Saint Leo MBA 560 quiz 2 Question # 00003098 Posted By: neil2103 Updated on: 11/02/2013 12:07 AM Due on: 11/14/2013 Subject Finance Topic Finance Tutorials: 1 See full Answer Question Question 1.1.Which of the following is a period cost? (Points : 2) Transportation cost on goods received from suppliers Storage costs for merchandise inventory Cost of merchandise purchased Advertising expense for the current monthQuestion 2.2.Gruver Company maintains perpetual inventory records. The company's inventory account had a $5,500 balance as of December 31, 2010. On that date, a physical count of inventory showed only $5,300 of merchandise in stock. The write-down to recognize the missing inventory will: (Points : 2) decrease assets. increase expense. decrease equity. all of the above.Question 3.3.Lynx Company purchased $4,000 of merchandise on account and sold the merchandise to a customer for $7,000 cash. What is Lynx’s gross margin and the net change in cash flow from operating activities as a result of these transactions? Cash Flow FromRowGross MarginOperating ActivitiesOne$7,000$4,000 inflowTwo$3,000$7,000 inflowThree$3,000$7,000 outflowFour$4,000$4,000 outflow(Points : 2) Row One Row Two Row Three Row FourQuestion 4.4.Cost of Goods Sold is reported as a(n): (Points : 2) asset on the balance sheet. direct reduction of equity on the statement of changes in stockholders’ equity. addition to Sales Revenue on the income statement. expense on the income statement.Question 5.5.A purchase of merchandise on account is a(n): (Points : 2) asset source transaction. asset exchange transaction. asset use transaction. claims exchange transaction.Question 6.6.Lemon Company sent goods to a customer FOB delivery. What effect will these freight costs have on Lemon company’s financial statements? (Points : 2) Row One Row Two Row Three Row FourQuestion 7.7.The Red Valley Company maintains perpetual inventory records. Although its inventory records indicated $18,000 in the inventory, a physical count showed only $16,250. Which of the following answers indicates the effect of the necessary write-down?RowAssets=Liab.+EquityRev-Exp.=Net Inc.CashOne(1,750)=NA+(1,750)NA-1750=(1,750)NATwoNA=1750+(1,750)NA-1750=(1,750)NAThree16,250=NA+16,25016,250-NA=16,25016,250 IAFour(18,000)=NA+(18,000)(18,000)-NA=(18,000)NA(Points : 2) Row One Row Two Row Three Row FourQuestion 8.8.During the month of March, Wang Company collected $8,000 of accounts receivable. Which of the following represents the effects of the collection of the receivables on Wang’s financial statements? (Points : 2) Row One Row Two Row Three Row FourQuestion 9.9.A retail company sells goods primarily to: (Points : 2) other businesses. manufacturing firms. the final consumer. both A and C.Question 10.10.Which of the following is not a generally recognized internal control procedure? (Points : 2) Establishment of clear lines of authority The minimization of labor cost Requiring regular vacations for employees Having employees covered by a fidelity bond.Question 11.11.Which of the following statements accurately describes a fidelity bond? (Points : 2) Insurance that the company buys to protect itself from loss due to employee dishonesty Proper procedures for processing accounting transactions Procedures to provide reasonable assurance that the objectives of a company are accomplished Guidelines that limit the actions and authority of different levels of managementQuestion 12.12.Effective internal controls for cash include: (Points : 2) making cash payments by prenumbered check. depositing cash in the bank on a timely basis. giving written cash receipts to customers as evidence of payment. all of the above.Question 13.13.What documentation issued by a bank increases a company's checking account balance at the bank? (Points : 2) An account invoice A debit memo A credit memo A certified checkQuestion 14.14.In a company's bank reconciliation, an outstanding check is a check that: (Points : 2) is guaranteed for payment by the bank. has been issued by the company but has not been presented to the bank forpayment. has been presented to the bank for payment but has not been reported on the bank statement. has been written for an amount that is greater than the balance in the account holder's bank account.Question 15.15.Wren Company accepted a check from Jay Company as payment for services rendered. Wren's bank statement revealed that the Jay check was an NSF check. Wren has not decided to write off the account. Exclusive of any bank charges what will the entry to record the NSF check have on the accounting equation of Wren Company?RowTotal AssetsTotal EquityOneNo effectNo effectTwoDecreaseDecreaseThreeDecreaseNo effectFourNo effectDecrease(Points : 2) Row One Row Two Row Three Row FourQuestion 16.16.Which of the following is not one of the purposes of an internal control system? (Points : 2) Safeguarding the company's assets Ensuring that the company is using the most effective marketing plan The assessment of the degree of compliance with company policies and public laws The evaluation of performanceQuestion 17.17.Accounting controls are designed to: (Points : 2) eliminate collusion. evaluate performance for annual merit increases. ensure low employee turnover. safeguard company assets and ensure reliable accounting records.Question 18.18.An entry to record the purchase of inventory on account under the perpetual inventory method: (Points : 2) increases total assets. decreases total liabilities. decreases total assets. increases total equity.Question 19.19.The credit terms, 2/10, n/30 indicate that a: (Points : 2) ten percent discount can be deducted if the invoice is paid within two days following the date of sale. two percent discount can be deducted for a period up to thirty days following the date of sale. two percent discount can be deducted if the invoice is paid by the tenth day following the date of the sale. two percent discount can be deducted if the invoice is paid after the tenth day following the sale, but before the thirtieth day.Question 20.20.The following are strong internal control measures over cash disbursementsexceptfor: (Points : 2) all checks should be prenumbered. unused checks should be locked up. the person approving the payment should also sign the check. the payment must be recorded on the books by someone other than the check signer. 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Solution: Saint Leo MBA 560 quiz 2