Which statement is correct? (Points : 3) As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.
The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.
The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.
As long as management is ethical, there are no problems with using the cash basis of accounting.
On May 25, Yellow House Company received a $650 check from Grizzly Bean for services to be performed in the future. The bookkeeper for Yellow House Company incorrectly debited Cash for $650 and credited Accounts Receivable for $650. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should: (Points : 3) debit Cash $650 and credit Unearned Service Revenue $650.
debit Accounts Receivable $650 and credit Service Revenue $650.
debit Accounts Receivable $650 and credit Cash $650.
debit Accounts Receivable $650 and credit Unearned Service Revenue $650.
Closing entries may be prepared from all but which one of the following sources? (Points : 3) Adjusted balances in the ledger
Income statement and balance sheet columns of the worksheet
Income and owner's equity statements
Which of the following companies would be least likely to use a worksheet to facilitate the adjustment process? (Points : 3) Large company with numerous accounts
Small company with numerous accounts
All companies, since worksheets are required under generally accepted accounting principles
Small company with few accounts
The account, Supplies, will appear in the following debit columns of the worksheet. (Points : 3) Trial balance
Adjusted trial balance
All of these
A post-closing trial balance should be prepared (Points : 3) before closing entries are posted to the ledger accounts.
after closing entries are posted to the ledger accounts.
before adjusting entries are posted to the ledger accounts.
only if an error in the accounts is detected
A lawyer collected $720 of legal fees in advance. He erroneously debited Cash for $270 and credited Accounts Receivable for $270. The correcting entry is (Points : 3)
Which of the following steps in the accounting cycle may be performed most frequently? (Points : 3) Prepare a post-closing trial balance
Journalize closing entries
Post closing entries
Prepare a trial balance
A post-closing trial balance is prepared (Points : 3) after closing entries have been journalized and posted.
before closing entries have been journalized and posted.
after closing entries have been journalized but before the entries are posted.
before closing entries have been journalized but after the entries are posted.
Which of the following expressions is incorrect? (Points : 3) Gross profit – operating expenses = net income
Sales revenue – cost of goods sold – operating expenses = net income
Net income + operating expenses = gross profit
Operating expenses – cost of goods sold = gross profit
After gross profit is calculated, operating expenses are deducted to determine (Points : 3) gross margin.
gross profit on sales.
Which of the following is a true statement about inventory systems? (Points : 3) Periodic inventory systems require more detailed inventory records.
Perpetual inventory systems require more detailed inventory records.
A periodic system requires cost of goods sold be determined after each sale.
A perpetual system determines cost of goods sold only at the end of the accounting period.
Costner’s Market recorded the following events involving a recent purchase of merchandise:
As a result of these events, the company’s inventory (Points : 3) increased by $19,208.
increased by $19,306.
increased by $19,308.
increased by $19,700.
28. Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2012 are as follows:
An end of the month (1/31/12) inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory? (Points : 3) $700
29. Which of the following statements is true regarding inventory cost flow assumptions? (Points : 3) A company may use more than one costing method concurrently.
A company must comply with the method specified by industry standards.
A company must use the same method for domestic and foreign operations.
A company may never change its inventory costing method once it has chosen a method.
30. Eneri Company's inventory records show the following data:
A physical inventory on December 31 shows 2,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method.
Under the FIFO method, the December 31 inventory is valued at (Points : 3) $14,000.
31. Which one of the following inventory methods is often impractical to use? (Points : 3) Specific identification
32. Under the lower-of-cost-or-market basis in valuing inventory, market is defined as (Points : 3) current replacement cost.
historical cost plus 10%.
selling price less markup.
33. The accountant at Cedric Company has determined that income before income taxes amounted to $7,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $225 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption? (Points : 3) $6,250
34. If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the (Points : 3) cost of goods sold of the companies will be identical.
cost of goods available for sale of the companies will be identical.
ending inventory of the companies will be identical.
net income of the companies will be identical.
35. In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the (Points : 3) FIFO method.