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- Download: http://solutionzip.com/downloads/061694rr-accounting-for-merchandising/
- Exam: 061694RR – ACCOUNTING FOR MERCHANDISING
- 1. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is
- the inventory record for Product C124:
- Date Received Sold Cost/Unit Balance
- April 22 534 $6.58 $3,513.72
- May 17 433 $6.70 $2,901.10
- June 21 389 $6.76 $2,629.64
- August 2 436 $6.44 $2,807.84
- What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)?
- A. $6.00
- B. $6.63
- C. $6.55
- D. $7.40
- 2. Physical inventory counts must be done
- A. regardless of method inventory.
- B. when using bar-code scan technology.
- C. when using the periodic method of inventory.
- D. when using the perpetual method of inventory.
- 3. Under a perpetual inventory system, the account to which transportation charges on incoming merchandise is generally entered is
- A. FOB shipping.
- B. delivery expense.
- C. inventory.
- D. FOB destination.
- 4. Under Sarbanes-Oxley, those officers signing off on the reports must have evaluated the company’s internal control within the previous
- A. nine months.
- B. year.
- C. six months.
- D. 90 days.
- 5. Nick Company reports the following inventory information:
- Inventory Number Inventory Quantity Unit Cost Unit Market Value
- APD 4837 440 $51.29 $51.48
- CPZ 2837 290 $76.59 $77.02
- IXL 9291 310 $42.34 $42.47
- EOD 1717 200 $22.19 $21.75
- DKS 3088 180 $31.22 $31.17
- What is the total value of the merchandise under LCM (lower-of-cost or market)?
- A. $67,961.70
- B. $68,113.30
- C. $68,210.30
- D. $67,864.70
- 6. To pay the least income tax possible in periods of rising inventory costs, the company should use which inventory costing method?
- A. LIFO
- B. FIFO
- C. Average cost
- D. Specific identification
- 7. Committing a fraud because the employee feels “I deserve a pay raise. The company owes this to me” is indicative of which part of the fraud triangle?
- A. Realization
- B. Perceived opportunity
- C. Rationalization
- D. Perceived pressure
- 8. Which of the following may not limit the effectiveness of internal control systems in an organization?
- A. Understanding of policies and procedures
- B. Duties not segregated
- C. Poorly designed controls
- D. Costs not worth benefits
- 9. When a company repays the seller for shipping costs on an FOB shipping transaction, which of the following is true?
- A. The shipping costs don’t affect the invoice cost.
- B. A purchase discount cannot be taken when shipping charges are prepaid.
- C. A purchase discount can still be taken on the gross amount of the invoice.
- D. A purchase discount can still be taken net of the prepaid shipping charges.
- 10. A company’s gross profit percentage decreases from 58% to 51%. What does this mean?
- A. This means that net income will be lower.
- B. This means that there will be a net loss.
- C. We can’t determine anything definite from the information given.
- D. This means that net income will be higher.
- 11. Goods available for sale are $118,000; beginning inventory is $37,000; ending inventory is $42,000; and cost of goods sold is $77,000. The inventory turnover is
- A. 1.95.
- B. 2.99.
- C. 1.53.
- D. 1.83.
- 12. To overstate earnings, a company can
- A. overstate expenses and overstate revenue.
- B. understate unearned revenue and understate property, plant, and equipment.
- C. understate expenses and understate revenue.
- D. overstate receivables and understate payables.
- 13. A low gross profit percentage means that
- A. general and administrative expenses are very high.
- B. selling expenses are very low.
- C. the cost of goods sold was relatively low.
- D. the cost of goods sold was relatively high.
- 14. A company’s current ratio increased from 1.23 to 1.45. What does this mean?
- A. This means that current assets decreased and current liabilities decreased.
- B. This means that current assets increased and current liabilities decreased.
- C. There isn’t enough information to explain the increase.
- D. This means that current assets increased and current liabilities increased.
- 15. When a merchandiser sells on account, which of the following is not needed to record the transaction?
- A. Accounts receivable
- B. Inventory
- C. Cost of goods sold
- D. Cash
- 16. Casey Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)
- Units Unit Price Total Cost
- January 1—Beginning Inventory 20 $12 $240
- March 8—Sold 14
- April 2—Purchase 30 $13 $390
- June 5—Sold 25
- Aug 6—Purchase 25 $14 $350
- Total Cost of Inventory $980
- Ending inventory is 14 units.
- What is the ending inventory of Casey Company for 2012 using FIFO?
- A. $175
- B. $182
- C. $168
- D. $196
- 17. A drawback to using _______ when inventory costs are rising is that the company reports lower net
- income.
- A. average costing
- B. LIFO
- C. specific-identification costing
- D. FIFO
- 18. If current assets decrease and current liabilities increase, the current ratio
- A. increases.
- B. remains the same.
- C. decreases.
- D. will change based on the change in total assets.
- 19. In a balance sheet prepared in report form, liabilities must be listed after
- A. assets with long-term liabilities listed first.
- B. stockholders’ equity.
- C. assets with current liabilities listed first.
- D. assets in alphabetical order.
- 20. Which items may not limit the effectiveness of internal control systems in an organization?
- A. Costs not worth benefits
- B. Overriding controls
- C. Collusion
- D. Properly designed controls
- End of exam
- Download: http://solutionzip.com/downloads/061694rr-accounting-for-merchandising/
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