Question 1

Which amount should be reported as cash on the balance sheet?

Accepted Answer

A)  The ending cash balance per the bank statement.
B)  The beginning cash balance per the bank statement.
C)  The up-to-date ending cash balance per the bank reconciliation.
D)  The ending cash balance per the books.E) C) and D)
F) A) and B)

Question 2

Which of the following statements regarding journal entries under a perpetual inventory system is true?

Accepted Answer

A)  "Freight-out" or delivery costs associated with sales should be included in the cost of goods sold amount.
B)  When a company receives payment from a customer for a sale,cash is debited and accounts payable is credited.
C)  When a company grants an allowance to a customer,inventory is credited when using a perpetual inventory system.
D)  When a customer returns inventory,the seller debits sales returns and allowances under a perpetual inventory system.E) C) and D)
F) A) and D)

Question 3

Most companies report their sales revenue and contra-revenue accounts,as well as net sales,on their externally reported income statements.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not stated as a primary objective of a company's internal control policies and procedures?

Accepted Answer

A)  The proper recording and authorization of transactions.
B)  The maintenance of adequate records.
C)  The prevention or detection of unauthorized activities involving a company's records.
D)  The provision of current information for outside investors and analysts.E) B) and C)
F) All of the above

Question 5

Over a two-year period,Coca-Cola's gross profit percentage went from 70.4% to 69.7%.Which of the following could not have been the cause of this change?

Accepted Answer

A)  Reduced selling prices.
B)  Rising product cost as a percentage of sales.
C)  Increased competition from Pepsi.
D)  No change in selling price or product cost,but a decrease in sales volume.E) A) and D)
F) A) and C)

Question 6

BetterBuy purchases computers from companies like Hewlett Packard and IBM and sells them to consumers.BetterBuy is a:

Accepted Answer

A)  merchandising company at the retail level.
B)  service company.
C)  merchandising company at the wholesale level.
D)  manufacturer.E) None of the above
F) B) and C)

Question 7

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Accepted Answer

A)  72%.
B)  0.28%.
C)  38.9%.
D)  28%.E) B) and D)
F) C) and D)

Question 8

Internal controls include the policies and procedures a company implements to protect against theft of assets,to promote efficiency,and to ensure compliance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 9

Intel makes microchips from raw materials acquired from suppliers.Intel is a:

Accepted Answer

A)  service company.
B)  retail company.
C)  manufacturer.
D)  merchandising company.E) A) and D)
F) All of the above

Question 10

On October 31,2013,the bank's records say that your company has $12,956.73 in its checking account.You are aware of three outstanding checks for a total of $2,112.19.During October,2013,the bank rejected two deposited checks from customers totaling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad checks,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2013,your Cash account would have a balance of:

Accepted Answer

A)  $14,402.73.
B)  $15,711.11.
C)  $11,498.73.
D)  $10,202.35.E) B) and D)
F) B) and C)

Question 11

Which of the following situations would cause the balance per bank to be more than the balance per books?

Accepted Answer

A)  Deposits in transit.
B)  Service charges.
C)  Outstanding checks.
D)  Checks from customers returned as NSF.E) B) and C)
F) All of the above

Question 12

On December 31,2014,you count 300 tie clips in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 128 tie clips during the next quarter.On March 31,2015,you count 288 tie clips in inventory.Which of the following is not true?

Accepted Answer

A)  Ending inventory on March 31,2015 should be 288 tie clips.
B)  Your company uses the perpetual inventory method.
C)  Your company's records would show that 140 tie clips were sold during the quarter.
D)  The amount of shrinkage cannot be determined with this type of inventory system.E) B) and D)
F) A) and B)

Question 13

The internal control principle related to separating employees' duties so that the work of one person can be used to check the work of another person is called:

Accepted Answer

A)  duplication of responsibility.
B)  mandatory vacations.
C)  segregation of duties.
D)  rotation of duties.E) None of the above
F) B) and C)

Question 14

A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 15

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:

Accepted Answer

A)  wholesale merchandising company.
B)  service company.
C)  retail merchandising company.
D)  secondary service company.E) B) and D)
F) B) and C)

Question 16

Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the NSF check returned?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) A) and D)
F) None of the above

Question 17

Which of the following statements regarding gross profit percentage is not true?

Accepted Answer

A)  It is possible for a company to increase both its gross profit percentage and net income without increasing the dollar amount of sales.
B)  A rising gross profit percentage indicates management's inability to control production and inventory costs.
C)  The gross profit percentage can be used to determine if a company is making enough on each sale to cover its operating expenses.
D)  Gross profit percentages vary across industries.E) All of the above
F) C) and D)

Question 18

The purpose of internal controls includes all of the following except:

Accepted Answer

A)  to improve efficiency.
B)  to reduce waste.
C)  to minimize errors.
D)  to eliminate fraud.E) A) and B)
F) A) and C)

Question 19

Your store buys ice cream at a cost of $1.50 a half gallon and sells it for $4 a half gallon.General and administrative expenses are $0.75 per half gallon.Which of the following statements is true?

Accepted Answer

A)  Your gross profit per half gallon is $2.50.
B)  Your gross profit per half gallon is $1.75.
C)  The difference between the selling price and the cost is recorded in the gross profit account.
D)  The difference between the selling price and the cost is recorded in the net profit account.E) B) and D)
F) A) and D)

Question 20

Which of the following is not true of a cash shortage/overage?

Accepted Answer

A)  It has a debit balance if there is a shortage.
B)  It is reported on the balance sheet.
C)  It is classified as a non-operating expense or revenue.
D)  If the recorded cash exceeds the cash counted,a shortage exists.E) A) and B)
F) C) and D)

Exam 6: Internal Control, Cash, and Merchandise Sales

The internal control principle related to separating employees' duties so that the work of one person can be used to check the work of another person is called:

Correct Answer
verified

BetterBuy purchases computers from companies like Hewlett Packard and IBM and sells them to consumers.BetterBuy is a:

Correct Answer
verified

Which of the following is not true of a cash shortage/overage?

Correct Answer
verified

A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

Correct Answer
verified

Intel makes microchips from raw materials acquired from suppliers.Intel is a:

Correct Answer
verified

Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the NSF check returned?

Correct Answer
verified

Most companies report their sales revenue and contra-revenue accounts,as well as net sales,on their externally reported income statements.

Correct Answer
verified

Over a two-year period,Coca-Cola's gross profit percentage went from 70.4% to 69.7%.Which of the following could not have been the cause of this change?

Correct Answer
verified

Which of the following statements regarding gross profit percentage is not true?

Correct Answer
verified

Which of the following situations would cause the balance per bank to be more than the balance per books?

Correct Answer
verified

Internal controls include the policies and procedures a company implements to protect against theft of assets,to promote efficiency,and to ensure compliance with laws and regulations.

Correct Answer
verified

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
verified

Your store buys ice cream at a cost of $1.50 a half gallon and sells it for $4 a half gallon.General and administrative expenses are $0.75 per half gallon.Which of the following statements is true?

Correct Answer
verified

Which of the following is not stated as a primary objective of a company's internal control policies and procedures?

Correct Answer
verified

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Correct Answer
verified

Which of the following statements regarding journal entries under a perpetual inventory system is true?

Correct Answer
verified

The purpose of internal controls includes all of the following except:

Correct Answer
verified

Correct Answer
verified

Which amount should be reported as cash on the balance sheet?

Correct Answer
verified

On December 31,2014,you count 300 tie clips in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 128 tie clips during the next quarter.On March 31,2015,you count 288 tie clips in inventory.Which of the following is not true?

Correct Answer
verified

Exam 6: Internal Control, Cash, and Merchandise Sales

The internal control principle related to separating employees' duties so that the work of one person can be used to check the work of another person is called:

Correct AnswerverifiedShow Answer

BetterBuy purchases computers from companies like Hewlett Packard and IBM and sells them to consumers.BetterBuy is a:

Correct AnswerverifiedShow Answer

Which of the following is not true of a cash shortage/overage?

Correct AnswerverifiedShow Answer

A physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

Correct AnswerverifiedShow Answer

Intel makes microchips from raw materials acquired from suppliers.Intel is a:

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.What journal entry should be recorded by Flynn Company for the NSF check returned?

Correct AnswerverifiedShow Answer

Most companies report their sales revenue and contra-revenue accounts,as well as net sales,on their externally reported income statements.

Correct AnswerverifiedShow Answer

Over a two-year period,Coca-Cola's gross profit percentage went from 70.4% to 69.7%.Which of the following could not have been the cause of this change?

Correct AnswerverifiedShow Answer

Which of the following statements regarding gross profit percentage is not true?

Correct AnswerverifiedShow Answer

Which of the following situations would cause the balance per bank to be more than the balance per books?

Correct AnswerverifiedShow Answer

Internal controls include the policies and procedures a company implements to protect against theft of assets,to promote efficiency,and to ensure compliance with laws and regulations.

Correct AnswerverifiedShow Answer

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 AnswerverifiedShow Answer

Your store buys ice cream at a cost of $1.50 a half gallon and sells it for $4 a half gallon.General and administrative expenses are $0.75 per half gallon.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following is not stated as a primary objective of a company's internal control policies and procedures?

Correct AnswerverifiedShow Answer

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Correct AnswerverifiedShow Answer

Which of the following statements regarding journal entries under a perpetual inventory system is true?

Correct AnswerverifiedShow Answer

The purpose of internal controls includes all of the following except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which amount should be reported as cash on the balance sheet?

Correct AnswerverifiedShow Answer

On December 31,2014,you count 300 tie clips in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 128 tie clips during the next quarter.On March 31,2015,you count 288 tie clips in inventory.Which of the following is not true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified