Worksheetsaccounting final
Total questions: 82
Worksheet time: 41mins
Which account is not classified as a selling expense?
Delivery Expense
Advertising Expense
Cost of Goods Sold
Sales Salaries
The inventory system employing accounting records that continuously disclose the amount of inventory is called
periodic
retail
physical
perpetual
Merchandise inventory is classified on the balance sheet as a
current asset
long-term asset
long-term liability
current liability
When merchandise purchased on account is returned under the perpetual inventory system, the buyer would debit
Accounts Payable
Accounts Receivable
Purchases Returns and Allowances
Merchandise Inventory
President's salaries, depreciation of office furniture, and office supplies are
administrative expenses
selling expenses
inventory expenses
miscellaneous expenses
When merchandise sold is assumed to be in the order in which the purchases were made, the company is using
first-in, last-out
last-in, first-out
average cost
first-in, first-out
During times of rising prices, which of the following is not an accurate statement?
FIFO will result in a higher net income than LIFO.
LIFO will result in a higher cost of merchandise sold than FIFO.
LIFO will result in higher income taxes than FIFO.
Average costing will yield results that are between those of FIFO and LIFO.
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
gross sales
gross profit
income from operations
net income
Which of the following accounts has a normal credit balance?
Merchandise Inventory
Accounts Receivable
Sales
Delivery Expense
Multiple-step income statements show
gross profit but not income from operations
neither gross profit nor income from operations
both gross profit and income from operations
income from operations but not gross profit
In credit terms of 3/15, n/45, the "3" represents the
number of days in the discount period
percent of the cash discount
full amount of the invoice
number of days when the entire amount is due
If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as
FOB shipping point
FOB destination
FOB seller
FOB n/30
Where are selling and administrative expenses found on the multiple-step income statement?
before gross profit
after sales and before gross profit
after net income and before expenses
after gross profit
The arrangements between buyer and seller as to when payments for merchandise are to be made are called
cash on demand
gross cash
net cash
credit terms
Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as
sales on account
sales when the credit card company remits the cash
cash sales
sales returns
Inventory shrinkage is recorded when
merchandise purchased from a seller is incomplete or short
merchandise is returned to a seller
merchandise is returned by a buyer
there is a difference between a physical count of inventory and inventory records
When comparing a retail business to a service business, the financial statement that changes the most is the
income statement
statement of cash flows
statement of owner's equity
balance sheet
Which of the following accounts has a normal debit balance?
Interest Revenue
Merchandise Inventory
Accounts Payable
Sales
The statement of owner's equity shows
only net income, beginning and ending capital
only net income, beginning capital, and withdrawals
beginning and ending capital and all the changes in the owner's capital as a result of net income (loss), and withdrawals
only total assets, beginning and ending capital
Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a
debit to Merchandise Inventory
debit to Cash
credit to Merchandise Inventory
credit to Customer Refunds Payable
Pierce Company sold to Stanton Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?
Accounts Receivable—Stanton, debit $20,100; Sales, credit $20,100
Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000, and
Delivery Expense, debit $500; Cash, credit $500
Accounts Receivable—Stanton, debit $20,000; Sales, credit $20,000
Accounts Receivable—Stanton, debit $19,600; Sales, credit $19,600, and
Accounts Receivable—Stanton, debit $500; Cash, credit $500
If the physical count of inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?
debit Cost of Merchandise Sold, $163,000; credit Merchandise Inventory, $158,000
debit Merchandise Inventory, $158,000; credit Cost of Merchandise Sold, $158,000
debit Merchandise Inventory, $5,000; credit Cost of Merchandise Sold, $5,000
debit Cost of Merchandise Sold, $5,000; credit Merchandise Inventory, $5,000
The inventory costing method that reports the earliest costs in ending inventory is
specific identification
weighted average
FIFO
LIFO
When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is:
debit Cost of Merchandise Sold; credit Merchandise Inventory
debit Cost of Merchandise Sold; credit Sales
No journal entry is made to record the cost of merchandise sold.
debit Merchandise Inventory; credit Cost of Merchandise Sold
Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a
credit to Merchandise Inventory
debit to Sales
debit to Merchandise Inventory
credit to Accounts Receivable
Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a
debit to Cash for $5,000
credit to Sales for $4,900
debit to Sales Discounts for $100
debit to Accounts Receivable for $4,880
Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to
Sales for $5,580
Sales Tax Payable for $420
Cash for $6,000
Sales for $6,240
During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is
average cost
FIFO
LIFO
weighted average
If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as
FOB shipping point
FOB destination
FOB buyer
FOB n/30
Which of the following companies would be more likely to use the specific identification inventory costing method?
Gordon’s Jewelers
Walmart
Best Buy
Lowe’s
The inventory costing method that reports the most current prices in ending inventory is
FIFO
specific identification
LIFO
average cost
Gross profit is equal to
sales less selling expenses
sales plus selling expenses
sales less cost of merchandise sold
sales plus cost of merchandise sold
When the perpetual inventory system is used, the inventory sold is debited to
Sales
Cost of Merchandise Sold
Supplies Expense
Merchandise Inventory
Cost flow is in the order in which costs were incurred when using
first-in, first-out
last-in, first-out
weighted average
average cost
When the perpetual inventory system is used, the inventory sold is shown on the income statement as
purchases returns and allowances
cost of merchandise sold
net purchases
purchases
The entry to record the return of merchandise from a customer would include a
debit to Sales
debit to Customer Refunds Payable
debit to Estimated Returns Inventory
credit to Sales
Ending inventory is made up of the oldest purchases when a company uses
average cost
first-in, first-out
last-in, first-out
retail method
Generally, the revenue account for a merchandising business is entitled
Gross Sales
Fees Earned
Gross Profit
Sales
If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is
$135
$75
$60
$15
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer's account as uncollectible?
Uncollectible Accounts Expense
Allowance for Doubtful Accounts
Accounts Receivable
Interest Expense
The balance in Allowance for Doubtful Accounts will directly impact the end-of-period adjustment for the bad debt expense when using which of the following methods?
allowance method based on aging the receivables
direct write-off method
accrual method
declining value method
Two methods of accounting for uncollectible accounts are the
direct write-off method and the allowance method
allowance method and the accrual method
allowance method and the net realizable method
direct write-off method and the accrual method
An aging of a company's accounts receivable indicates that the estimate of uncollectible receivables totals $7,900. If Allowance for Doubtful Accounts has a $700 credit balance, the adjustment to record the bad debt expense for the period will require a
debit to Bad Debt Expense for $8,600
debit to Bad Debt Expense for $7,900
debit to Bad Debt Expense for $7,200
credit to Allowance for Doubtful Accounts for $700
What is the type of account and normal balance of Allowance for Doubtful Accounts?
contra asset, credit
asset, debit
asset, credit
contra asset, debit
Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is
$29,500
$34,500
$32,000
cannot be determined
The journal entry used to record the issuance of an interest-bearing note for the purpose of borrowing funds for the business is
debit Accounts Payable; credit Notes Payable
debit Cash; credit Notes Payable
debit Notes Payable; credit Cash
debit Cash and Interest Expense; credit Notes Payable
During a bank reconciliation process,
outstanding checks and deposits in transit are added to the bank statement balance
outstanding checks are subtracted and deposits in transit are added to the bank statement balance
outstanding checks and deposits in transit are subtracted from the bank statement balance
outstanding checks are added and deposits in transit are subtracted from the bank statement balance
The cash account in the company's ledger is a(n)
asset with a normal debit balance
asset with a normal credit balance
liability with a normal debit balance
liability with a normal credit balance
Which of the following should not be considered cash by an accountant?
money orders
bank checking accounts
postage stamps
travelers' checks
Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct regarding the entry to record estimated uncollectible receivables?
Cash will be debited
Bad Debt Expense will be credited
Allowance for Doubtful Accounts will be credited
Accounts Receivable will be debited
When a borrower receives the face amount of a discounted note less the discount, the amount is known as
the note proceeds
the note discount
the note deferred interest
the note principal
The amount of cash to be reported on the balance sheet at June 30 is the
total of the cash column in the cash receipts journal as of June 30
adjusted balance appearing in the bank reconciliation for June 30
total of the cash column in the cash payments journal as of June 30
balance as of June 30 on the bank statement
Notes may be issued
when assets are purchased
to creditors to temporarily satisfy an account payable created earlier
when borrowing money
for all of these
To record estimated uncollectible receivables using the allowance method, the adjusting entry would be a
debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts
debit to Accounts Receivable and a credit to Allowance for Doubtful Accounts
debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable
debit to Loss on Credit Sales and a credit to Accounts Receivable
Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n)
addition to the balance per bank statement
deduction from the balance per company's records
deduction from the balance per bank statement
addition to the balance per company's records
The bank reconciliation
should be prepared by an employee who records cash transactions
is part of the internal control system
is for information purposes only
is sent to the bank for verification
When a company receives an interest-bearing note receivable, it will
debit Notes Receivable for the maturity value of the note
debit Notes Receivable for the face value of the note
credit Notes Receivable for the maturity value of the note
credit Notes Receivable for the face value of the note
A bank statement
is a credit reference letter written by the company's bank
shows a company the financial position of the bank as of a certain date
is a bill from the bank for services rendered
shows the activity that increased or decreased the company's account balance
Which of the following would most likely be classified as a current liability?
two-year notes payable
bonds payable
mortgage payable
unearned rent
One of the weaknesses of the direct write-off method is that it
understates accounts receivable on the balance sheet
violates the matching principle
is too difficult to use for many companies
is based on estimates
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
at the end of each accounting period
when a credit sale is past due
whenever a predetermined amount of credit sales have been made
when an account is determined to be worthless
Allowance for Doubtful Accounts has a debit balance of $1,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $12,900. Which of the following entries records the proper adjustment for bad debt expense?
debit Bad Debt Expense, $14,000; credit Allowance for Doubtful Accounts, $14,000
debit Allowance for Doubtful Accounts, $14,000; credit Bad Debt Expense, $14,000
debit Allowance for Doubtful Accounts, $11,800; credit Bad Debt Expense, $11,800
debit Bad Debt Expense, $11,800; credit Allowance for Doubtful Accounts, $11,800
EFT
means Efficient Funds Transfer
can process certain cash transactions at less cost than by using the mail
makes it easier to document purchase and sale transactions
means Effective Funds Transfer
Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)
deduction from the balance per company's records
addition to the balance per bank statement
deduction from the balance per bank statement
addition to the balance per company's records
Martinez Co. borrowed $50,000 on March 1 of the current year by signing a 60-day, 9%, interest-bearing note. Assuming a 360-day year, when the note is paid on April 30, the entry to record the payment should include a
debit to Interest Payable for $750
debit to Interest Expense for $750
credit to Cash for $50,000
credit to Cash for $54,500
The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?
debit Allowance for Doubtful Accounts; credit Accounts Receivable
debit Sales Returns and Allowance; credit Accounts Receivable
debit Bad Debt Expense; credit Allowance for Doubtful Accounts
debit Bad Debt Expense; credit Accounts Receivable
Accompanying the bank statement was a debit memo for bank service charges. On the bank reconciliation, the item is
a deduction from the balance per company's records
an addition to the balance per bank statement
a deduction from the balance per bank statement
an addition to the balance per company's records
The term "receivables" includes all
money claims against other entities
merchandise to be collected from individuals or companies
cash to be paid to creditors
cash to be paid to debtors
Current liabilities are reported on the
Income statement
Balance Sheet
Statement of Owner's Equity
Both the income statement and the balance sheet
Which one of the following reflects a weak internal control system?
all employees are well supervised
a single employee is responsible for comparing a receiving report to an invoice
all employees must take their vacations
a single employee is responsible for collecting and recording of cash
Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)
deduction from the balance per company's records
addition to the balance per bank statement
deduction from the balance per bank statement
addition to the balance per company's records
"To maintain public confidence and trust in the financial reporting of companies" is the purpose of
the FASB
the IRS
Sarbanes-Oxley
GAAP
After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of accounts receivable?
$51,000
$289,000
$340,000
$391,000
The current portion of long-term debt should
be classified as a long-term liability
not be separated from the long-term portion of debt
be paid immediately
be reclassified as a current liability
A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n)
deduction from the balance per the company's records
addition to the balance per the bank statement
deduction from the balance per the bank statement
addition to the balance per the company's records
A debit balance in the Allowance for Doubtful Accounts
is the normal balance for that account
indicates that actual bad debt write-offs have been less than what was estimated
cannot occur if the percentage of receivables method of estimating bad debts is used
indicates that actual bad debt write-offs have exceeded previous provisions for bad debts
A current liability is a debt that is reasonably expected to be paid
between 6 months and 18 months
out of currently recognized revenues
within one year
out of cash currently on hand
The purpose of the bank reconcilation is to
Update the cash balance in the company to match the cash balance per the bank
To make sure the company has accounted for their bad debts
To make sure that depreciation was recorded properly
To make sure the trial balance is in balance
An example of a good internal control is
Allowing everyone to enter the inventory warehouse
Using security cameras near the cash registers
Not requiring training for employees about the importance of internal controls
Allowing one person to record transactions and handle cash
After reconciling the bank statement, a journal entry will need to be made for which of the following?
Outstanding checks
Bank service charge
Deposits in transit
Bank error
Cash is a(n) _____ with a normal _____ balance.
Asset; credit
Asset; debit
Revenue; debit
Revenue; credit
The allocation of a plant asset's cost to expense over its useful life is called ________.
book value
depreciation
residual value
accrued revenue
