Please Click here for Solution - Ask Questions_ Get Answers from

Document Sample
Please Click here for Solution - Ask Questions_ Get Answers from Powered By Docstoc
					   1) Which of the following items should NOT be included in the Cash caption on the balance
      sheet? A. Amounts on deposit in checking account at the bank B. Postage stamps on hand C.
      Checks from other parties presently in the cash register D. Coins and currency in the cash
      register

2) A cash equivalent is a short-term, highly liquid investment that is readily convertible into known
amounts of cash and A. bears an interest rate that is at least equal to the prime rate of interest at the date
of liquidation. B. is so near its maturity that it presents insignificant risk of changes in interest
rates. C. has a current market value that is greater than its original cost. D. is acceptable as a means to
pay current liabilities.

3) Which of the following is NOT considered cash for financial reporting purposes? A. Coin, currency,
and available funds B. Postdated checks and I.O.U.'s C. Money orders, certified checks, and personal
checks D. Petty cash funds and change funds

4) Which of the following is a generally accepted method of determining the amount of the adjustment
to bad debt expense? A. A percentage of accounts receivable NOT adjusted for the balance in the
allowance B. An amount derived from aging accounts receivable and NOT adjusted for the balance in
the allowance C. A percentage of sales NOT adjusted for the balance in the allowance D. A
percentage of sales adjusted for the balance in the allowance

5) Which of the following methods of determining annual bad debt expense best achieves the matching
concept? A. Percentage of average accounts receivable B. Direct write-off C. Percentage of ending
accounts receivable D. Percentage of sales

6) Which of the following methods of determining bad debt expense does NOT properly match expense
and revenue? A. Charging bad debts with an amount derived from aging accounts receivable under the
allowance method. B. Charging bad debts with a percentage of sales under the allowance method. C.
Charging bad debts as accounts are written off as uncollectible. D. Charging bad debts with an
amount derived from a percentage of accounts receivable under the allowance method.

7) The failure to record a purchase of mer¬chandise on account even though the goods are properly
included in the physical inven¬tory results in A. an understatement of cost of goods sold and liabilities
and an overstatement of assets. B. an overstatement of assets and net income. C. an understatement of
liabilities and an overstatement of owners' equity. D. an understatement of assets and net income.

8) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in
inventory, but did NOT record the transaction. The effect of this on its financial statements for January
31 would be A. net income and current assets were overstated and current liabilities were understated.
B. net income, current assets, and retained earnings were overstated. C. net income, current assets,
and retained earnings were understated. D. net income was correct and current assets were understated.

 9) Valuation of inventories requires the deter¬mination of all of the following EXCEPT A. the cost of
goods held on consign¬ment from other companies. B. the costs to be included in inventory. C. the
cost flow assumption to be adopted. D. the physical goods to be included in inventory.

10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory
item is its A. invoice price less the purchase discount taken. B. invoice price. C. invoice price less the
purchase discount allowable whether taken or not. D. invoice price plus any purchase discount lost.
11) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of
goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold
when inventory is valued using the LIFO method? A. Prices increased. B. Prices decreased. C. Price
trend cannot be determined from information given. D. Prices remained unchanged.

12) When using the periodic inventory system, which of the following generally would NOT be
separately accounted for in the computation of cost of goods sold? A. Purchase returns and allowances
of merchandise during the period B. Trade discounts applicable to purchases during the period C.
Cost of transportation-in for merchandise purchased during the period D. Cash (purchase) discounts
taken during the period

				
DOCUMENT INFO