Exam #2 example #79108

2 February 2023
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question
Which account it not classified as a selling expense? -Delivery Expense -Cost of goods sold -Sales Salaries -Advertising Expense
answer
_Cost of goods sold
question
During the times of rising prices, which of the following is not an accurate statement? - LIFO will result in higher income taxes than fifo -LIFO will result in a higher cost of merchandise sold than FIFO -Average costing will yield results that are between those of FIFO and LIFO -FIFO will result in a higher net income than LIFO
answer
-LIFO will result in higher income taxes than FIFO
question
Damaged merchandise that can be sold only at prices below cost should be valued at -LIFO -FIFO -Net realizable value -Average cost
answer
-Net realizable value
question
Which of the following is NOT a difference between a retail business and a service business? -In what is sold - The inclusion of gross profit on the income statement - Accounting equation - Merchandise inventory included on the balance sheet
answer
-Accounting equation
question
The primary difference between the periodic and perpetual inventory system is that a -Periodic system provides an easy means to determine inventory shrinkage -Periodic system records the cost of the sale on the date the sale is made -Periodic system keeps a record showing the inventory on hand at all times -Periodic system determines the inventory on hand only at the end of the accounting period
answer
-Periodic system determines the inventory on hand only at the end of the accounting period
question
What is the type of account and normal balance of Allowance for doubtful accounts? -Asset, debit -Contra asset, Credit -Contra asset, debit -Asset, credit
answer
-Contra asset, Credit
question
The two methods of accounting for uncollectible receivables are the allowance method and the -direct write off method - equity method -interest method -cost method
answer
-direct write off method
question
Under the allowance method of accounting for uncollectible receivables, writing off an uncollectible account. -Affects only income statement accounts -Affects both balance sheet and income statement accounts -Is not an acceptable practice -Affects only balance sheet accounts
answer
-Affects only balance sheet accounts
question
Credit memos from the bank -Show the bank has collected a note receivable for the customer -Show that a company has deposited a customer's NSF check -Are used to show a bank service charge. -Decrease a bank customer's account.
answer
-Show the bank has collected a note receivable for the customer
question
A bank reconciliation should be prepared periodically because -Any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected. -The company's records and the bank's record are in agreement -The bank must make sure that its records are correct -The bank has not recorded all of its transactions
answer
-Any differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected
question
bank reconciliaton? (Balance per bank + deposits in transit - outstanding checks)
answer
(Balance per bank + deposits in transit - outstanding checks)
question
Build-A-Lot bank reconciliation (Balance company records-bank services charges-NSF checks)
answer
(Balance company records-bank services charges-NSF checks)