Exam (elaborations)
Financial Accounting (Exam 2 chapter 5-9) (2)
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- GPSTC Class 290
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- GPSTC Class 290
Financial Accounting (Exam 2 chapter 5-9) (2)
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Financial Accounting (Exam 2 chapter5-9)
A company buys footwear and clothing from manufacturers, which it resells to
discount stores in a large urban area. This company is an example of a: - CORRECT
ANSWER-wholesale merchandising company.
A company decides to start allowing its customers to pay with national credit cards
and PayPal. This decision would: - CORRECT ANSWER-speeds up its cash
collection and reduces losses from customers writing bad checks.
A company sells goods at a selling price of $20,000. The cost of the goods is
$15,000. Under a perpetual inventory system, the journal entries prepared to record
the credit sale will include a debit to: - CORRECT ANSWER-Cost of Goods Sold and
a credit to Inventory for $15,000.
A piece of equipment was acquired on January 1, 2021, at a cost of $25,000, with an
estimated residual value of $5,000 and an estimated useful life of five years. The
company uses the double-declining-balance method. What is its book value at
December 31, 2022? - CORRECT ANSWER-$9,000
A trucking company sold its fleet of trucks for $56,800. The trucks originally cost
$1,496,000 and had Accumulated Depreciation of $1,287,000 recorded through the
date of disposal. What gain or loss did the trucking company record when it sold the
fleet of trucks? - CORRECT ANSWER-Loss of $152,200.
Alpha Company bought inventory from Omega Company, FOB shipping point. On
December 31, the last day of the accounting year, the goods were on a truck owned
by Theta, Incorporated, exactly halfway between Alpha and Omega. Which company
should include these goods in its December 31 inventory? - CORRECT
ANSWER-Alpha Company
Alphabet Company, which uses the periodic inventory method, purchases different
letters for resale. Alphabet had no beginning inventory. It purchased A thru G in
January at $2.50 per letter. In February, it purchased H thru L at $4.50 per letter. It
purchased M thru R in March at $5.50 per letter. It sold A, D, E, H, J and N in
October. There were no additional purchases or sales during the remainder of the
year.If Alphabet Company uses the weighted average method, what is the cost of its
ending inventory? (Round the per unit cost to two decimal places and then round
your answer to the nearest whole dollar.) - CORRECT ANSWER-$49
, An example of the internal control principle of establishing responsibility is: -
CORRECT ANSWER-assigning each cash drawer to only one employee
establishing responsibility.
Explanation:
Whenever possible, establish responsibility by assigning each task to only one
employee. Doing so will allow you to determine who caused any errors or thefts that
occur. That's why retail companies assign a separate cash register drawer to each
employee at the beginning of a shift. If two cashiers were to use the same drawer, it
would be impossible to know which cashier caused the drawer to be short on cash.
With only one person responsible for adding and removing money from the drawer,
there's no doubt about who is responsible for a cash shortage.
Best, Incorporated loaned $100,000 for three months on November 1 to one of its
customers at the rate of 6%. The principal amount of the loan plus interest is due on
the following February 1. Which of the following is the adjusting journal entry that will
be recorded on December 31? - CORRECT ANSWER-Debit Interest Receivable and
credit Interest Revenue for $1,000.
Bolster Soda had an accounts receivable turnover ratio of 9.9 this year and 11.0 last
year. Castor Soda had a turnover ratio of 9.3 this year and 9.3 last year. This implies:
- CORRECT ANSWER-Bolster's receivables turnover ratios were better than
Castor's for both years.
Chuck Daniels Auto acquired a hydraulic lift on August 1, 2021. The lift cost
$165,000, had an estimated useful life of 10 years and a residual value of $16,500 at
the end of its useful life. What amount of depreciation expense would be recognized
under the double-declining-balance method for the year ending December 31, 2021?
- CORRECT ANSWER-$13,750
Comparing the cash in the register with the cash count sheet is required by the
internal control principle of: - CORRECT ANSWER-independently verifying.
Egrane, Incorporated's monthly bank statement showed the ending balance of cash
of $14,800. The bank reconciliation for the period showed an adjustment for a
deposit in transit of $1,200, outstanding checks of $1,600, an NSF check of $560,
bank service charges of $24 and the EFT from a customer in payment of the
customer's account of $1,200.
What is the up-to-date ending Cash balance? - CORRECT ANSWER-$14,400
Employee fraud includes which of the following categories? - CORRECT
ANSWER-Corruption
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