Accounting Essay Example for Free

Accounting Essay Merchandise inventory is generally valued at the price for which the goods can be sold. reported under the classification of Property, Plant, and Equipment on the balance sheet. reported as a current asset on the balance sheet. often reported as a miscellaneous expense on the income statement. Items waiting to be used in production are considered to be finished goods. merchandise inventory. raw materials. work in progress. In a manufacturing business, inventory that is ready for sale is called store supplies inventory. finished goods inventory. aw materials inventory. work in process inventory. Inventory items on an assembly line in various stages of production are classified as Finished goods. Work in process. Merchandise inventory. Raw materials. Rudolf Diesel Companys 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 $21,750. $21,000. $27,000. $24,000. Rudolf Diesel Companys 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 $21,750. $21,000. $27,000. $24,000. In a period of rising prices, FIFO will have lower cost of goods sold than LIFO. lower net income than LIFO. lower net purchases than LIFO. lower income tax expense than LIFO. The inventory turnover ratio is computed by dividing cost of goods sold by 365 days. verage inventory. beginning inventory. ending inventory. Quigley Companys records indicate the following information for the year: Merchandise inventory, 1/1 $550,000 Purchases 2,250,000 Net Sales 3,000,000 On December 31, a physical inventory determined that ending inventory of $600,000 was in the warehouse. Quigleys gross profit on sales has remained constant at 30%. Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory? 700,000 $100,000 $200,000 $300,000 Quigley Companys records indicate the following information for the year: Merchandise inventory, 1/1 $550,000 Purchases 2,250,000 Net Sales 3,000,000 On December 31, a physical inventory determined that ending inventory of $600,000 was in the warehouse. Quigleys gross profit on sales has remained constant at 30%. Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory? $700,000 $100,000 $200,000 $300,000 Cash from sales of merchandise will be recorded in the sales journal. ash receipts journal. purchases journal. general journal. Posting a sales journal to the accounts in the general ledger requires a debit to Cash and a credit to Sales. debit to Accounts Receivable and a credit to Inventory. debit to Sales and a credit to Inventory. debit to Accounts Receivable and a credit to Sales. The process of totaling the columns of a journal is termed footing. ruling. columnizing. sizing. Cross-footing a cash receipts journal means all necessary postings have been completed. each line of the journal has a horizontal total. the columns of the journal have been cross-referenced. he equality of debits and credits in the journal have been proved. Entries in the purchases journal are made without supporting documentation. from purchase invoices. from sales invoices. from the general journal. Principles of an efficient and effective accounting information system include all of the following except cost effectiveness. flexibility. useful output. All of these options are principles. Which of the following is not an advantage of a subsidiary ledger? Puts greater detail in the general ledger. Makes possible a division of labor. Shows transactions affecting one customer or one creditor in a single account. Helps locate errors in individual accounts. Cash equivalents include each of the following except U. S. Treasury bills. bank certificates of deposit. money market funds. petty cash. An example of poor internal control is one person should be responsible for handling related transactions. the accountant should not have physical custody of the asset nor access to it. a salesperson makes the sale, and a different person ships the goods. the custodian of an asset should not maintain or have access to the accounting records. Having different individuals receive cash, record cash receipts, and hold the cash is an example of documentation procedures. establishment of responsibility. segregation of duties. independent internal verification. Storing cash in a company safe is an application of which internal control principle? Establishment of responsibility Segregation of duties Documentation procedures Physical controls Using prenumbered checks and having an approved invoice for each check is an example of segregation of duties. documentation procedures. independent internal verification. establishment of responsibility. An application of good internal control over cash disbursements is check signers should record the cash disbursements. blank checks should be stored in the treasurers desk. each check should be compared with the approved invoice after the check is issued. following payment, the approved invoice should be stamped PAID. Journal entries are required by the depositor for all of the following except bank service charges. an NSF check. collection of a note receivable. bank errors. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of 6 months or less when purchased. year or less when purchased. 1 month or less when purchased. 3 months or less when purchased. The financial statements of Gentry Manufacturing Company report net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days? 50 times 40 times 80 times 54. 7 times Writing off an uncollectible account under the allowance method requires a debit to Bad Debts Expense. Uncollectible Accounts Expense. Accounts Receivable. Allowance for Doubtful Accounts. The direct write-off method estimates bad debt losses. is acceptable for financial reporting purposes. shows only actual losses from uncollectible accounts receivable. debits Allowance for Doubtful Accounts to record write-offs of accounts. Putnam Companys account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $105,000 (Cr. ), respectively. An aging of accounts receivable indicated that $192,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is $87,000. 297,000. $105,000. $192,000. The interest rate specified on any note is for a day. week. month. year. On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is $9,300. $300. $9,000. $9,900. The accounts receivable turnover ratio is computed by dividing total sales by ending net accounts receivable. total sales by average net accounts receivable. net credit sales by average net accounts receivable. net credit sales by ending net accounts receivable.