Question 1.1.Which of the following is a period cost? (Points : 2)

Question 2.2.Gruver Company maintains perpetual inventory records. The company’s inventory account had a $5,500 balance as of December 31, 2010. On that date, a physical count of inventory showed only $5,300 of merchandise in stock. The write-down to recognize the missing inventory will: (Points : 2)

Question 3.3.Lynx Company purchased $4,000 of merchandise on account and sold the merchandise to a customer for $7,000 cash. What is Lynx’s gross margin and the net change in cash flow from operating activities as a result of these transactions?

Cash Flow From
Row Gross Margin Operating Activities
One $7,000 $4,000 inflow
Two $3,000 $7,000 inflow
Three $3,000 $7,000 outflow
Four $4,000 $4,000 outflow

(Points : 2)

Question 4.4.Cost of Goods Sold is reported as a(n): (Points : 2)

Question 5.5.A purchase of merchandise on account is a(n): (Points : 2)

Question 6.6.Lemon Company sent goods to a customer FOB delivery. What effect will these freight costs have on Lemon company’s financial statements?

test2 q23 (Points : 2)

Question 7.7.The Red Valley Company maintains perpetual inventory records. Although its inventory records indicated $18,000 in the inventory, a physical count showed only $16,250. Which of the following answers indicates the effect of the necessary write-down?

Row Assets = Liab. + Equity Rev Exp. = Net Inc. Cash
One (1,750) = NA + (1,750) NA 1750 = (1,750) NA
Two NA = 1750 + (1,750) NA 1750 = (1,750) NA
Three 16,250 = NA + 16,250 16,250 NA = 16,250 16,250 IA
Four (18,000) = NA + (18,000) (18,000) NA = (18,000) NA

(Points : 2)

Question 8.8.During the month of March, Wang Company collected $8,000 of accounts receivable. Which of the following represents the effects of the collection of the receivables on Wang’s financial statements?

test2 q18 (Points : 2)

Question 9.9.A retail company sells goods primarily to: (Points : 2)

Question 10.10.Which of the following is not a generally recognized internal control procedure? (Points : 2)

Question 11.11.Which of the following statements accurately describes a fidelity bond? (Points : 2)

Question 12.12.Effective internal controls for cash include: (Points : 2)

Question 13.13.What documentation issued by a bank increases a company’s checking account balance at the bank? (Points : 2)

Question 14.14.In a company’s bank reconciliation, an outstanding check is a check that: (Points : 2)

Question 15.15.Wren Company accepted a check from Jay Company as payment for services rendered. Wren’s bank statement revealed that the Jay check was an NSF check. Wren has not decided to write off the account. Exclusive of any bank charges what will the entry to record the NSF check have on the accounting equation of Wren Company?

Row Total Assets Total Equity
One No effect No effect
Two Decrease Decrease
Three Decrease No effect
Four No effect Decrease

(Points : 2)

Question 16.16.Which of the following is not one of the purposes of an internal control system? (Points : 2)

Question 17.17.Accounting controls are designed to: (Points : 2)

Question 18.18.An entry to record the purchase of inventory on account under the perpetual inventory method: (Points : 2)

Question 19.19.The credit terms, 2/10, n/30 indicate that a: (Points : 2)

Question 20.20.The following are strong internal control measures over cash disbursementsexceptfor: (Points : 2)