Net income is gross profit less
- financing expenses.
- operating expenses.
- other expenses and losses.
- other expenses.
On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:
- a $3,600 credit to Cost of Goods Sold.
- a $6,000 credit to Cash.
- a $3,600 credit to Inventory.
- d a $6,000 debit to Accounts Receivable.
Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?
When a seller grants credit for returned goods, the account that is credited is
- Sales Revenue.
- Sales Returns and Allowances.
- Accounts Receivable.
An aging of a company's accounts receivable indicates that $14,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
- debit to Bad Debt Expense for $14,000.
- debit to Allowance for Doubtful Accounts for $12,900.
- debit to Bad Debt Expense for $12,900.
- credit to Allowance for Doubtful Accounts for $14,000.
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The basic issues in accounting for notes receivable include each of the following except
- analyzing notes receivable.
- disposing of notes receivable.
- recognizing notes receivable.
- valuing notes receivable.
Three accounting issues associated with accounts receivable are
- depreciating, returns, and valuing.
- depreciating, valuing, and collecting.
- recognizing, valuing, and disposing.
- accrual, bad debts, and disposing.
A cash discount is usually granted to all of the following except
- retail customers.
- All of these answers are correct.
If a company fails to record estimated bad debts expense,
- cash realizable value is understated.
- expenses are understated.
- revenues are understated.
- receivables are understated.
Bad Debt Expense is considered
- an avoidable cost in doing business on a credit basis.
- an internal control weakness.
- a necessary risk of doing business on a credit basis.
- avoidable unless there is a recession.
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The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
- will increase income in the period it is collected.
- will decrease income in the period it is collected.
- requires a correcting entry for the period in which the account was written off.
- does not affect income in the period it is collected.
The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is
The control principle related to not having the same person authorize and pay for goods is known as
- establishment of responsibility.
- independent internal verification.
- segregation of duties.
- rotation of duties.
If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is
A system of internal control
- is infallible.
- can be rendered ineffective by employee collusion.
- invariably will have costs exceeding benefits.
- is premised on the concept of absolute assurance.
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A credit balance in Cash Over and Short is reported as a(n)
- miscellaneous expense.
- miscellaneous revenue.
The cash account shows a balance of $40,000 before reconciliation. The bank statement does not include a deposit of $9,200 made on the last day of the month. The bank statement shows a collection by the bank of $3,960 and a customer’s check for $1,300 was returned because it was NSF. A customer’s check for $1,380 was recorded on the books as $1,920, and a check written for $318 was recorded as $390. The correct balance in the cash account was
A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would
- credit Cash Over and Short for $3.
- credit Miscellaneous Revenue for $3.
- debit Cash Over and Short for $3.
- debit Miscellaneous Expense for $3.
Jolene is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates
- documentation procedures are violated.
- independent internal verification is violated.
- segregation of duties is violated.
- establishment of responsibility is violated.
Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
- inadequate internal control.
- duplication of effort.
- external verification.
- segregation of duties.
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Which of the following statements is correct with respect to inventories?
- The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
- It is generally good business management to sell the most recently acquired goods first.
- Under FIFO, the ending inventory is based on the latest units purchased.
- FIFO seldom coincides with the actual physical flow of inventory.
In a manufacturing business, inventory that is ready for sale is called
- raw materials inventory.
- work in process inventory.
- finished goods inventory.
- store supplies inventory.
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
- LIFO will have the highest ending inventory.
- FIFO will have the highest cost of good sold.
- FIFO will have the highest ending inventory.
- LIFO will have the lowest cost of goods sold.
Indrisano's Used Cars uses the specific identification method of costing inventory. During March, Indrisano purchased three cars for $12,000, $14,400, and $19,200, respectively. During March, two cars are sold for a total of $34,600. Indrisano determines that at March 31, the $14,400 car is still on hand. What is Indrisano’s gross profit for March?
A company purchased inventory as follows:
150 units at $5
350 units at $6
The average unit cost for inventory is
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