Exam: 061553RR - Accounting for Merchandising-If the replacement cost of inventory is less than its historical cost
Question;Exam: 061553RR - Accounting for Merchandising1.If the replacement cost of inventory is less than its historical cost, the company will write down theinventory byA.increasing inventory and decreasing cost of goods sold.B.making a note in the financial statements only.C.increasing cost of goods sold and decreasing inventory.D.increasing inventory for replacement cost and decreasing inventory for historical cost.2.Which element of internal control deals with a company having large amounts of cash on hand?A.Information and communicationB.Risk assessmentC.Control environmentD.Control activities3.Under a perpetual inventory system, when goods are returned to a retailer from a customer, _______ isdebited and _______ is credited.A.Cost of Goods Sold, Sales Returns and AllowancesB.Sales, Cost Goods SoldC.Inventory, SalesD.Sales Returns and Allowances, Cost of Goods Sold4.Under the average cost method, the flow of costs through the accounting records will _______ to thephysical flow of goods through the business.A.match closelyB.have no relationshipC.exactly matchD.be nearly opposite5.As it relates to accounting fraud, which of the followingbestdescribes perceived pressure?A.Intentional misrepresentation of the financial statementsB.An element of the fraud triangle in which the employee justifies his or her actionsC.An element of the fraud triangle in which the employee feels a need to obtain cash or other assetsD.An element of the fraud triangle in which the employee believes there is a chance to commit and conceal fraud6.Which of the following isnotpart of the fraud triangle?A.RealizationB.Perceived pressureC.RationalizationD.Perceived opportunity7.The factor that makes a person feel forced to steal money because of high medical bills isA.realization.B.perceived opportunity.C.perceived pressure.D.rationalization.8.An employee believes that getting away with fraud without being detected is likely. This best relates towhich element of the fraud triangle?A.RealizationB.RationalizationC.Perceived opportunityD.Perceived pressure9.When merchandise is sold under the perpetual system of inventory, the journal entry to record a sale ofmerchandise on account includes debiting _______ and crediting _______.A.Cost of Goods Sold, SalesB.Accounts Receivable, InventoryC.Accounts Receivable, SalesD.Accounts Receivable, Cost of Goods Sold10.If net sales decrease and cost of goods sold increases, the gross profit percentageA.increases.B.remains the same.C.decreases.D.will change based upon the change in total assets.11.A company has net sales of $126,000, cost of goods sold of $72,000, operating expenses of $38,000,and other expenses of $3,000. Approximately what is the company's gross profit percentage?A.0.429B.0.127C.0.103D.0.24112.A method of valuing inventory based on the average of units is called theA.LIFO method.B.FIFO method.C.average cost method.D.specific cost method.13.Land is an example of aA.long-term liability.B.current asset.C.current liability.D.long-term asset.14._______ occurs if a disgruntled employee convinces another to steal from the company.A.CollusionB.A control activityC.MonitoringD.The control environment15.Lyman Company returned $750 of goods it had purchased from another company. The original invoicewas for $4,200, 3/10, n/30. What is the discount if Lyman pays the balance within the discount period?A.$103.50B.$126.00C.$0.00D.$22.5016.If there is a difference between the physical count and the perpetual record, the account in which thedifference is recorded is theA.Inventory Expense.B.Revenue.C.Cost of Goods Sold.D.Sales.17.Which of the following would probablynotneed to be disclosed in a footnote?A.A 10% increase in salesB.Change of inventory methodsC.A material change in estimated shrinkageD.A change in depreciation method18.In order to attract investors and borrow on attractive terms, a company would use ________ in timeswhen inventory costs are rising.A.average costingB.specific-identification costingC.LIFOD.FIFO19.Michelle, a customer of Regal Company, returned $45 of goods that were purchased on account.Under the perpetual inventory system, Regal will record a debit to _______ and a credit to _______ forEnd of exam$45.A.Sales, Cost of Goods SoldB.Sales Returns and Allowances, Accounts Receivable (Michelle)C.Sales, Accounts Receivable (Michelle)D.Cost of Goods Sold, Inventory20.A company has net sales of $126,000, cost of goods sold of $72,000, operating expenses of $38,000,and other expenses of $3,000. The company's net income isA.$54,000.B.$51,000.C.$16,000.D.$13,000.
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