1. The inventory records for Bradley Sales appear below:
Beg. Bal. (20 units @ $44) 880
Cost of Goods Sold (150 units @ ?)
No. 1: (100 units @ $50) 5,000
No. 2: (80 units @ $70) 5,600
Using the average cost method, what is the weighted-average unit cost?
2. Refer to Question 1. Using the average cost method, what is the cost of goods sold?
3. Refer to Question 1. What value is assigned to the ending inventory, if using FIFO?
4. The excess of sales revenue over cost of goods sold is:
A. gross profit.
B. cost of goods sold.
C. beginning inventory.
D. ending inventory.
5. The perpetual inventory system:
A. requires an annual count of inventory on hand.
B. is used by most businesses.
C. keeps a continuous record for each inventory item.
D. all of the above
6. Cost of goods sold:
A. will always be lower when using LIFO rather than FIFO, during a period of rising prices.
B. will be the same amount when using LIFO or FIFO, during a period of rising prices.
C. is the number of units of inventory purchased multiplied by cost per unit of inventory.
D. is the number of units of inventory sold multiplied by cost per unit of inventory.
7. Merchandise inventory:
A. is an expense on the income statement.
B. is the cost of inventory that has not been sold.
C. is neither A or B.
D. is both A and B.
8. Inventory turnover:
A. indicates how rapidly inventory is sold.
B. is the ratio of cost of goods sold to average inventory.
C. both A and B.
D. none of the above
9. The Midnight Merchandising Company had the following records:
What is the cost of goods sold for this company?
10. Refer to Question 9. What is the gross profit for this company?
11. Available-for-sale securities are reported on the balance sheet at:
A. Historical cost.
B. Fair value.
C. Amortized cost.
D. None of the above.
12. An unrealized gain occurs:
A. If the fair value of the investment is greater than the current recorded value.
B. If the fair value of the investment is less than the current recorded value.
C. If the sales price is greater than the investment carrying amount.
D. None of the above.
13. Which method of writing off an uncollectible account violates the expense recognition principle?
A. Direct write-off method
B. Allowance method
C. Net receivables method
D. Expense recognition does not apply to uncollectible account expense.
14. When an accounts receivable account has been determined to be uncollectible the entry to record the write off using the allowance method would include a:
A. debit to Accounts Receivable.
B. debit to Uncollectible Account Expense.
C. credit to Notes Receivable.
D. debit to Allowance for Uncollectible Accounts.
15. Which of the following about factoring a receivable is true?
A. The seller retains control over the collection process.
B. The seller receives the amount of the receivable plus the financing expenses charged by the financial institution.
C. Factoring is often expensive compared to the costs of retaining the receivable on the books.
D. The seller receives the full value of the accounts receivable.
16. The two most common types of fraud that impact financial statements are:
A. Misappropriation of assets Failure to reconcile the bank statement
B. Failure to file tax return Failure to create cash budget
C. Misappropriation of assets Fraudulent financial reporting
D. Fraudulent financial reporting Failure to file tax return
17. Which of the following is NOT an element of the fraud triangle?
18. Which of the following is NOT a component of internal control?
A. Comply with legal requirements
B. Risk assessment
C. Monitoring of controls
D. Information system
19. The book side of a bank reconciliation will include which of the following?
A. Bank errors
B. Electronic funds transfers (EFT)
C. Outstanding checks
D. Deposits in transit
20. The Griffin Corporation had a beginning cash balance of $14,100 during the month of June. This company expects to collect $9,000 from its outstanding accounts receivable. The projected cash sales for June are $18,000. The outstanding accounts payable balance is $20,000, of which 30% is to be paid during June. Operating expenses that are to be paid during June are projected to be $24,000. When preparing a cash budget for the month of June, what is the expected ending cash balance?