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ACC 557 Midterm Exam Part 2 Question With Answers

2016-05-11 05:04:16

ACC 557 Midterm Exam Part 2 Question With Answers

Question 1

Net income is gross profit less

  • financing expenses.
  • operating expenses.
  • other expenses and losses.
  • other expenses.


Question 2

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.


Question 3

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?

  • $8,100
  • $8,280
  • $8,820
  • $9,000


Question 4

When a seller grants credit for returned goods, the account that is credited is

  • Sales Revenue.
  • Sales Returns and Allowances.
  • Inventory.
  • Accounts Receivable.


Question 5

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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Question 6

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.


Question 7

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.


Question 8

A cash discount is usually granted to all of the following except

  • retail customers.
  • retailers.
  • wholesalers.
  • All of these answers are correct.


Question 9

If a company fails to record estimated bad debts expense,

  • cash realizable value is understated.
  • expenses are understated.
  • revenues are understated.
  • receivables are understated.


Question 10

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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Question 11

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.


Question 12

The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is

  • $50,000.
  • $50,750.
  • $54,500.
  • $59,000.


Question 13

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.


Question 14

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

  • $44,100.
  • $45,000.
  • $45,900.
  • $62,100.


Question 15

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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Question 16

A credit balance in Cash Over and Short is reported as a(n)

  • asset.
  • liability.
  • miscellaneous expense.
  • miscellaneous revenue.


Question 17

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

  • $42,048.
  • $42,192.
  • $43,128.
  • $51,392.


Question 18

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.


Question 19

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.


Question 20

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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Question 21

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.


Question 22

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.


Question 23

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.


Question 24

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?

  • $1,000.
  • $3,400.
  • $4,200.
  • $8,200.


Question 25

A company purchased inventory as follows:

150 units at $5

350 units at $6

The average unit cost for inventory is

  • $5.00.
  • $5.50.
  • $5.70.
  • $6.00.


About Author:

This article covers the topic for the Strayer University ACC 557 Midterm Exam Part 2. The author is working in the field of education from last 5 years. This article covers the questions & answers of ACC 557 Complete Course from Strayer University. Other topics in the class are as follows:


ACC 557 Week 1 DQ 1
ACC 557 Week 1 Homework
ACC 557 Week 1 Complete
ACC 557 Midterm Exam Part 1
ACC 557 Midterm Exam Part 2

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