ACC 557 MIDTERM EXAM PART 2
Net income is gross profit less
• financing expenses.
• operating expenses.
• other expenses and losses.
• other expenses.
On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:
• a $3,600 credit to Cost of Goods Sold.
• a $6,000 credit to Cash.
• a $3,600 credit to Inventory.
• d a $6,000 debit to Accounts Receivable.
Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the ...view middle of the document...
A cash discount is usually granted to all of the following except
• retail customers.
• All of these answers are correct.
If a company fails to record estimated bad debts expense,
• cash realizable value is understated.
• expenses are understated.
• revenues are understated.
• receivables are understated.
Bad Debt Expense is considered
• an avoidable cost in doing business on a credit basis.
• an internal control weakness.
• a necessary risk of doing business on a credit basis.
• avoidable unless there is a recession.
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The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
• will increase income in the period it is collected.
• will decrease income in the period it is collected.
• requires a correcting entry for the period in which the account was written off.
• does not affect income in the period it is collected.
The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is
The control principle related to not having the same person authorize and pay for goods is known as
• establishment of responsibility.
• independent internal verification.
• segregation of duties.
• rotation of duties.
If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is
A system of internal control
• is infallible.
• can be rendered ineffective by employee collusion.
• invariably will have costs exceeding benefits.
• is premised on the concept of absolute assurance.
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A credit balance in Cash Over and Short is reported as a(n)
• miscellaneous expense.
• miscellaneous revenue.
The cash account shows a balance of $40,000 before reconciliation. The bank statement does not include a deposit of $9,200 made on the last day of the month. The bank statement shows a collection by the bank of $3,960 and a customer’s check for $1,300 was returned because it was NSF. A customer’s check for $1,380 was recorded on the books as $1,920, and a check written for $318 was recorded as $390. The correct balance in the cash account was
A petty cash fund of $100 is replenished when the fund contains $4 in cash and receipts for $93. The entry to replenish the fund would
• credit Cash Over and Short for $3.