ACC 557 Midterm Exam Part 2

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Title: ACC 557 Midterm Exam Part 2

1
ACC 557 MIDTERM EXAM PART 2

Question 1
Net income is gross profit less
financing expenses.
operating expenses.
other expenses and losses.
other expenses.
Question 2
On November 2, 2014, Kasdan Company has cash
sales of 6,000 from merchandise having a cost of
3,600. The entries to record the day's cash
sales will include
a 3,600 credit to Cost of Goods Sold.
a 6,000 credit to Cash.
a 3,600 credit to Inventory.
d a 6,000 debit to Accounts Receivable.

Question 3
Glenn Company purchased merchandise inventory
with an invoice price of 9,000 and credit terms
of 2/10, n/30. What is the net cost of the goods
if Glenn Company pays within the discount period?
8,100
8,280
8,820
9,000
Question 4
When a seller grants credit for returned goods,
the account that is credited is
Sales Revenue.
Sales Returns and Allowances.
Inventory.
Accounts Receivable.

Question 5
An aging of a company's accounts receivable
indicates that 14,000 are estimated to be
uncollectible. If Allowance for Doubtful Accounts
has a 1,100 credit balance, the adjustment to
record bad debts for the period will require a
debit to Bad Debt Expense for 14,000.
debit to Allowance for Doubtful Accounts for
12,900.
debit to Bad Debt Expense for 12,900.
credit to Allowance for Doubtful Accounts for
14,000.
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Week 1 Complete
Question 6
The basic issues in accounting for notes
receivable include each of the following except
analyzing notes receivable.
disposing of notes receivable.
recognizing notes receivable.
valuing notes receivable.

Question 9
If a company fails to record estimated bad debts
expense,
cash realizable value is understated.
expenses are understated.
revenues are understated.
receivables are understated.
Question 10
Bad Debt Expense is considered
an avoidable cost in doing business on a credit
basis.
an internal control weakness.
a necessary risk of doing business on a credit
basis.
avoidable unless there is a recession.
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Question 11
The collection of an account that had been
previously written off under the allowance method
of accounting for uncollectibles
will increase income in the period it is
collected.
will decrease income in the period it is
collected.
requires a correcting entry for the period in
which the account was written off.
does not affect income in the period it is
collected.
Question 12
The maturity value of a 50,000, 9, 60-day note
receivable dated July 3 is
50,000.
50,750.
54,500.
59,000.

Question 13
The control principle related to not having the
same person authorize and pay for goods is known
as
establishment of responsibility.
independent internal verification.
segregation of duties.
rotation of duties.
Question 14
If the month-end bank statement shows a balance
of 54,000, outstanding checks are 15,000, a
deposit of 6,000 was in transit at month end,
and a check for 900 was erroneously charged by
the bank against the account, the correct balance
in the bank account at month end is
44,100.
45,000.
45,900.
62,100.

Question 17
The cash account shows a balance of 40,000
before reconciliation. The bank statement does
not include a deposit of 9,200 made on the last
day of the month. The bank statement shows a
collection by the bank of 3,960 and a customers
check for 1,300 was returned because it was NSF.
A customers check for 1,380 was recorded on the
books as 1,920, and a check written for 318 was
recorded as 390. The correct balance in the cash
account was
42,048.
42,192.
43,128.
51,392.
Question 18
A petty cash fund of 100 is replenished when the
fund contains 4 in cash and receipts for 93.
The entry to replenish the fund would
credit Cash Over and Short for 3.
credit Miscellaneous Revenue for 3.
debit Cash Over and Short for 3.
debit Miscellaneous Expense for 3.

Question 19
Jolene is warehouse custodian and also maintains
the accounting record of the inventory held at
the warehouse. An assessment of this situation
indicates
documentation procedures are violated.
independent internal verification is violated.
segregation of duties is violated.
establishment of responsibility is violated.
Question 20
Having one person post entries to accounts
receivable subsidiary ledger and a different
person post to the Accounts Receivable Control
account in the general ledger is an example of
inadequate internal control.
duplication of effort.
external verification.
segregation of duties.
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557

Question 21
Which of the following statements is correct with
respect to inventories?
The FIFO method assumes that the costs of the
earliest goods acquired are the last to be sold.
It is generally good business management to sell
the most recently acquired goods first.
Under FIFO, the ending inventory is based on the
latest units purchased.
FIFO seldom coincides with the actual physical
flow of inventory.
Question 22
In a manufacturing business, inventory that is
ready for sale is called
raw materials inventory.
work in process inventory.
finished goods inventory.
store supplies inventory.

Question 23
Two companies report the same cost of goods
available for sale but each employs a different
inventory costing method. If the price of goods
has increased during the period, then the company
using
LIFO will have the highest ending inventory.
FIFO will have the highest cost of good sold.
FIFO will have the highest ending inventory.
LIFO will have the lowest cost of goods sold.
Question 24
Indrisano's Used Cars uses the specific
identification method of costing inventory.
During March, Indrisano purchased three cars for
12,000, 14,400, and 19,200, respectively.
During March, two cars are sold for a total of
34,600. Indrisano determines that at March 31,
the 14,400 car is still on hand. What is
Indrisanos gross profit for March?
1,000.
3,400.
4,200.
8,200.