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The Income Summary account




1. The Income Summary account is used: (Points: 2);To adjust and update asset and liability accounts;To close the revenue and expense accounts;To determine the appropriate dividend amount;In some situations to replace the income statement;To replace the retained earnings account in some businesses;2. A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year? (Points: 2);$75;$125;$175;$250;$325;Calculation: xxxxxxxxxxxxxxxxxxxxx;3. A trial balance prepared after adjustments have been recorded is called a(n): (Points: 2);Balance sheet;Adjusted trial balance;Unadjusted trial balance;Classified balance sheet;Unclassified balance sheet;4. The accrual basis of accounting: (Points: 2);Is generally accepted for external reporting since it is more useful for most business decisions;Is flawed because it gives complete information about cash flows;Recognizes revenues when received in cash;Recognizes expenses when paid in cash;Eliminates the need for adjusting entries at the end of each period;5. The main purpose of adjusting entries is to: (Points: 2);Record external transactions and events;Record internal transactions and events;Recognize assets purchased during the period;Recognize debts paid during the period;Correct errors;6. Multiple-step income statements: (Points: 2);Are required by the FASB;Contain more detail than a simple listing of revenues and expenses;Are required for the perpetual inventory system;List cost of goods sold as an operating expense;Can only be used in perpetual inventory systems;7. The full disclosure principle: (Points: 2);Requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made and its effect on net income;Requires that companies use the same accounting method for inventory valuation period after period;Is not subject to the materiality principle;Is only applied to retailers;Is also called the consistency principle;8. A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: (Points: 2);$3,725.00;$3,925.00;$3,995.00;$4,000.50;$4,075.00;Calculation: xxxx xxxxxxxxxxxxxxxxxxxxxxxxxx;9. A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000. (Points: 2);Sales: $136,000, Gross Profit: $111,000;Sales: $136,000, Gross Profit: $85,000;Sales: $85,000, Gross Profit: $136,000;Sales: $111,000, Gross Profit: $136,000;Sales: $60,000, Gross Profit: $25,000;Calculation:xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;10. Days' sales in inventory: (Points: 2);Is also called days' stock on hand;Focuses on average inventory rather than ending inventory;Is used to measure solvency;Is calculated by dividing cost of goods sold by ending inventory;Is a substitute for the acid-test ratio;11. Our company has three times as many assets as it does liabilities. If total liabilities are $55,000, what is the amount of owners' equity? (Points: 2);$55,000;$110,000;$165,000;$220,000;Cannot be determined from the given information;Calculation: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;12. A remittance advice is: (Points: 2);An explanation for a payment by check;A bank statement;A voucher;An EFT;A cancelled check;13. The impact of technology on internal controls includes which of the following: (Points: 2);Reduced processing errors;Elimination of the need for regular audits;Elimination of the need to bond employees;More efficient separation of duties;Elimination of fraud;14. A company had $43 missing from petty cash which was not accounted for by petty cash receipts. The correct procedure is to: (Points: 2);Debit Cash Over and Short for $43;Credit Cash Over and Short for $43;Debit Petty Cash for $43;Credit Petty Cash for $43;Credit Cash for $43;15. Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. The inventory turnover equals: (Points: 2);0.21;4.51;4.79;76.1 days;80.9 days;Calculation= xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;16. Cash equivalents: (Points: 2);Are short-term, highly liquid investments;Include 6-month CDs;Include checking accounts;Are recorded in petty cash;Include money orders;17. Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses? (Points: 2);FIFO;Weighted average;LIFO;Specific identification;First In Still Here;18. A seller of goods or services, usually a manufacturer or wholesaler is known as a: (Points: 2);Vendor;Payee;Vendee;Creditor;Debtor;19. A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold? (Points: 2);$120;$124;$128;$130;$140;Calculation = xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;20. A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals: (Points: 2);$200;$1,564;$1,568;$1,600;$1,800;Calculation= xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;21. The conservatism principle: (Points: 2);Requires that when there are more than one equally likely estimate of amounts expected to be received or paid in the future, then the less optimistic amount should be used;Requires that a company use the same accounting methods period after period;Requires that revenues and expenses be reported in the period in which they are earned or incurred;Requires that all items of a material nature be included in financial statements;Requires that all inventory items be reported at full cost;22. A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000,net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period? (Points: 2);$1,500,000;$1,275,000;$1,725,000;$1,521,000;$1,479,000;Calculation = xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;23. ABC Corporation had total quick assets $5,888,000, current assets $11,700,000 and current liabilities $8,000,000. Its acid-test ratio equals: (Points: 2);0.50;0.68;0.74;1.50;2.20;Calculation = xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;24. A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they purchased 10 units at $13 per unit. On August 12 they purchased 20 units at $14 per unit. On August 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at August 15 after the sale? (Points: 2);$140;$160;$210;$380;$590;Calculation = xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx;25. Which of the following is the most serious limitation of internal controls? (Points: 2);Computer error;Human fraud or human error;Cost-benefit principle;Cybercrime;Management fraud


Paper#79960 | Written in 18-Jul-2015

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