The company distributes goods throughout the Rocky Mountain area.Customers are billed after the shipments are sent.Most customers pay within two weeks.You notice that one employee is responsible for opening all incoming payments,recording them in the accounting records,and depositing all receipts in the bank daily.When asked why this one person performed all of these duties,you were told that it was more efficient for one person to handle cash and to keep track of things.If any cash was missing,responsibility could be easily determined.Do you agree with this arrangement? If you were to make changes,what would you do,and why?

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

Bittner Corporation developed the following reconciling information in preparing its September bank reconciliation: Using the above information,determine the cash balance per books (before adjustments)for the Bittner Corporation.

Assuming the allowance method for bad debts is used,when a customer's uncollectible account is written off,a credit should be made to which of the following accounts?