Acc 131 Test 2

Conservatism

The lower of cost or market method of accounting for inventories follows the convention of________

Merchandise placed aside for a customer who plans to come in next week and pay with cash

Which of the following does not represent a sales

Increase cost of goods sold and decrease merchandise inventory

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would___

Maintenance of a clean and safe workplace

A traditional definition of internal control specifically includes all of following features except

Segregation of duties

Jane manages the physical inventory in the warehouse and she also maintains the accounting records of the inventory held there. Which of the following internal control activities have been violated?

Increase to sales discounts for $8

The collection of a $400 account within the 2% discount period would result in a

Record keeping and physical custody of cash should be performed by the same person

Which of the following is not an internal control activity for cash?

Periodic

All of the following are inventory costing methods except

LIFO

In a period of rising prices, which inventory method is best to use to reduce income taxes by refunding net income

The most recently purchased units

When the FIFO method is used, ending inventory is assumed to consist of..

Replacement cost

When applying the lower of cost or market rule to inventory valuation, market generally means

Safeguarding of assets and records

Which internal control activity is followed when inventory storage areas are secured with limited access

added to the balance per books

On the bank reconciliation, interests earned on a checking account should be

outstanding checks

Which of the following would be deducted from the balance per bank

A bank service charge

Which of the following items on a bank reconciliation would require a journal entry on the company's books?

contra-account to accounts receivable

The account allowance for uncollectable accounts is classified as a(n)

In the period of the sale

The matching rule related to credit losses by stating the bad debt expense should be recorded

decrease to accounts receivable for $1000

The collection of $1,000 account after the 2% discount. Would result in a(n)

the company must increase the balance per its records by $450

If a company erroneously records a $500 deposit as $50 in its records, which of the following must occur when reconciling its bank statement

Accounts receivable 250
Cash 250

Which of the following journal entries is recorded as a result of the bank reconciliation process to record a NSF check for $250

The aging of accounts receivable method

Which one of the approaches for the allowance procedure emphasizes the net realizable value of accounts receivable on the balance sheet

$180

The interest on a 3 month, 12%, $6,000 note receivable is

sells the inventory

Merchandise inventory becomes part of cost of goods sold when a company

A debit to allowance for doubtful account for $1,425

Under the allowance method, the entry to write-off a $1,425 uncollectable account includes

A bank certificate of deposit for one year

Which of the following is not included in cash and cash equivalents on a company's balance sheet

Aging of accounts receivable method takes into account the existing balance in the allowance for doubtful accounts account

Which of the following statements is true regarding the 2 allowance procedures used to estimate bad debts