Quiz
T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP
Questions in this quiz (80)
1INTERNAL CONTROL IS MAINLY CONCERNED WIHT THE AMOUNT OF AUTHORITY A SUPERVISOR EXERCISES OER A SUBORDINATE.
- ATrue
- BFalse
2A HIGHLY AUTOMATED COMPUTERIZED SYSTEM OF ACCOUNTING ELIMINATES THE NEED FOR INTERNAL CONTROL.
- ATrue
- BFalse
3THE SAFEGUARDING OF ASSETS IS AN OBJECTIVE OF A COMPANY'S SYSTEM OF INTERNAL CONTROL.
- ATrue
- BFalse
4MANAGEMENT IS RESPONSIBLE FOR ESTABLISHING A SYSTEM OF INTERNAL CONTROL.
- ATrue
- BFalse
5THE RESPONSIBILITY FOR KEEPING THE RECORDS FOR AN ASSET SHOULD BE SEPARATE FROM THE PHYSICAL CUSTODY OF THAT ASSET.
- ATrue
- BFalse
6INTERNAL CONTROL IS MOST EFFECTIVE WHEN SEVERAL PEOPLE ARE RESPONSIBLE FOR A GIVEN TASK.
- ATrue
- BFalse
7REQUIRING EMPLOYEES TO TAKE VACATIONS IS A WEAKNESS IN THE SYSTEM OF INTERNAL CONTROLS BECAUSE IT DOES NOT PROMOTE OPERATIONAL EFFICIENCY.
- ATrue
- BFalse
8THE EXTENT OF INTERNAL CONTROL FEATURES ADOPTED BY A COMPANY MUST BE EVALUATED IN TERMS OF COST-BENEFIT.
- ATrue
- BFalse
9AN EFFECTIVE SYSTEM OF INTERNAL CONTROL REQUIRES THAT AT LEAST TWO INDIVIDUALS BE ASSIGNED TO ONE CASH DRAWER SO THAT EACH CAN SERVE AS CHECK ON THE OTHER.
- ATrue
- BFalse
10ONLY LARGE COMPANIES NEED TO BE CONCERNED WITH A SYSTEM OF INTERNAL CONTROL.
- ATrue
- BFalse
11THE RESPONSIBILITY FOR ORDERING, RECEIVING, AND PAYING FOR MERCHANDISE SHOULD BE ASSIGNED TO DIFFERENT INDIVIDUALS.
- ATrue
- BFalse
12IN ORDER TO PREVENT A TRANSACTION FROM BEING RECORDED MORE THAN ONCE, A COMPANY SHOULD MAINTAIN ONLY ONE BOOK OF ORIGINAL ENTRY.
- ATrue
- BFalse
13FIRMS USE PHYSICAL CONTROLS PRIMARILY TO SAFEGUARD THEIR ASSETS.
- ATrue
- BFalse
14TRANSACTIONS THAT AFFECT INVENTORIES ON HAND HAVE AN EFFECT ON BOTH THE BALANCE SHEET AND THE INCOME STATEMENT.
- ATrue
- BFalse
15MANUFACTURERS USUALLY CLASSIFY INVENTORY INTO TWO CATEGORIES: FINISHED GOODS AND WORK IN PROCESS.
- ATrue
- BFalse
16RAW MATERIALS INVENTORIES ARE THE GOODS THAT A MANUFACTURER HAS COMPLETED AND ARE READY TO BE SOLD TO CUSTOMERS.
- ATrue
- BFalse
17GOODS THAT HAVE BEEN PURCHASED FOB DESTINATION BUT ARE IN TRANSIT, SHOULD BE EXCLUDED FROM A PHYSICAL COUNT OF GOODS.
- ATrue
- BFalse
18WORK IN PROCESS IS THAT PORTION OF MANUFACTURED INVENTORY THAT HAS BENE PLACED INTO THE PRODUCTION PROCESS BUT IS NOT YET COMPLETE.
- ATrue
- BFalse
19THE SPECIFIC IDENTIFICATION METHOD OF COSTING INVENTORIES TRACKS THE ACTUAL PHYSICAL FLOW OF THE GOODS AVAILABLE FOR SALE.
- ATrue
- BFalse
20MANAGEMENT MAY CHOOSE ANY INVENTORY COSTING METHOD IT DESIRES AS LONG AS THE COST FLOW ASSUMPTION CHOSEN IS CONSISTENT WITH THE PHYSICAL MOVEMENT OF GOODS IN THE COMPANY.
- ATrue
- BFalse
21THE FIRST IN, FIRST OUT (FIFO) INVENTORY METHOD RESULTS IN AN ENDING INVENTORY VALUED AT THE MOST RECENT COST.
- ATrue
- BFalse
22THE EXPENSE RECOGNITION PRINCIPLE REQUIRES THAT THE COST OF GOODS SOLD BE MATCHED AGAINST THE ENDING MERCHANDISE INVENTORY IN ORDER TO DETERMINE INCOME.
- ATrue
- BFalse
23THE SPECIFIC IDENTIFICATION METHOD OF INVENTORY VALUATION IS DESIRABLE WHEN A COMPANY SELLS A LARGE NUMBER OF LOW-UNIT COST ITEMS.
- ATrue
- BFalse
24IF A COMPANY HAS NO BEGINNING INVENTORY AND THE UNIT COST OF INVENTORY ITEMS DOES NOT CHANGE DURING THE YEAR, THE VALUE ASSIGNED TO THE ENDING INVENTORY WILL BE THE SAME UNDER LIFO AND AVERAGE COST FLOW ASSUMPTIONS.
- ATrue
- BFalse
25IF THE UNIT PRICE OF INVENTORY IS INCREASING DURING A PERIOD, A COMPANY USING THE LIFO INVENTORY METHOD WILL SHOW LESS GROSS PROFIT FOR THE PERIOD, THAN IF IT HAD USED THE FIFO INVENTORY METHOD.
- ATrue
- BFalse
26IF A COMPANY HAS NO BEGINNING INVENTORY AND THE UNIT PRICE OF INVENTORY IS INCREASING DURING A PERIOD, THE COST OF GOODS AVAILABLE FOR SALE DURING THE PERIOD WILL BE THE SAME UNDER THE LIFO AND FIFO INVENTORY METHODS.
- ATrue
- BFalse
27A COMPANY MAY USE MORE THAN ONE INVENTORY COSTING MTHOD CONCURRENTLY.
- ATrue
- BFalse
28USE OF THE LIFO INVENTORY VALUATION METHOD ENABLES A COMPANY TO REPORT PAPER OF PHANTOM PROFITS.
- ATrue
- BFalse
29IF A COMPANY CHANGES ITS INVENTORY VALUATION METHOD, THE EFFECT OF THE CHANGE ON NET INCOME SHOULD BE DISCLOSED IN THE FINANCIAL STATEMENTS.
- ATrue
- BFalse
30UNDER THE LOWER-OF-COST-OR-MARKET BASIS, MARKET IS DEFINED AS CURRENT REPLACEMENT COST.
- ATrue
- BFalse
31ACCOUNTANTS BELIEVE THAT THE WRITE DOWN FROM COST TO MARKET SHOULD NOT BE MADE IN THE PERIOD IN WHICH THE PRICE DECLINE OCCURS.
- ATrue
- BFalse
32AN ERROR THAT OVERSTATES THE ENDING INVENTORY WILL ALSO CAUSE NET INCOME FOR THE PERIOD TO BE OVERSTATED.
- ATrue
- BFalse
33IF INVENTORIES ARE VALUED USING THE LIFO COST ASSUMPTION, THEY SHOULD NOT BE CLASSIFIED AS A CURRENT ASSET ON THE BALANCE SHEET.
- ATrue
- BFalse
34A SEGREGATION OF DUTIES AMON EMPLOYEES ELIMINATES THE POSSIBILITY OF COLLUSION.
- ATrue
- BFalse
35FOR EFFICIENCY OF OPERATIONS AND BETTER CONTROL OVER CASH, A COMPANY SHOULD MAINTAIN ONLY ONE BANK ACCOUNT.
- ATrue
- BFalse
36CASH REGISTERS ARE AN IMPORTANT INTERNAL CONTROL DEVICE USED IN CONTROLLING OVER THE COUNTER RECEIPTS.
- ATrue
- BFalse
37CHECKS RECEIVED IN THE MAIL SHOULD BE IMMEDIATELY STAMPED "NSF" TO PREVENT UNAUTHORIZED CASHING OF THE CHECK.
- ATrue
- BFalse
38CONTROL OVER CASH DISBURSEMENTS IS IMPROVED IF MAJOR EXPENDITURES ARE PAID BY CHECK.
- ATrue
- BFalse
39IN A VOUCHER SYSTEM, VOUCHERS ARE PREPARED IN THE ACCOUNTS RECEIVABLE DEPARTMENT.
- ATrue
- BFalse
40ELECTRONIC FUNDS TRANSFER (EFT) IS A DISBURSEMENT SYSTEM THAT USES TELEPHONE OR COMPUTER TO TRANSFER CASH FROM ONE LOCATION TO ANOTHER.
- ATrue
- BFalse
41RETAILERS AND WHOLESALERS ARE BOTH CONSIDERED MERCHANDISERS.
- ATrue
- BFalse
42THE STEPS IN THE ACCOUNTING CYCLE ARE DIFFERENT FOR A MERCHANDISING COMPANY THAN FOR A SERVICE COMPANY.
- ATrue
- BFalse
43SALES MINUS OPERATING EXPENSES EQUALS GROSS PROFIT.
- ATrue
- BFalse
44UNDER A PERCEPTUAL INVENTORY SYSTEM, THE COST OF GOODS SOLD IS DETERMINED EACH TIME A SALE OCCURS.
- ATrue
- BFalse
45A PERIODIC INVENTORY SYSTEMS REQUIRES A DETAILED INVENTORY RECOD OF INVENTORY ITEMS.
- ATrue
- BFalse
46FREIGHT TERMS OF FOB DESTINATION MEANS THAT THE SELLER PAYS THE FREIGHT COSTS.
- ATrue
- BFalse
47FREIGHT COSTS INCURRED BY THE SELLER ON OUTGOING MERCHANDISE ARE AN OPERATING EXPENSE TO THE SELLER.
- ATrue
- BFalse
48SALES REVENUES ARE EARNED DURING THE PERIOD CASH IS COLLECTED FROM THE BUYER.
- ATrue
- BFalse
49THE SALES RETURNS AND ALLOWANCES ACCOUNT AND THE SALES DISCOUNT ACCOUNT ARE BOTH CLASSIFIED AS EXPENSE ACCOUNTS.
- ATrue
- BFalse
50THE REVENUE RECOGNITION PRINCIPLE APPLIES TO MERCHANDISERS BY RECOGNIZING SALES REVENUES WHEN THEY ARE EARNED.
- ATrue
- BFalse
51SALES ALLOWANCES AND SALES DISCOUNTS ARE BOTH DESIGNED TO ENCOURAGE CUSTOMERS TO PAY THEIR ACCOUNTS PROMPTLY.
- ATrue
- BFalse
52TO GRANT A CUSTOMER A SALES RETURN, THE SELLER CREDITS SALES RETURNS AND ALLOWANCES.
- ATrue
- BFalse
53A COMPANY'S UNADJUSTED LANACE IN INVENTORY WILL USUALLY NOT AGREE WITH THE ACTUAL AMOUNT OF INVENTORY ON HAND AT YEAR-END.
- ATrue
- BFalse
54FOR A MERCHANDISING COMPANY, ALL ACCOUNTS THAT AFFECT THE DETERMINATION OF INCOME ARE CLOSED TO THE INCOME SUMMARY ACCOUNT.
- ATrue
- BFalse
55A MERCHANDISING COMPANY HAS DIFFERENT TYPES OF ADJUSTING ENTRIES THAN A SERVICE COMPANY.
- ATrue
- BFalse
56NON-OPERATING ACTIVITIES EXCLUDE REVENUES AND EXPENSES AT RESULT FROM SECONDARY OR AUXILIARY OPERATIONS.
- ATrue
- BFalse
57OPERATING EXPENSES ARE DIFFERENT FOR MERCHANDISING AND SERVICE ENTERPRISES.
- ATrue
- BFalse
58NET SALES APPEARS ON BOTH THE MULTIPLE-STEP AND SINGLE-STEP FORMS OF AN INCOME STATEMENT.
- ATrue
- BFalse
59A MULTIPLE-STEP INCOME STATEMENT PROVIDES USERS WITH MORE INFORMATION ABOUT A COMPANY'S INCOME PERFORMANCE.
- ATrue
- BFalse
60THE MULTIPLE-STEP FORM OF INCOME STATEMENT IS EASIER TO READ THAN THE SINGLE-STEP FORM.
- ATrue
- BFalse
61TRADE RECEIVABLES OCCUR WHEN TWO COMPANIES TRADE OR EXCHANGE NOTES RECEIVABLE.
- ATrue
- BFalse
62OTHER RECEIVABLES INCLUDE NON-TRADE RECEIVABLES SUCH AS LOANS TO COMPANY OFFICERS.
- ATrue
- BFalse
63BOTH ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE REPRESENT CLAIMS THAT ARE EXPECTED TO BE COLLECTED IN CASH.
- ATrue
- BFalse
64RECEIVABLES ARE VALUED AND REPORTED IN THE BALANCE SHEET AT THEIR GROSS AMOUNT LESS ANY SALES RETURNS AND ALLOWANCES AND LESS ANY CASH DISCOUNTS.
- ATrue
- BFalse
65THE 3 PRIMARY ACCOUNTING PROBLEMS WITH ACCOUNTS RECEIVABLE ARE: (1) RECOGNIZING, (2) DEPRECIATING, AND (3) DISPOSING.
- ATrue
- BFalse
66ACCOUNTS RECEIVABLE ARE THE RESULT OF CASH AND CREDIT SALES.
- ATrue
- BFalse
67IF A RETAILER ASSESSES A FINANCE CHARGE ON THE AMOUNT OWED BY A CUSTOMER, ACCOUNTS RECEIVABLE IS DEBITED FOR THE AMOUNT OF INTEREST.
- ATrue
- BFalse
68IF A COMPANY USES THE ALLOWANCE METHOD TO ACCOUNT FOR UNCOLLECTIBLE ACCOUNTS, THE ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT ONLY INVOLVES BALANCE SHEET ACCOUNTS.
- ATrue
- BFalse
69THE PERCENTAGE OF RECEIVABLES BASIS OF ESTIMATING EXPECTED UNCOLLECTIBLE ACCOUNTS EMPHASIZES INCOME STATEMENT RELATIONSHIPS.
- ATrue
- BFalse
70UNDER THE DIRECT WRITE-OFF METHOD, NO ATTEMPT IS MADE TO MATCH BAD DEBTS EXPENSE TO SALES REVENUES IN THE SAME ACCOUNTING PERIOD.
- ATrue
- BFalse
71ALLOWANCE FOR DOUBTFUL ACCOUNTS IS DEBITED UNDER THE DIRECT WRITE-OFF METHOD WHEN AN ACCOUNT IS DETERMINED TO BE UNCOLLECTIBLE.
- ATrue
- BFalse
72ALLOWANCE FOR DOUBTFUL ACCOUNTS IS A CONTRA ASSET ACCOUNT.
- ATrue
- BFalse
73CASH REALIZABLE VALUE IS DETERMINED BY SUBTRACTING ALLOWANCE FOR DOUBTFUL ACCOUNTS FROM NET SALES.
- ATrue
- BFalse
74GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRE THAT THE DIRECT WRITE-OFF METHOD BE USED FOR FINANCIAL REPORTING PURPOSES IF IT IS ALSO USED FOR TAX PURPOSES.
- ATrue
- BFalse
75UNDER THE ALLOWANCE METHOD, BAD DEBTS EXPENSE IS DEBITED WHEN AN ACCOUNT IS DEEMED UNCOLLECTIBLE AND MUST BE WRITTEN OFF.
- ATrue
- BFalse
76UNDER THE ALLOWANCE METHOD, THE CASH REALIZABLE VALUE OF RECEIVABLES IS THE SAME BOTH BEFORE AND AFTER AN ACCOUNT HAS BEEN WRITTEN OFF.
- ATrue
- BFalse
77THE PERCENTAGE OF SALES BASIS FOR ESTIMATING UNCOLLECTIBLE ACCOUNTS ALWAYS RESULTS IN MORE BAD DEBTS EXPENSE BEING RECOGNIZED THAN THE PERCENTAGE OF RECEIVABLE BASIS.
- ATrue
- BFalse
78AN AGING SCHEDULE IS PREPARED ONLY FOR OLD ACCOUNTS RECEIVABLES THAT HAVE BEEN PAST DUE FOR MORE THAN ONE YEAR.
- ATrue
- BFalse
79AN AGING OF ACCOUNTS RECEIVABLE SCHEDULE IS BASED ON THE PREMISE THAT THE LONGER THE PERIOD AN ACCOUNT REMAINS UNPAID, THE GREATER THE PROBABILITY THAT IT WILL EVENTUALLY BE COLLECTED.
- ATrue
- BFalse
80SALES RESULTING FROM THE USE OF VISA AND MASTERCARD ARE CONSIDERED CREDIT SALES BY THE RETAILER.
- ATrue
- BFalse
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- Quiz on T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP, created by Natalie Balzert on 20/10/2014.
- Author
- Natalie Balzert
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- English
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