Question 1

A merchandising company's operating cycle begins with the sale of merchandise and ends with the cash collection from sales.

Accepted Answer

A) True 
 B)False

Question 2

A good voucher system includes procedures and approvals designed to control cash payments.

Accepted Answer

A) True 
 B)False

Question 3

On a bank statement,deposits are listed as debits and cleared checks are listed as credits.

Accepted Answer

A) True 
 B)False

Question 4

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period.In preparing the bank reconciliation for this period,the amount of this check should be

Accepted Answer

A)  added to the bank balance of cash.
B)  ignored in preparing this period's bank reconciliation.
C)  deducted from the bank balance of cash.
D)  deducted from the company's balance of cash.E) A) and B)
F) A) and C)

Question 5

Which of the following statements regarding shrinkage is not true?

Accepted Answer

A)  Perpetual inventory systems can help managers detect shrinkage.
B)  Shrinkage is another term for inventory loss due to theft,error,or fraud.
C)  Shrinkage is detected by comparing the balance in the inventory ledger account and the results of the physical inventory count.
D)  It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.E) B) and C)
F) A) and C)

Question 6

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion,while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Accepted Answer

A)  While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage.
B)  Coca-Cola generated a lower gross profit percentage because its sales revenue was lower.
C)  PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola.
D)  The selling price of Coca-Cola products must have been higher than the price of Pepsi Co products.E) B) and D)
F) All of the above

Question 7

Before reconciling to its bank statement,Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250.The bank reconciliation for the month contained the following items:  Given the above information,what adjusted cash balance should Lauren report at month-end?

Accepted Answer

A)  $4,500.
B)  $4,820.
C)  $5,160.
D)  $5,590.E) A) and B)
F) C) and D)

Question 8

Passwords are an example of which internal control principle?

Accepted Answer

A)  Segregate duties.
B)  Restrict access.
C)  Document procedures.
D)  Independently verify.E) None of the above
F) A) and C)

Question 9

Which of the following statements regarding periodic versus perpetual inventory systems is true?

Accepted Answer

A)  Perpetual inventory systems are inferior for determining optimal times to reorder merchandise.
B)  Periodic inventory systems require a greater investment in technology to implement them.
C)  Perpetual inventory systems may assist in determining inventory lost due to shrinkage.
D)  Periodic inventory systems allow sales personnel to provide more immediate information regarding availability of inventory.E) All of the above
F) B) and C)

Question 10

A company has gross profit of $58,300 and a gross profit percentage of 25%.What is the company's net sales?

Accepted Answer

A)  $233,200.
B)  $14,575.
C)  $72,825.
D)  $711,260.E) All of the above
F) B) and C)

Question 11

For each of the following cash activities,choose the appropriate letter to match the activity with the internal control principle to which it relates.Each internal control principle may be used more than once.

Accepted Answer

The answer of For each of the following cash activities,choose...

Question 12

Inventory shrinkage is the difference between inventory recorded and inventory counted.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true of an imprest system?

Accepted Answer

A)  It is an internal control for cash receipts.
B)  It is commonly used with voucher systems.
C)  The payroll bank account equals zero after all employees have been paid.
D)  Eliminates the need for a bank reconciliation.E) A) and B)
F) All of the above

Question 14

Internal controls are concerned with:

Accepted Answer

A)  only manual systems of accounting.
B)  the extent of government regulations.
C)  protecting against theft of assets and enhancing the reliability of accounting information.
D)  preparing income tax returns.E) A) and B)
F) A) and C)

Question 15

The sales returns and allowances account balance should be reported as a deduction from the sales account balance because it is an expense account.

Accepted Answer

A) True 
 B)False

Question 16

Your company purchases $50,000 of inventory from a wholesaler who allows you 45 days to pay.In addition,the wholesaler offers a 3% discount if payment is made within 12 days.These payment terms would be expressed as:

Accepted Answer

A)  .03/12,n/45.
B)  n/45,3/12.
C)  n/45,.03/12.
D)  3/12,n/45.E) A) and B)
F) A) and C)

Question 17

A company had the following partial list of account balances at year-end:  The amount of net sales reported on the income statement would be:

Accepted Answer

A)  $57,200.
B)  $64,200.
C)  $56,000.
D)  $55,700.E) A) and D)
F) None of the above

Question 18

When you identify interest received from the bank in performing a bank reconciliation,you must:

Accepted Answer

A)  add the amount of interest to the balance per bank.
B)  deduct the amount of interest from the balance per books.
C)  add the amount of interest to the balance per books.
D)  deduct the amount of interest from the balance per bank.E) B) and C)
F) A) and D)

Question 19

Which one of the following statements regarding sales discounts is true?

Accepted Answer

A)  If a company offers a discount to encourage prompt payment and the discount is taken,the discount reduces the amount of Net Sales.
B)  Credit terms of "2/10,n/30" mean that if payment is made in two days,a 10% discount may be taken;if not paid within two days,the full invoice price will be due in thirty days.
C)  The terms "sales discounts" and "sales credits" are used interchangeably by a company.
D)  Sales discounts is an expense account.E) A) and B)
F) None of the above

Question 20

Central Company sold goods for $5,000 to Western Company on March 12 on credit.Terms of the sale were 2/10,n/30.At the time of the sale,Central recorded the transaction by debiting accounts receivable for $5,000 and crediting sales revenue for $5,000.Western paid the balance due,less the discount,on March 21.To record the March 21 transaction,Central would debit:

Accepted Answer

A)  Cash for $4,900.
B)  Accounts Receivable for $4,900.
C)  Cash for $5,000.
D)  Accounts Receivable for $5,000.E) B) and C)
F) A) and D)

Exam 6: Internal Control, Cash, and Merchandise Sales

A company has gross profit of $58,300 and a gross profit percentage of 25%.What is the company's net sales?

Correct Answer
verified

Which of the following statements regarding periodic versus perpetual inventory systems is true?

Correct Answer
verified

A good voucher system includes procedures and approvals designed to control cash payments.

Correct Answer
verified

For each of the following cash activities,choose the appropriate letter to match the activity with the internal control principle to which it relates.Each internal control principle may be used more than once.

Correct Answer
verified

Passwords are an example of which internal control principle?

Correct Answer
verified

The sales returns and allowances account balance should be reported as a deduction from the sales account balance because it is an expense account.

Correct Answer
verified

Correct Answer
verified

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period.In preparing the bank reconciliation for this period,the amount of this check should be

Correct Answer
verified

When you identify interest received from the bank in performing a bank reconciliation,you must:

Correct Answer
verified

Internal controls are concerned with:

Correct Answer
verified

Which of the following statements regarding shrinkage is not true?

Correct Answer
verified

On a bank statement,deposits are listed as debits and cleared checks are listed as credits.

Correct Answer
verified

Inventory shrinkage is the difference between inventory recorded and inventory counted.

Correct Answer
verified

Which one of the following statements regarding sales discounts is true?

Correct Answer
verified

Before reconciling to its bank statement,Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250.The bank reconciliation for the month contained the following items: Given the above information,what adjusted cash balance should Lauren report at month-end?

Correct Answer
verified

Your company purchases $50,000 of inventory from a wholesaler who allows you 45 days to pay.In addition,the wholesaler offers a 3% discount if payment is made within 12 days.These payment terms would be expressed as:

Correct Answer
verified

Which of the following is true of an imprest system?

Correct Answer
verified

A merchandising company's operating cycle begins with the sale of merchandise and ends with the cash collection from sales.

Correct Answer
verified

A company had the following partial list of account balances at year-end: The amount of net sales reported on the income statement would be:

Correct Answer
verified

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion,while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Correct Answer
verified

Exam 6: Internal Control, Cash, and Merchandise Sales

A company has gross profit of $58,300 and a gross profit percentage of 25%.What is the company's net sales?

Correct AnswerverifiedShow Answer

Which of the following statements regarding periodic versus perpetual inventory systems is true?

Correct AnswerverifiedShow Answer

A good voucher system includes procedures and approvals designed to control cash payments.

Correct AnswerverifiedShow Answer

For each of the following cash activities,choose the appropriate letter to match the activity with the internal control principle to which it relates.Each internal control principle may be used more than once.

Correct AnswerverifiedShow Answer

Passwords are an example of which internal control principle?

Correct AnswerverifiedShow Answer

The sales returns and allowances account balance should be reported as a deduction from the sales account balance because it is an expense account.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period.In preparing the bank reconciliation for this period,the amount of this check should be

Correct AnswerverifiedShow Answer

When you identify interest received from the bank in performing a bank reconciliation,you must:

Correct AnswerverifiedShow Answer

Internal controls are concerned with:

Correct AnswerverifiedShow Answer

Which of the following statements regarding shrinkage is not true?

Correct AnswerverifiedShow Answer

On a bank statement,deposits are listed as debits and cleared checks are listed as credits.

Correct AnswerverifiedShow Answer

Inventory shrinkage is the difference between inventory recorded and inventory counted.

Correct AnswerverifiedShow Answer

Which one of the following statements regarding sales discounts is true?

Correct AnswerverifiedShow Answer

Before reconciling to its bank statement,Lauren Cosmetics Corporation's general ledger had a month-end balance in the cash account of $5,250.The bank reconciliation for the month contained the following items: Given the above information,what adjusted cash balance should Lauren report at month-end?

Correct AnswerverifiedShow Answer

Your company purchases $50,000 of inventory from a wholesaler who allows you 45 days to pay.In addition,the wholesaler offers a 3% discount if payment is made within 12 days.These payment terms would be expressed as:

Correct AnswerverifiedShow Answer

Which of the following is true of an imprest system?

Correct AnswerverifiedShow Answer

A merchandising company's operating cycle begins with the sale of merchandise and ends with the cash collection from sales.

Correct AnswerverifiedShow Answer

A company had the following partial list of account balances at year-end: The amount of net sales reported on the income statement would be:

Correct AnswerverifiedShow Answer

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion,while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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