Question 1

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

Accepted Answer

A)  Work in process inventory. 
B)  Finished goods inventory. 
C)  Merchandise inventory. 
D) Raw materials inventory. 
A)  Work in process inventory. 
B)  Finished goods inventory. 
C)  Merchandise inventory. 
D) Raw materials inventory.

Question 2

Assume that on September 1, 2016, a 6-month rent payment for $12,000 per month (for a total of $72,000) was made with respect to a commercial lease that the company entered into on that date as a tenant. The company took occupancy of the rented space immediately. The lease term will expire on February 28, 2017. The $72,000 payment was recorded as a debit to Prepaid Rent on September 1, 2016. The adjusting entry on December 31, 2016, is as follows:

Accepted Answer

A) 
  
B) 
  
C) 
  
D)   
A) 
  
B) 
  
C) 
  
D)

Question 3

The principal reason for converting a customer's account receivable to a note receivable is:

Accepted Answer

A)  the note receivable earns interest and the account receivable does not. 
B)  the receivable is less likely to have to be written off as uncollectible. 
C)  working capital is immediately increased. 
D) the customer is more likely to continue purchasing the company's products. 
A)  the note receivable earns interest and the account receivable does not. 
B)  the receivable is less likely to have to be written off as uncollectible. 
C)  working capital is immediately increased. 
D) the customer is more likely to continue purchasing the company's products.

Question 4

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

Accepted Answer

A)  the cash balance shown on the bank's records at the close of business on December 31, without further adjustments. 
B)  the cash balance shown in the company's general ledger account for this checking account at the close of business on December 31, without further adjustments. 
C)  the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation. 
D) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any bank service charges and/or interest income from the December 31 bank account reconciliation. 
A)  the cash balance shown on the bank's records at the close of business on December 31, without further adjustments. 
B)  the cash balance shown in the company's general ledger account for this checking account at the close of business on December 31, without further adjustments. 
C)  the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any outstanding checks and/or deposits in transit from the December 31 bank account reconciliation. 
D) the cash balance shown in the general ledger account for this checking account as of the close of business on December 31, after recognizing any bank service charges and/or interest income from the December 31 bank account reconciliation.

Question 5

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

Accepted Answer

A)  net income will be higher. 
B)  income taxes will be lower. 
C)  balance sheet inventory values will be higher. 
D) a higher selling price can be established. 
A)  net income will be higher. 
B)  income taxes will be lower. 
C)  balance sheet inventory values will be higher. 
D) a higher selling price can be established.

Question 6

A firm has used LIFO for several years during which costs have trended higher. If this firm achieves a substantial reduction in inventory quantities in 2017 by selling more merchandise than it purchases, the effect on 2017 net income of the inventory reduction, compared to having no change in inventory quantity from the beginning to the end of 2017, is:

Accepted Answer

A)  net income for 2017 will be greater if the inventory quantity declines. 
B)  net income for 2017 will be less if the inventory quantity declines. 
C)  net income for 2017 will not be affected because of the inventory quantity decline. 
D) can't tell from the information given. 
A)  net income for 2017 will be greater if the inventory quantity declines. 
B)  net income for 2017 will be less if the inventory quantity declines. 
C)  net income for 2017 will not be affected because of the inventory quantity decline. 
D) can't tell from the information given.

Question 7

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

Accepted Answer

A)  Periodic. 
B)  Physical. 
C)  Perpetual. 
D) Just-in-time. 
A)  Periodic. 
B)  Physical. 
C)  Perpetual. 
D) Just-in-time.

Question 8

The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is:

Accepted Answer

A)  consistency. 
B)  matching revenue and expense. 
C)  original cost. 
D) objectivity. 
A)  consistency. 
B)  matching revenue and expense. 
C)  original cost. 
D) objectivity.

Question 9

a. If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in understating the firm's ending inventory balance by $12,000, how would the firm's cost of goods sold be affected?
b. If management wanted to overstate net income, would ending inventory be understated or overstated? Explain your answer.

Accepted Answer

a. To correct the understatement, invent

Question 10

The following is a portion of the current assets section of the balance sheets of The Sweet Cafe at December 31, 2017 and 2016:
(a.) If bad debts expense for 2017 totaled $32,800, what was the amount of accounts receivable written off during the year?
(b.) The December 31, 2017, Allowance account balance includes $6,800 for a past due account that is not likely to be collected. This account has not been written off. If it had been written off, what would have been the effect of the write off on:
(1.) The current ratio at December 31, 2017?
(2.) Net income and ROE for the year ended December 31, 2017?
(c.) What do you suppose was the level of The Sweet Cafe's sales in 2017, compared to 2016? Explain your answer.

Accepted Answer

@#IMG-DLM& $10,200 + $32,800 - Accounts written of

Question 11

When costs are rising over time:

Accepted Answer

A)  LIFO results in higher profits that FIFO. 
B)  Cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold. 
C)  ending inventory balances will be greater under LIFO. 
D) FIFO results in higher profits than LIFO. 
A)  LIFO results in higher profits that FIFO. 
B)  Cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold. 
C)  ending inventory balances will be greater under LIFO. 
D) FIFO results in higher profits than LIFO.

Question 12

One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if:

Accepted Answer

A)  inventory quantities change from the beginning to end of the year. 
B)  a new product is added to inventory during the year. 
C)  the cost of inventory items changes during the year. 
D) price levels do not change during the year. 
A)  inventory quantities change from the beginning to end of the year. 
B)  a new product is added to inventory during the year. 
C)  the cost of inventory items changes during the year. 
D) price levels do not change during the year.

Question 13

a. If the beginning balance of the Inventory account and the cost of items purchased or made during the period are correct, but an error resulted in understating the firm's ending inventory balance by $12,000, how would the firm's cost of goods sold be affected?
b. If management wanted to overstate net income, would ending inventory be understated or overstated? Explain

Accepted Answer

a. To correct the understatement, invent

Question 14

The following are data available for Blue Grass for the month of June:
(a.) Calculate cost of goods sold and ending inventory under the following cost flow assumptions:
(1.) Weighted-average
(2.) FIFO
(3.) LIFO
(b.) Assume net income using the weighted average cost flow assumption was $12,800. Calculate net income under FIFO and LIFO.

Accepted Answer

The answer of The following are data available for Blue...

Question 15

When a firm uses the LIFO inventory cost flow assumption:

Accepted Answer

A)  cost of goods sold will be greater than if FIFO were used. 
B)  net income will be greater than if FIFO were used. 
C)  cost of goods sold will be the same as if FIFO were used. 
D) better matching of revenue and expense is achieved than under FIFO. 
A)  cost of goods sold will be greater than if FIFO were used. 
B)  net income will be greater than if FIFO were used. 
C)  cost of goods sold will be the same as if FIFO were used. 
D) better matching of revenue and expense is achieved than under FIFO.

Question 16

Prepare a bank reconciliation for Grace, Inc., as of January 31, from the following information:
(a.) The January 31 cash balance in the general ledger is $5,088.(b.) The January 31 balance shown on the bank statement is $4,544.(c.) Checks issued but not returned with the bank statement were No. 435 for $452 and No. 448 for $182.(d.) A deposit made on January 31 for $1,280 was included in the general ledger balance but not in the bank statement balance.(e.) Interest credited to the account during January but not recorded on the company's books amounted to $72.(f.) A bank charge of $24 for printing new checks was made to the account during January. Although the company was expecting a charge, the amount was not Known until the bank statement arrived.(g.) In the process of reviewing canceled checks, it was determined that a check issued to a supplier in payment of an account payable of $139 was recorded as a $193 cash disbursement.Required:
(1.) Prepare the bank reconciliation for Grace, Inc., as of January 31.(2.) Prepare the appropriate adjusting entry(ies) or show the reconciling items in a horizontal model for Grace, Inc., related to the bank reconciliation.

Accepted Answer

The answer of Prepare a bank reconciliation for Grace, Inc.,...

Question 17

Which of the following is(are) true regarding cost flow assumptions?

Accepted Answer

A)  Manufacturing firms are required to use FIFO. 
B)  Service firms are required to use LIFO. 
C)  If a firm uses FIFO for tax purposes, then FIFO must be used for financial reporting purposes. 
D) If a firm uses LIFO for tax purposes, then LIFO must be used for financial reporting purposes. 
E)  All of the above. 
A)  Manufacturing firms are required to use FIFO. 
B)  Service firms are required to use LIFO. 
C)  If a firm uses FIFO for tax purposes, then FIFO must be used for financial reporting purposes. 
D) If a firm uses LIFO for tax purposes, then LIFO must be used for financial reporting purposes. 
E)  All of the above.

Question 18

The inventory cost flow assumption describes the flow of product cost:

Accepted Answer

A)  from the warehouse to the customer. 
B)  from the asset (inventory) account and to the expense (cost of goods sold) account. 
C)  from the revenue (sales) account and to the expense (cost of goods sold) account. 
D) from the asset (inventory) account and to the revenue (sales) account. 
A)  from the warehouse to the customer. 
B)  from the asset (inventory) account and to the expense (cost of goods sold) account. 
C)  from the revenue (sales) account and to the expense (cost of goods sold) account. 
D) from the asset (inventory) account and to the revenue (sales) account.

Question 19

Regardless of the inventory cost flow assumption used, inventories on the balance sheet are stated at:

Accepted Answer

A)  original cost. 
B)  realizable value. 
C)  replacement cost. 
D) the lower of cost or market. 
A)  original cost. 
B)  realizable value. 
C)  replacement cost. 
D) the lower of cost or market.

Question 20

The reason for recording a prepaid expense as a current asset is:

Accepted Answer

A)  that the prepaid item will be returned for a cash refund. 
B)  that the prepaid item has not yet become an expense. 
C)  that the expense has been incurred but not yet paid. 
D) to avoid recognizing an expense so net income will be higher for the current accounting period. 
A)  that the prepaid item will be returned for a cash refund. 
B)  that the prepaid item has not yet become an expense. 
C)  that the expense has been incurred but not yet paid. 
D) to avoid recognizing an expense so net income will be higher for the current accounting period.

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

The principal reason for converting a customer's account receivable to a note receivable is:

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is:

When costs are rising over time:

One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if:

When a firm uses the LIFO inventory cost flow assumption:

Which of the following is(are) true regarding cost flow assumptions?

The inventory cost flow assumption describes the flow of product cost:

Regardless of the inventory cost flow assumption used, inventories on the balance sheet are stated at:

The reason for recording a prepaid expense as a current asset is:

Accounting-Present and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

The Bookkeeping Process and Transaction Analysis

Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements, and Other Disclosures

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Costs for Decision Making

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Exam 5: Accounting for and Presentation of Current Assets

Which of the following is NOT an example of an inventory account a manufacturing firm might use?

The principal reason for converting a customer's account receivable to a note receivable is:

The amount of cash related to a particular bank checking account that is shown on the balance sheet at December 31 is:

One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:

Which of the following inventory accounting systems has been made much more feasible as a result of computer systems developments?

The accounting concept or principle applied when an allowance is provided for estimated uncollectible accounts receivable is:

When costs are rising over time:

One inventory cost flow assumption will result in different cost of goods sold from another inventory cost flow assumption only if:

When a firm uses the LIFO inventory cost flow assumption:

Which of the following is(are) true regarding cost flow assumptions?

The inventory cost flow assumption describes the flow of product cost:

Regardless of the inventory cost flow assumption used, inventories on the balance sheet are stated at:

The reason for recording a prepaid expense as a current asset is:

Accounting-Present and Past

Financial Statements and Accounting Conceptsprinciples

Fundamental Interpretations Made From Financial Statement Data

The Bookkeeping Process and Transaction Analysis

Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets

Accounting for and Presentation of Liabilities

Accounting for and Presentation of Stockholders Equity

The Income Statement and the Statement of Cash Flows

Corporate Governance, Notes to the Financial Statements, and Other Disclosures

Financial Statement Analysis

Managerial Accounting and Cost-Volume-Profit Relationships

Cost Accounting and Reporting

Cost Planning

Cost Control

Costs for Decision Making

Filters