When a product is sold, an entry is made to
debit Cost of Goods Sold and credit Inventory.
Sales minus Cost of Goods Sold equals
Gross Profit (or Gross Margin).
If price levels are rising, the inventory cost flow assumption that results in the lowest net income is
LIFO
Assume a company uses the weighted average cost flow assumption and a periodic inventory method. The company makes the following purchases of goods:
10 units @ $8 per unit
10 units @ $10 per unit
20 units @ $11 per unit
During the month, the company sells
300
A company makes the following purchases of goods during the month:
10 units @ $8 per unit
10 units @ $10 per unit
20 units @ $11 per unit
Also during the month, the company sells 10 units.
Under a periodic method and a FIFO cost flow assumption, which uni
10 units @ $8
In a period of rising prices, the cost flow assumption that results in the highest Inventory amount on the Balance Sheet is [Options: FIFO; LIFO; Weighted Average; All the same]
FIFO
In a period of rising prices, the calculation of Cost of Goods Sold under the weighted average method will result in
an amount that is between the FIFO and LIFO calculations.
Inventory numbers will be the same for both the periodic and perpetual methods when using
weighted average
The three elements of the fraud triangle include all of the following except
context.
Cash equivalents" refers to
petty cash accounts.
The Accounts Receivable account is classified as a(an)
current asset.
Two methods of accounting for uncollectible accounts are the
direct write-off method and the allowance method.
The allowance for doubtful accounts can be calculated in one of two ways. One method is to calculate a percentage of the annual sales and record that amount as the bad debt expense (with an offsetting credit to the Allowance account). This method is calle
percentage of sales method.
The allowance for doubtful accounts can be calculated in one of two ways. One method is to prepare an aging of all the accounts receivable balances and determine the appropriate allowance amount, then record an entry that brings the account balance up to
analysis of receivables method.
All of the following are examples of fixed asset categories except
bonds payable.
'Property, plant, and equipment' will appear
as long-term assets on the balance sheet.
All of the following are needed for the calculation of straight-line depreciation except
market value.
When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is
units-of-output method.
Assume an asset has been acquired at a cost of $80,000, and the company uses 5% ($4,000) as the residual value. Under the double-declining balance of depreciation
a percentage that is twice the straight-line rate will be applied to the full $80,000.
Assume an asset has been acquired for $100,000, and the company uses a units-of-activity depreciation method. The company expects to produce 100,000 units over five years. Production by year is expected to be 20,000 units, 28,000 units, 26,000 units, 18,0
$1
Payroll transactions will affect current liabilities through all of the following accounts except
vacation accrual.
The journal entry for wages will include
a debit to Wages Expense.
FICA Taxes
includes both social security taxes and medicare taxes.
The difference between gross wages and net wages is due to
payroll taxes and other deductions that are withheld.
Bonds will typically appear as a
long-term liability on the Balance Sheet.
The face amount of a bond
is the principal amount of the bond.
Which of the following interest-related terms does not fit with the others? (coupon, contract, stated, or market rate)
market rate.
When the market rate of interest on bonds is higher than the contract (stated) rate of a bond, the bond will sell at
maturity value.
When the market rate of interest on bonds is lower than the contract (stated) rate of a bond, the bond will sell at
a premium.
A discount or premium that arises upon issuance of a bond will be
amortized down to zero over the life of the bond.
When a bond is redeemed prior to maturity,
the difference between the redemption price (market value) and the book value will create a gain or loss on the redemption.
Which one of the following is not typically a debit balance account (an account that is increased with debit transactions)?
Retained Earnings
Which of the following accounts is not found on the Balance Sheet?
sales
The Allowance for Doubtful Accounts is
a contra-account offsetting Accounts Receivable.
The inventory method that typically results in the highest Cost of Goods Sold is
LIFO
The entry to record the usage of a fixed asset over its useful life is
debit depreciation expense; credit accumulated depreciation
Current liabilities typically includes
accounts payable, other payable accounts, and accrued liabilities.