Financial Accounting > QUESTIONS & ANSWERS > Herzing University - ACCOUNTING AC107 Final Quiz. 100% Answers with Justification (All)

Herzing University - ACCOUNTING AC107 Final Quiz. 100% Answers with Justification

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• Question 1 3 out of 3 points On any given day, it is unlikely that the balance in the Cash account in the depositor's general ledger will be the same as the bank balance. • Ques... tion 2 3 out of 3 points In the journal entry to record the daily cash receipts for sales, a cash shortage in a change fund is entered as a debit to Cash Short and Over for the amount of the shortage. • Question 3 3 out of 3 points To reconcile the bank statement, which of the following amounts would be added to the bank statement ending balance? • Question 4 3 out of 3 points The check written to establish the petty cash fund is recorded in the journal by entering a debit to Petty Cash and a credit to Cash for the amount of the check written. • Question 5 3 out of 3 points Part of the Sarbanes-Oxley Act (SOX) requires that management of publicly traded companies provide a statement that they understand their responsibility for maintaining adequate internal controls as well as a report on the effectiveness of the current controls. • Question 6 3 out of 3 points The control activities of internal controls include the following: • Question 7 3 out of 3 points Management creates the control environment for a business by setting the ethical and professional norms. • Question 8 3 out of 3 points The Sales Returns and Allowance account is credited for the selling price of any merchandise returned by a customer. • Question 9 3 out of 3 points Sales Revenue less sales returns and allowances and less sales discounts equals net sales. • Question 10 3 out of 3 points The amount of sales tax collected is recorded in the Sales Tax Revenue account. • Question 11 3 out of 3 points A customer returns merchandise that was delivered in poor condition and that does not meet specifications. The account that the customer would credit for the amount of the return is • Question 12 3 out of 3 points Merchandise is sold on account for $90, and the sale is subject to sales tax of $5.40. The Sales Revenue account should be credited for • Question 13 3 out of 3 points A list showing the amount due from each customer as of a specified date is known as a • Question 14 3 out of 3 points Cash discounts off the invoice price of goods sold may be granted by the seller to encourage early payment of the invoice. • Question 15 3 out of 3 points When a business uses the perpetual inventory system the balance in the Inventory account is updated every time that merchandise is acquired or sold. • Question 16 3 out of 3 points For merchandising businesses using the periodic inventory system, the account "Purchases" is used only to record the cost of merchandise acquired for resale. • Question 17 3 out of 3 points The discount terms on an invoice are 3/15, n/30. This means that • Question 18 3 out of 3 points Postings to the accounts payable ledger and the accounts receivable ledger should be completed daily. • Question 19 3 out of 3 points Which of the following indicates that the buyer must pay the transportation costs for items purchased? • Question 20 3 out of 3 points An invoice of $300 dated April 2 is subject to credit terms of 2/10, n/30. If the invoice is paid on April 10, the amount to be paid would be • Question 21 3 out of 3 points When a business uses a subsidiary accounts receivable ledger, there is no need to keep a summary, controlling accounts receivable account in the general ledger. • Question 22 3 out of 3 points If a business sells its products first-in, first-out so that perishable items do not spoil, the accounting department is required to use the FIFO method of valuing ending inventory and cost of goods sold on the financial statements. • Question 23 3 out of 3 points Understating ending inventory causes the net income to also be understated. • Question 24 3 out of 3 points If the market value (replacement cost) of inventory is less than the inventory value reported in the ledger, the lower-of-cost-or-market rule requires that we record a loss as soon as we are aware of it. • Question 25 3 out of 3 points When merchandise is purchased on account and the PERPETUAL inventory system is used, the journal entry for the purchase would include: • Question 26 3 out of 3 points Under the PERIODIC inventory system, the merchandise inventory and the cost of goods sold for the current period are determined • Question 27 3 out of 3 points The following data applies to a particular item of merchandise. The first numeric column shows the quantity purchased and the second numeric column shows the purchase price of each unit. On hand at the start of the period 300 $5.10 1st purchase 500 $5.20 2nd purchase 700 $5.30 3rd purchase 600 $5.50 Number of units available for sale 2,100 On hand at the end of the period - 500 Number of units sold during the period 1,600 Calculate the cost of goods sold using the FIFO method for the 1,600 units sold. • Question 28 3 out of 3 points The following data applies to a particular item of merchandise. The first numeric column shows the quantity purchased and the second numeric column shows the purchase price of each unit. On hand at the start of the period 300 $5.10 1st purchase 500 $5.20 2nd purchase 700 $5.30 3rd purchase 600 $5.50 Number of units available for sale 2,100 On hand at the end of the period - 500 Number of units sold during the period 1,600 Calculate the cost of goods sold using the LIFO method for the 1,600 units sold. • Question 29 3 out of 3 points When a business uses the periodic inventory system, the first adjusting entry to Merchandise Inventory will close the beginning balance to zero with a credit. The second entry to Merchandise Inventory will add the balance counted during the physical count with a debit. • Question 30 3 out of 3 points Under the accrual basis of accounting, revenue is recorded when earned regardless of when cash is received. Response Feedback: Correct! Under accrual accounting revenue is recognized when earned. • Question 31 3 out of 3 points Unearned revenue is reported as a(n) • Question 32 3 out of 3 points Sports, Inc. plans to sell season football tickets for the 10 games played from September through November. The tickets sell for $45 per season package On April 30, the office reports that it has sold 200 season ticket packages. The correct entry to record the sale of the season tickets is • Question 33 3 out of 3 points The journal entry to record a cash shortage in the change drawer will include a credit to the account "Cash Over and Short". • Question 34 3 out of 3 points The consistency principle states that, in general, accountants should use the same accounting methods from one period to the next. • Question 35 3 out of 3 points The cost of goods available for sale minus the cost of goods sold = • Question 36 3 out of 3 points The lower-of-cost-or-market rule is based on which accounting principle? • Question 37 3 out of 3 points The FIFO method of accounting for inventory and cost of goods sold assumes that the oldest items are the first ones sold and the newest goods are still in ending inventory. • Question 38 3 out of 3 points Unearned revenue is a liability account. • Question 39 3 out of 3 points A business using the perpetual inventory system reports $125,000 in the Inventory asset account at the end of the accounting period. A physical count of inventory shows that there is $130,000 actually on hand. The journal entry to adjust the accounting records will include a debit to Inventory Short and Over for $5,000. • Question 40 3 out of 3 points Which of the following statements about the expanded income statement for a business using the periodic inventory method is FALSE? [Show More]

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