1. 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.
often reported as a miscellaneous expense on the income statement.
 reported as a current asset on the balance sheet.


2. Lee Industries had the following inventory transactions occur during 2010:
                                                            Units                     Cost/unit
2/1/10                  Purchase                             18                          $45
3/14/10                              Purchase                             31                          $47
5/1/10                  Purchase                             22                          $49
The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory
system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)
$848
$2,441
$772
$2,365

              
3. The one characteristic that all entries recorded in a multi-column purchases journal have in common is 
credit to the Cash account.
debit to the Accounts Payable account.
debit to the Cash account.
credit to the Accounts Payable account.

4. The individual amounts in the Accounts Payable column in the cash payments journal are posted to  the subsidiary ledger
weekly.
daily.
yearly.

monthly.

1. The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger
yearly.
daily.
weekly.

monthly.


2. In which journal would a cash purchase of merchandise inventory be recorded?
 Purchase journal
General journal
Cash payments journal
None of these.

3. During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.
                                             Purchases                                                                        Sales
July        3                            20 units @ $12                  July        13                          25 units
               11                          20 units @ $13                                 22                          10 units
               20                          10 units @ $15                                                              
Under the FIFO method, the cost of goods sold for each sale is:
               July 13                  July 22
 375       150
$300      $120 
325        130
305        130

 

4. In large companies, the independent internal verification procedure is often assigned to
 management.
computer operators.
outside CPAs.
internal auditors.

 

1. In large companies, the independent internal verification procedure is often assigned to
 management.
computer operators.
outside CPAs.
internal auditors.

2. Shandy Shutters has the following inventory information.

Nov.      1                            Inventory                            15 units @                          $8.00
               8                            Purchase                             60 units @                          $8.60
               17                          Purchase                             30 units @                          $8.40
               25                          Purchase                             45 units @                          $8.80
A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand.
 Assume a periodic inventory system is used. Ending inventory under FIFO is
 $846.
$863.
$438.
$421.


3. Which of the following would not be reported on the balance sheet as a cash equivalent?
 Sixty-day certificate of deposit
Money market savings certificate
Six-month Treasury bill
Money market fund


4. If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts
for disbursements when it is replenished, the journal entry to record replenishment should include credits to the following accounts
Petty Cash, $95.
Petty Cash, $100.
Cash, $100.
Cash, $95; Cash Over and Short, $5.

1. A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account would include a credit to
Cash for $85.
Petty Cash for $85.

Cash Over and Short for $5.
Cash for $80.


2. The maturity value of a $30,000, 8%, 3-month note receivable is
 $30,600.
$30,200.

$30,240.
$32,400.


3. The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record estimated uncollectible accounts
is relevant to both bases of adjusting for uncollectible accounts.
is relevant when using the percentage of receivables basis.
will never show a debit balance at this stage in the accounting cycle.

is relevant when using the percentage of sales basis.


4. The percentage of receivables basis for estimating uncollectible accounts emphasizes
 the relationship between sales and accounts receivable.
income statement relationships.
cash realizable value.
the relationship between accounts receivable and bad debts expense.

 

1. A note receivable is a negotiable instrument which
can only be collected by a bank.
eliminates the need for a bad debts allowance.
takes the place of checks in a business firm.
can be transferred to another party by endorsement.

2. Depreciable cost is the
cost of an asset less its salvage value.
cost of an asset less accumulated depreciation.

book value of an asset.
book value of an asset less its salvage value.


3. Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000;
additional costs of $4,000 for freight and $20,000 for installation were incurred.
 The equipment has an estimated salvage value of $8,000 and an estimated useful life of five years.
The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is:
$96,000.
$86,400.

$99,200.
$88,000.


4. Hull Company acquires land for $86,000 cash. Additional costs are as follows:
Removal of shed               $300
Filling and grading            1,500
Salvage value of lumber of shed  120
Broker commission          1,130
Paving of parking lot        10,000
Closing costs      560
Hull will record the acquisition cost of the land as
 $89,370.
$87,690.

$89,610.
$86,000.

 

 

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