Accounting Questions

Please see attached.

PART I ? WORK SHEET COMPLETION
Instructions: Complete the partial work sheet presented below, inserting additional labels as needed.

SANTOS SERVICES AGENCY
Partial Work Sheet
For the Month Ended September 30, 2005
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Adjusted Income Balance
Trial Balance Statement Sheet
Account Titles Dr. Cr. Dr. Cr. Dr. Cr.
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Cash 6,500
Accounts Receivable 1,000
Supplies 3,075
Prepaid Insurance 2,000
Prepaid Rent 500
Equipment 35,000
Accum. Depreciation?Equipment 4,000
Notes Payable 14,000
Accounts Payable 12,000
Unearned Revenue 2,000
Common Stock 9,825
Dividends 2,000
Service Revenue 16,000
Interest Expense 400
Salaries Expense 4,000
Supplies Expense 1,500
Rent Expense 2,000
Insurance Expense 1,200
Salaries Payable 1,300
Interest Payable 50
Totals 59,175 59,175

2. (2 points)The ledger of Shelly Company at December 31, 2006 included the following accounts:

Beginning inventory $6,000
Ending inventory 4,200
Purchases 23,000
Purchases returns and allowances 1,200
Puchases discounts 225

Compute:
(1) Net purchases
(2) Cost of goods sold
3. (2 points)
Match each of the following principles of internal control with the appropriate description below.
A. Establishment of responsibility B. Segregation of duties C. Documentation procedures D. Physical, mechanical, and electronic controls E. Independent internal verification F. Other controls
_____ 1. Involves the review, comparison, and reconciliation of data prepared by other employees.
_____ 2. Provide evidence that transactions and events have occurred.
_____ 3. Includes the authorization and approval of transactions.
_____ 4. Rotating employees' duties and requiring employees to take vacations.
_____ 5. Related activities should be assigned to different individuals.
_____ 6. Using garment sensors to deter theft.

4.
Under a double-entry system, show how the entry in each statement is entered in the ledger by using debit or credit to indicate the increase or decrease in the affected account.

Debit or Credit

A. An increase in Salary Expense.

B. A decrease in Accounts Payable.

C. An increase in Prepaid Insurance.

D. An increase in Common Stock.

E. A decrease in Office Supplies.

F. An increase in Dividends.

G. An increase in Service Revenue.

H. A decrease in Accounts Receivable.

I. An increase in Rent Expense.

J. A decrease in Store Equipment.

5. A trial balance will not balance if
a. a journal entry is posted twice.
b. a wrong amount is used in journalizing.
c. incorrect account titles are used in journalizing.
d. a journal entry is only partially posted.

6. On July 7, 2006, Reethink Enterprises had cash sales of $1,400. The entry to record this transaction would include:
a. a debit to Sales Revenue of $1,400.
b. a credit to Accounts Receivable of $1,400.
c. a debit to Cash of $1,400.
d. a credit to Accounts Payable of $1,400.

7. During February 2006, its first month of operations, the owner of Rutwing Enterprises invested cash of $25,000. Rutwing had cash sales of $4,000 and paid expenses of $7,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?
a. $3,000 credit
b. $22,000 debit
c. $29,000 debit
d. $18,000 credit

8. The Accumulated Depreciation account is a(n)
a. contra asset.
b. liability.
c. asset.
d. operating expense.

9. A post-closing trial balance contains
a. real and nominal accounts.
b. permanent and temporary accounts.
c. balance sheet or permanent accounts.
d. balance sheet and owner`s equity statement accounts.

10. Which of the following is false with regard to a work sheet?
a. Before the adjusting entries are recorded in the General Journal, they are recorded in the adjustments columns of the work sheet.
b. A work sheet is a required step in the accounting cycle.
c. When a work sheet is used, the preparation of financial statements is still required.
d. If a credit is needed to balance the income statement columns on the work sheet, a debit will be needed to balance the balance sheet columns

11. When two or more people get together for the purpose of circumventing prescribed controls, it is called
a. a fraud committee.
b. collusion.
c. a division of duties.
d. bonding of employees.

12. From an internal control standpoint, the asset most susceptible to improper diversion and use is
a. prepaid insurance.
b. cash.
c. buildings.
d. land.

13. The principle of establishing responsibility does not include
a. one person being responsible for one task.
b. authorization of transactions.
c. independent internal verification.
d. approval of transactions.

14. Which statement is false regarding the lower of cost or market (LCM) method of inventory?
a. Market is defined as current replacement cost, not selling price.
b. LCM is an example of the accounting concept of conservatism.
c. LCM is applied to individual items listed on the inventory summary sheets.
d. All of the above are true regarding LCM.

15. Proponents of LIFO, as opposed to FIFO, point out that LIFO results in
a. lower income taxes in a period of deflation.
b. a more current cost of goods sold.
c. lower net income in a period of deflation.
d. higher net income in periods of inflation.

16. Goods in transit should be included in the inventory of the
a. buyer when the terms are FOB destination.
b. buyer when the terms are FOB shipping point.
c. transportation company when the terms are FOB destination.
d. seller when the terms are FOB shipping point.