saint mba560 week 2 quiz (jan 18, 2014)

1. During the month of March, Wang Company sold merchandise on account for $9,100. The merchandise had cost Wang $4,900. Which of the following represents the effects of this transaction on Wang’s financial statements?

(Points : 2) Row One
Row Two
Row Three
Row Four

Question 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. 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? Row Assets = Liab. + Equity Rev - Exp. = Net Inc. Cash One (1,750) = NA + (1,750) NA - 1750 = (1,750) NA Two NA = 1750 + (1,750) NA - 1750 = (1,750) NA Three 16,250 = NA + 16,250 16,250 - NA = 16,250 16,250 IA Four (18,000) = NA + (18,000) (18,000) - NA = (18,000) NA (Points : 2) Row One Row Two Row Three Row Four

Question 4. 4. Merchandising businesses: (Points : 2) manufacture the goods they sell. generate revenue primarily by providing services to customers. buy the merchandise they sell from suppliers. include dry cleaning companies and law firms.

Question 5. 5. Product costs are also referred to as: (Points : 2) period costs. selling and administrative expenses. operating expenses. inventory costs.

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 Four

Question 7. 7. The following data are from the income statement of Rathbun Company: Sales $800 Cost of Goods Sold (500) Other Expenses (200) Net Income $100 The company's gross margin percentage is: (Points : 2) 12.5% 37.5% 62.5% 60.0%

Question 8. 8. 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 9. 9. Baxter Company’s merchandise inventory at the start of 2010 was $85,000. The company purchased inventory during 2010 in the amount of $323,000, and its inventory at the end of the year was $102,000. What was Baxter’s Cost of Goods Available for Sale for the year 2010? (Points : 2) $391,000 $306,000 $408,000 $289,000

Question 10. 10. Which of the following is not considered an accounting control? (Points : 2) Performance evaluations of managers Requiring employees to take vacations or rotate job duties Bonding of employees Use of prenumbered documents

Question 11. 11. A bank deposit made on June 30 did not appear on the June bank statement. In doing the June bank reconciliation, this deposit in transit should be: (Points : 2) subtracted from the unadjusted book balance. added to the unadjusted bank balance. subtracted from the unadjusted bank balance. added to the unadjusted book balance.

Question 12. 12. Which of the following retailers would be expected to have the highest gross margin percentage? (Points : 2) Kmart Neiman Marcus Wal-Mart Save-a-Lot, discount supermarket chain

Question 13. 13. In preparing a bank reconciliation, typical adjustments to the bank balance include: (Points : 2) NSF checks. interest earned on the account. accounts or notes receivable collected by the bank. deposits in transit.

Question 14. 14. To have a strong internal control system, a business must have good administrative controls. Administrative controls include: (Points : 2) the reconciliation of the bank statement. the accuracy of the recording procedures. assessing compliance with company policies. maintenance of accurate inventory records.

Question 15. 15. 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 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 performance

Question 17. 17. The following are strong internal control measures over cash disbursements except for: (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.

Question 18. 18. The term "FOB destination" means: (Points : 2) the seller of the merchandise is responsible for transportation costs. the seller relinquishes ownership at the shipping point. the buyer of the merchandise pays the shipping cost. the buyer assumes responsibility at the shipping point.

Question 19. 19. Unger Company uses the perpetual inventory method. Unger sold goods that cost $3,500 for $7,200. If the sale was made to a customer on account, the sale will: (Points : 2) increase total assets by $3,700. increase total liabilities by $7,200. increase total liabilities by $3,500. increase total assets by $7,200.

Question 20. 20. 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.