FA FINAL MC

1. In a perpetual inventory system, two entries usually are made to record each sales transaction. The purposes of these entries are best described as follows:

• One entry recognizes the sales revenue, and the other recognises the cost of goods sold.

• One entry records the purchase of the goods, and the other records the sale.

• One entry records the cost of goods sold, and the other reduces the balance in the Inventory account.

• One entry updates the general ledger, and the other updates the subsidiary ledgers.

1. In a periodic inventory system, the cost of goods sold is:

• Recorded as sales transactions occur.

• Determined by computation at year-end, after the taking of a complete physical inventory.

• Equal to the beginning inventory, plus purchases made during the period, less sales revenue for the period.

• Determined by subtracting the balance in the Gross Profit account from the amount of net sales.

1. Parkside Pool reports net sales of $625,000, gross profit of $275,000, and profit for the period of $15,000. The company's cost of goods sold is:

• $335,000

• $350,000

• $340,000

• $325,000

1. During the year 201X, the inventory of Debra’s Gift Shop was decreased by $50,000. If the income statement for the year 201X reported cost of goods sold of $350,000, purchases during the year must have amounted to:

• $400,000

• $310,000

• $300,000

• $350,000

1. Which of the following businesses is most likely to use a periodic inventory system?

• A jewelry shop

• A small boutique

• A supermarket chain

• A car dealership

1. Which of the following is NOT included in the financial assets?

• Cash.

• Investments in securities.

• Inventories.

• Accounts receivable.

1. An NSF check returned by the bank should be entered in the depositor's accounting records by a debit to:

• Accounts Receivable.

• An expense account.

• Cash.

• Cash Over and Short.

1. Which of the following can be considered as an effective control of cash?

• One person handles the receipts and disbursements of cash.

• Cash is deposited monthly into a bank.

• There is approval of cash payments.

• A reconciliation of the bank balance with the cash balance is prepared twice a year.

1. A bank reconciliation explains the differences between ____________.

• Cash receipts and cash disbursements for the period

• The balance of cash in the bank and the budgeted expenditures for the upcoming accounting period

• The balance per bank statement and the cash balance per the accounting records of the depositor

• The balance per bank statement and cash expected to be on hand according to the cash forecast

1. When preparing bank reconciliation, deposits in transit will:

• Increase the balance per depositor's records.

• Decrease the balance per depositor's records.

• Increase the balance per the bank statement.

• Decrease the balance per the bank statement.