Inventory Questions

1) In ____ the inventory and cost of goods sold accounts are kept up to date throughout the accounting period .
A) perpetual inventory system (B) periodic inventory system (C) manufacturing inventory system (D) physical inventory sheet

2) A company that sells a low volume of high cost merchandise is more likely to use a _____ than is a company that sells a high volume of low-cost merchandise.
A) perpetual inventory system (B) periodic inventory system (C) manufacturing inventory system (D) physical inventory sheet

3) The credit term 2/10 n/30 me
A) that after 10days 2% interest system (B) That there is a 10% discount if payment is received within 30 days (C) That there is a 2% discount if payment is receive within 10 days (D) There is a 10% discount if paid immediately and 2% if paid within 30 days

4) In a perpetual inventory system, two entries usually are made to record each sale transaction. The purpose of these entries are best describe as the follows:
A) one entry recognizes that sales revenue, and the other recognizes the cost of goods sold(B) One entry records the purchase of the merchandise and the other records of the sale (C)One entry records the cost of goods sold , and the other reduces the balance in the inventory account. (D) One entry update the general ledger and the other updates the subsidiary ledge

Herbert Corp uses its periodic inventory system and the following information is available:
Sales.........................$31,000
Inventory-Beginning .....$8,000
Inventory -Ending ....... $7,000
Purchases..................$23,000

5) Calculate the cost of goods sold
A) $7,000 (B) $24,000 (C) $23,000 (D)$31,000

6) Calculate the gross profit
A) $7,000 (B) $24,000 (C) $23,000 (D)$31,000

7) Gross Profit margin is the dollar amount of gross profit expressed as a % of gross sales.
A) True (B) False

Television Depot is a small retail business that specializes in the sale of top-of-the-line televisions. This year the store has begun to carry the Flat TV manufactured by Panasar Co. Thus far this year, Television Depot has recorded the following transaction involving the Flat TV:
Jan. 5. Purchase 7 Flat TVs at a unit cost of $1,200
Jan.18. Purchase 4 additional Flat TV s at $1,200 each
Feb.12. Sold 8 Flat TVs to the Empire Hotel for $13,600

8). If Television Depot use a perpetual inventory system the journal entry to record the purchase on Jan. 18th would include which of the following
A) A debit to the purchase account for $4,800 (B) Debit to the cost of goods sold for $4,800 (C) Credit to inventory for $4,800 (D) Debit to inventory for 4,800

9) If Television Depot uses a perpetual inventory system, the journal entry to record the sale on Feb. 12th would include all of the following except:
A) Debit to the cost of goods sold for $9,600 (B) Credit to sale Revenue for $13,600 (C) Credit to purchase for $9,600 (D) Credit to Inventory for $9,600

10) Family Food Stores purchase canned goods at an invoice price of $3,000 and terms 2/10, n/30 . Half of the goods had been mislabeled and were returned immediately to the supplier. If Family Food pays the remaining amount of the invoice within the discount period, the amount paid should be:
A) $1,440 (B) $1,470, (C) $2,940 (D) $3,000

11) The balance shown on the bank statement is always equal to the month-end balance of a company's cash account in the general ledger.
A) True (B) False

The Cash account in the ledger of Triangle Floors shows a balance of $15,267 at Sept 30. The bank statement however shows a balance of $19,700 at the same date. The only reconciling item consist of a bank service charge of $7, a large number of outstanding checks totaling $8,170 and a deposit in transit.

12) Refer to the above data. What is the adjusted cash balance in the September 30. bank reconciliation
A) $7,090 (B) $15,260 (C) $11,530 (D) $11,523

13) Refer to the above data. What is the amount of the deposit in transit
$4,440 (B) $7,104 (C) $3,730 (D) $4,333

14) Refer to the above data , Eagle Company's bank statement showed a balance at May 31 of $301,624. The only reconciling items consisted of a large number of outstanding checks totaling $86,412. At may 31, what balance should Eagle Cash account show
A) $301,624 (B) $215,212 (C) 128,800 (D )some other amount

15) Refer to above data , The allowance for doubtful accounts is called a valuation account or contra-asset account and normally has a credit balance.
A) True (B) False

16) The purpose of establishing a petty cash fund is to:
A) Achieve internal control over small cash disbursement not made by check (B) Keep track of expenditure paid out of cash receipt from customers prior to deposit (C) Ensure that the amount of cash in the bank does not become excessive (D)Keep enough cash on hand in the office to cover all normal operating expensive of the business for a period of time.

On November 1, 2005, Phillip Corporation sold land priced at $600,000 in exchange for a 7% six month note receivable

17) Refer to the above data. The journal entry made by Phillip to record this transaction on November 1, 2005 includes:
A) Debit to note Receivable of $ 621,000 (B) Debit to interest Receivable of $21,000 (C) Credit to Interest Revenue of $21,000 (D) Debit to note Receivable of $600,000

18) Refer to above data Phillips balance sheet at December 31, 2005, include which of the flowing as a result of the sale of land on November 1
A) Notes Receivable of $600,000 and the interest Receivable of $7,000(B) Notes Receivable of $621,000 and the interest Receivable of $7,000 (C) Notes Receivable of $600,000 and the interest Receivable of $21,000 (D) Notes Receivable of $600,000 only

19) Refer to the data above. On May 1, 2006 (maturity date), the note is collected in full by Phillip Corporation. Assuming a fiscal year end of December 31, Phillips recognizes which of the following in its income statement for 2006 with regard to this note
A) $621,000 sales revenue (B) $21,000 interest Revenue (C) $14,000 interest revenue (D) $7,000

At the end of January, the unadjusted trail balance of VIP, INC included the following accounts:
Debit Credit
Sales (80% represent credit $400,000
Sales)
Accounts Receivable $240,000
Allowance for doubtful $700
Accounts

20) Refer to the above data . VIP uses the income statement approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,200. What is the amount of uncollectible account expense recognized iv VIP's income statement for January?
A) $6,200 (B) $5,500 (C) $6,900 (D) Some other amount

21) Refer to the above data. VIP uses the income statement approach in estimating uncollectible accounts expense, and uncollectible accounts expense is estimated to be 2% of credit sales. What is the amount of uncollectible accounts expense recognized in VIP's income statement for January?
A) $6,400 (B) $8,000 (C) $8,700 (D) $7,200

22) Refer to the above data: The allowance for doubtful Accounts is an expense account and appears on the income statement.
A)True (B) False

23) Accounts Receivable:
A) Are usually converted into cash in 30 to 60 days(B) are relatively assets (C) usually appear after a short term investments in marketable securities(D) All of above

24) A good system of internal control will include all of the following except:
A) Preparing a pro-forma financial statement on a monthly basis(B) Separating the handling of cash from the maintenance of accounting records (C) making all major payments by check. (D) Reconciling bank statement with accounting records.