Quiz 3R 1. Merchandise inventory includes: All goods owned by a company and held for sale [A] 2. Damaged and obsolete goods that can be sold: Are included in inventory at their net realizable value [C] 3. Costs included in the Merchandise Inventory account can include all of the following except: Damaged inventory that cannot be sold [E] 4. During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is: LIFO method [E] 5. The inventory valuation method that tends to smooth out erratic changes in costs is: Weighted average [B] 6. The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current value, and also mimics the actual flow of goods for most businesses is: FIFO [A] 7. The inventory turnover ratio is calculated as: Cost of goods sold divided by average merchandise inventory [A] 8. Assume that the custodian of a $450 petty cash fund has $55.5 in coins and currency plus $390.00 in receipts at the end of the month. The entry to replenish the petty cash fund will include: A credit to Cash for $394.50 [D] 9. If a check correctly written and paid by the bank for $182 is incorrectly recorded in the company’s books for $128, how would this error be treated on the bank reconciliation? Subtract $54 from the book balance [E] 10. In the process of reconciling Marks Enterprises’ bank statement for September, Mr. Marks compiles the following information: Cash balance per company books on September 30 Deposits in transit at month-end Outstanding checks at month-end Bank charge for printing new checks Note receivable and interest collected by bank on Marks behalf A check given to Marks during the month by a customer is returned by the bank as NSF $6,245 $1,360 $680 $75 $710 $540 The adjusted cash balance per the books on September 30 is: $6,340 [A] 11. A company had net sales of $30,700 and ending accounts receivable of $3,500 for the current period. Its days’ sales uncollected equals (Use 365 days a year and round your final answer to two decimal places): 41.61 days [B] 12. The interest accrued on $4,000 at 6% for 45 days is: (Use 360 days a year. Do not round intermediate calculations): $30 [E] 13. Sorry, I do not have this!! ): However, it is very similar to number 12. 14. On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,600; Allowance for Doubtful Accounts, credit balance of $1,001. What amount should be debited to Bad Debts Expense, assuming 5% of outstanding accounts receivable at the end of the current year will be uncollectible? $3,879 [B] http://mgmt026.wordpress.com IF YOU GET VERSION A, I FEEL SORRY FOR YOU BECAUSE THE NUMBERS ARE DIFFERENT. GG. 15. A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts: Accounts receivable Allowance for uncollectible accounts Net sales $353,000 debit 620 credit 798,000 credit All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared? $4,788 [B] 16. A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts: Accounts receivable Allowance for uncollectible accounts Net sales $350,000 debit 650 credit 795,000 credit All sales are made on credit. Based on past experience, the company estimates 0.3% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? Debit Bad Debts Expense $2,385; credit Allowance for Doubtful Accounts $2,385. [C] 17. Accounts receivable occur from credit sales to customers. True [A] 18. A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date. True [A] 19. Sellers allow customers to use credit cards: All of these [E] 20. The accounts receivable turnover is calculated by: Dividing net sales by average accounts receivable. 21. The allowance method based on the idea that a given percent of a company’s credit sales for the period are uncollectible is: The percent of sales method [A] 22. Failure by a promissory note’s maker to pay the amount due at maturity is known as: Dishonoring a note [C] 23. A properly designed internal control system: Lowers the company’s risk of loss [A] 24. When two clerks share the same cash register it is a violation of which internal control principle? Establish responsibilities [A] 25. http://mgmt026.wordpress.com IF YOU GET VERSION A, I FEEL SORRY FOR YOU BECAUSE THE NUMBERS ARE DIFFERENT. GG.