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Rudolf Diesel Company's inventory records show

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These are multiple choices.

1. Financial information is presented below:
Operating Expenses 45,000
Sales Returns and Allowances 13,000
Sales Discounts 6,000
Sales 150,000
Cost of Goods Sold 67,000
Gross profit would be

2. Rudolf Diesel Company's inventory records show the following data:
Units Unit Cost
Inventory January 1 5,000 $9.00
Purchases June 18 4,500 $8.00
November 8 3,000 $7.00
A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO method, the December 31 inventory is

3. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

4. A bank reconciliation should be prepared
whenever the bank refuses to lend the company money.
when an employee is suspected of fraud.
to explain any difference between the depositor's balance per books and the balance per bank.
by the person who is authorized to sign checks.

5. Merchandise inventory is
reported under the classification of Property, Plant, and Equipment on the balance sheet.
often reported as a miscellaneous expense on the income statement.
reported as a current asset on the balance sheet.
generally valued at the price for which the goods can be sold.

6. Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

7. The following information was available for Carton Company at December 31, 2008: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $660,000; and sales $900,000.Carton's inventory turnover ratio in 2008 was

8. Cost of goods sold is determined only at the end of the accounting period in
a perpetual inventory system.
a periodic inventory system.
both a perpetual and a periodic inventory system.
neither a perpetual nor a periodic inventory system.

9. Logan Company made a purchase of merchandise on credit from Claude Corporation on August 3, for $6,000, terms 2/10, n/45. On August 10, Logan makes the appropriate payment to Claude. Logan uses a perpetual inventory system. The entry on August 10 for Logan Company is
Accounts Payable 6,000
Cash 6,000

Accounts Payable 5,880
Cash 5,880

Accounts Payable 6,000
Purchases Returns and Allowances 120
Cash 5,880

Accounts Payable 6,000
Merchandise Inventory 120
Cash 5,880

2.5 points

10.In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

11. Net sales is sales less

12. If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

13. All of the following are parties to a check except the

14. On October 4, 2008, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a

15. The collection of a $600 account within the 2 percent discount period will result in a

16. Tier II Company uses a periodic inventory system. Details for the inventory account for the month of January, 2009 are as follows:
Units Per Unit Price Total
Balance 1/1/09 200 $5.00 $1,000
Purchase 1/15/09 100 5.30 530
Purchase 1/28/09 100 5.50 550
An end of the month (1/31/09) inventory showed that 120 units were on hand.
If the company uses LIFO, what is the value of the ending inventory?

17. At May 1, 2008, Treeline Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows:200 units at $7300 units at $8The company sold 500 units during the month for $12 per unit. Treeline uses the average cost method. The average cost per unit for May is
Answer
$7.00.
$7.50.
$7.60.
$8.00.

18. At the beginning of the year, Midtown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,600,000. If Midtown Athletic reported ending inventory of $600,000 and sales of $2,000,000, the company's cost of goods sold and gross profit rate must be

19. Under a perpetual inventory system, acquisition of merchandise is debited to the

20. Which one of the following inventory methods is often impractical to use?

21. When two or more people get together for the purpose of circumventing prescribed controls, it is called

22. An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is
Answer
Cost of Goods Sold Net Income
Understated Understated

Cost of Goods Sold Net Income
Overstated Overstated

Cost of Goods Sold Net Income
Understated Overstated

Cost of Goods Sold Net Income
Overstated Understated

23. A voucher system is a series of prescribed control procedures

24. Bryan Company purchased merchandise from Cates Company with freight terms of FOB shipping point. The freight costs will be paid by the

25. Controls that enhance the accuracy and reliability of the accounting records are

26. A sales discount does not

27. Jansen Company gathered the following reconciling information in preparing its April bank reconciliation:
Cash Balance per Books, 4/30 $6,600
Deposits in Transit 900
Notes Receivable and Interest collected by Bank 2,220
Bank Charge for Check Printing 75
Outstanding Checks 4,500
NSF check 420
The adjusted cash balance per books on April 30 is

28. Ace Industries had the following inventory transactions occur during 2008:
The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars)

Answer
$2,441
$2,365
$848
$772

Q 29- Match the item on the right hand side to the appropriate item on the left hand side.

1- Freight terms that require the buyer to pay the freight cost
2. Sales less sales returns and allowances and sales discounts.
3. Detailed inventory records are maintained in this inventory system?
4. When a perpetual inventory system is used, the acquisition of merchandise inventory is debited to this account?
5. Sales Returns and Allowances and Sales Discounts have normal debit balances and both are?
6. Indicates those people authorized to sign checks.
7. Anything that a bank will accept for deposit.
8. Mechanical and electronic control devices.
9. One who issues a check.
10. An extensive network of approvals by authorized individuals.

A. Bank signature card
B. Maker
C. Cash
D. Merchandise inventory
E. Cash registers, garment senors, and burglar alarms are examples
F. Voucher system
G. FOB shipping point
H. Specific identification method
I. Contra revenue account
J. Net sales

30. Match the item on the right hand side to the appropriate item on the left hand side.

A business that buys and sells goods rather than performing services to earn a profit

Net sales less cost of goods sold.

Requires a physical count of goods on hand to compute cost of goods sold.

Measures the number of times inventory sold during the period.

Title of goods transfers when the goods are delivered to the buyer.

One to whom a check is payable.

Two or more employees circumventing prescribed procedures.

Prevent a transaction from being recorded more than once.

Checks which have been paid by the depositor's bank.

Checks which have been returned by the maker's bank for lack of funds.
Answers
A- Periodic inventory system
B- FOB destination
C- Inventory turnover
D- NSF checks
E- Collusion
F- Merchandiser
G- Canceled checks
H- Gross profit
I- Prenumbered documents
J- Payee

31. Which of the following accounts is not closed to Income Summary?

32. When making a payment from the petty cash fund for postage stamps, the following journal entry is made.

33. W.B. Reindeer Company's inventory records show the following data:
Units Unit Cost
Inventory January 1 5,000 $9.00
Purchases: June 18 4,500 8.00
November 8 3,000 7.00
A physical inventory on December 31 shows 2,000 units on hand. W.B. Reindeer sells the units for $12 each. The company has an effective tax rate of 20%. Reindeer uses the periodic inventory method. Under the LIFO method, cost of goods sold is

34. Allowing only designated personnel to handle cash receipts is an example of
establishment of responsibility.
segregation of duties.
documentation procedures.
independent internal verification.

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