T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP

Question 1 of 80

Medal-premium 1

INTERNAL CONTROL IS MAINLY CONCERNED WIHT THE AMOUNT OF AUTHORITY A SUPERVISOR EXERCISES OER A SUBORDINATE.

Select one of the following:

  • True
  • False

Question 2 of 80

Medal-premium 1

A HIGHLY AUTOMATED COMPUTERIZED SYSTEM OF ACCOUNTING ELIMINATES THE NEED FOR INTERNAL CONTROL.

Select one of the following:

  • True
  • False

Question 3 of 80

Medal-premium 1

THE SAFEGUARDING OF ASSETS IS AN OBJECTIVE OF A COMPANY'S SYSTEM OF INTERNAL CONTROL.

Select one of the following:

  • True
  • False

Question 4 of 80

Medal-premium 1

MANAGEMENT IS RESPONSIBLE FOR ESTABLISHING A SYSTEM OF INTERNAL CONTROL.

Select one of the following:

  • True
  • False

Question 5 of 80

Medal-premium 1

THE RESPONSIBILITY FOR KEEPING THE RECORDS FOR AN ASSET SHOULD BE SEPARATE FROM THE PHYSICAL CUSTODY OF THAT ASSET.

Select one of the following:

  • True
  • False

Question 6 of 80

Medal-premium 1

INTERNAL CONTROL IS MOST EFFECTIVE WHEN SEVERAL PEOPLE ARE RESPONSIBLE FOR A GIVEN TASK.

Select one of the following:

  • True
  • False

Question 7 of 80

Medal-premium 1

REQUIRING EMPLOYEES TO TAKE VACATIONS IS A WEAKNESS IN THE SYSTEM OF INTERNAL CONTROLS BECAUSE IT DOES NOT PROMOTE OPERATIONAL EFFICIENCY.

Select one of the following:

  • True
  • False

Question 8 of 80

Medal-premium 1

THE EXTENT OF INTERNAL CONTROL FEATURES ADOPTED BY A COMPANY MUST BE EVALUATED IN TERMS OF COST-BENEFIT.

Select one of the following:

  • True
  • False

Question 9 of 80

Medal-premium 1

AN 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.

Select one of the following:

  • True
  • False

Question 10 of 80

Medal-premium 1

ONLY LARGE COMPANIES NEED TO BE CONCERNED WITH A SYSTEM OF INTERNAL CONTROL.

Select one of the following:

  • True
  • False

Question 11 of 80

Medal-premium 1

THE RESPONSIBILITY FOR ORDERING, RECEIVING, AND PAYING FOR MERCHANDISE SHOULD BE ASSIGNED TO DIFFERENT INDIVIDUALS.

Select one of the following:

  • True
  • False

Question 12 of 80

Medal-premium 1

IN ORDER TO PREVENT A TRANSACTION FROM BEING RECORDED MORE THAN ONCE, A COMPANY SHOULD MAINTAIN ONLY ONE BOOK OF ORIGINAL ENTRY.

Select one of the following:

  • True
  • False

Question 13 of 80

Medal-premium 1

FIRMS USE PHYSICAL CONTROLS PRIMARILY TO SAFEGUARD THEIR ASSETS.

Select one of the following:

  • True
  • False

Question 14 of 80

Medal-premium 1

TRANSACTIONS THAT AFFECT INVENTORIES ON HAND HAVE AN EFFECT ON BOTH THE BALANCE SHEET AND THE INCOME STATEMENT.

Select one of the following:

  • True
  • False

Question 15 of 80

Medal-premium 1

MANUFACTURERS USUALLY CLASSIFY INVENTORY INTO TWO CATEGORIES: FINISHED GOODS AND WORK IN PROCESS.

Select one of the following:

  • True
  • False

Question 16 of 80

Medal-premium 1

RAW MATERIALS INVENTORIES ARE THE GOODS THAT A MANUFACTURER HAS COMPLETED AND ARE READY TO BE SOLD TO CUSTOMERS.

Select one of the following:

  • True
  • False

Question 17 of 80

Medal-premium 1

GOODS THAT HAVE BEEN PURCHASED FOB DESTINATION BUT ARE IN TRANSIT, SHOULD BE EXCLUDED FROM A PHYSICAL COUNT OF GOODS.

Select one of the following:

  • True
  • False

Question 18 of 80

Medal-premium 1

WORK IN PROCESS IS THAT PORTION OF MANUFACTURED INVENTORY THAT HAS BENE PLACED INTO THE PRODUCTION PROCESS BUT IS NOT YET COMPLETE.

Select one of the following:

  • True
  • False

Question 19 of 80

Medal-premium 1

THE SPECIFIC IDENTIFICATION METHOD OF COSTING INVENTORIES TRACKS THE ACTUAL PHYSICAL FLOW OF THE GOODS AVAILABLE FOR SALE.

Select one of the following:

  • True
  • False

Question 20 of 80

Medal-premium 1

MANAGEMENT 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.

Select one of the following:

  • True
  • False

Question 21 of 80

Medal-premium 1

THE FIRST IN, FIRST OUT (FIFO) INVENTORY METHOD RESULTS IN AN ENDING INVENTORY VALUED AT THE MOST RECENT COST.

Select one of the following:

  • True
  • False

Question 22 of 80

Medal-premium 1

THE EXPENSE RECOGNITION PRINCIPLE REQUIRES THAT THE COST OF GOODS SOLD BE MATCHED AGAINST THE ENDING MERCHANDISE INVENTORY IN ORDER TO DETERMINE INCOME.

Select one of the following:

  • True
  • False

Question 23 of 80

Medal-premium 1

THE SPECIFIC IDENTIFICATION METHOD OF INVENTORY VALUATION IS DESIRABLE WHEN A COMPANY SELLS A LARGE NUMBER OF LOW-UNIT COST ITEMS.

Select one of the following:

  • True
  • False

Question 24 of 80

Medal-premium 1

IF 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.

Select one of the following:

  • True
  • False

Question 25 of 80

Medal-premium 1

IF 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.

Select one of the following:

  • True
  • False

Question 26 of 80

Medal-premium 1

IF 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.

Select one of the following:

  • True
  • False

Question 27 of 80

Medal-premium 1

A COMPANY MAY USE MORE THAN ONE INVENTORY COSTING MTHOD CONCURRENTLY.

Select one of the following:

  • True
  • False

Question 28 of 80

Medal-premium 1

USE OF THE LIFO INVENTORY VALUATION METHOD ENABLES A COMPANY TO REPORT PAPER OF PHANTOM PROFITS.

Select one of the following:

  • True
  • False

Question 29 of 80

Medal-premium 1

IF A COMPANY CHANGES ITS INVENTORY VALUATION METHOD, THE EFFECT OF THE CHANGE ON NET INCOME SHOULD BE DISCLOSED IN THE FINANCIAL STATEMENTS.

Select one of the following:

  • True
  • False

Question 30 of 80

Medal-premium 1

UNDER THE LOWER-OF-COST-OR-MARKET BASIS, MARKET IS DEFINED AS CURRENT REPLACEMENT COST.

Select one of the following:

  • True
  • False

Question 31 of 80

Medal-premium 1

ACCOUNTANTS BELIEVE THAT THE WRITE DOWN FROM COST TO MARKET SHOULD NOT BE MADE IN THE PERIOD IN WHICH THE PRICE DECLINE OCCURS.

Select one of the following:

  • True
  • False

Question 32 of 80

Medal-premium 1

AN ERROR THAT OVERSTATES THE ENDING INVENTORY WILL ALSO CAUSE NET INCOME FOR THE PERIOD TO BE OVERSTATED.

Select one of the following:

  • True
  • False

Question 33 of 80

Medal-premium 1

IF INVENTORIES ARE VALUED USING THE LIFO COST ASSUMPTION, THEY SHOULD NOT BE CLASSIFIED AS A CURRENT ASSET ON THE BALANCE SHEET.

Select one of the following:

  • True
  • False

Question 34 of 80

Medal-premium 1

A SEGREGATION OF DUTIES AMON EMPLOYEES ELIMINATES THE POSSIBILITY OF COLLUSION.

Select one of the following:

  • True
  • False

Question 35 of 80

Medal-premium 1

FOR EFFICIENCY OF OPERATIONS AND BETTER CONTROL OVER CASH, A COMPANY SHOULD MAINTAIN ONLY ONE BANK ACCOUNT.

Select one of the following:

  • True
  • False

Question 36 of 80

Medal-premium 1

CASH REGISTERS ARE AN IMPORTANT INTERNAL CONTROL DEVICE USED IN CONTROLLING OVER THE COUNTER RECEIPTS.

Select one of the following:

  • True
  • False

Question 37 of 80

Medal-premium 1

CHECKS RECEIVED IN THE MAIL SHOULD BE IMMEDIATELY STAMPED "NSF" TO PREVENT UNAUTHORIZED CASHING OF THE CHECK.

Select one of the following:

  • True
  • False

Question 38 of 80

Medal-premium 1

CONTROL OVER CASH DISBURSEMENTS IS IMPROVED IF MAJOR EXPENDITURES ARE PAID BY CHECK.

Select one of the following:

  • True
  • False

Question 39 of 80

Medal-premium 1

IN A VOUCHER SYSTEM, VOUCHERS ARE PREPARED IN THE ACCOUNTS RECEIVABLE DEPARTMENT.

Select one of the following:

  • True
  • False

Question 40 of 80

Medal-premium 1

ELECTRONIC FUNDS TRANSFER (EFT) IS A DISBURSEMENT SYSTEM THAT USES TELEPHONE OR COMPUTER TO TRANSFER CASH FROM ONE LOCATION TO ANOTHER.

Select one of the following:

  • True
  • False

Question 41 of 80

Medal-premium 1

RETAILERS AND WHOLESALERS ARE BOTH CONSIDERED MERCHANDISERS.

Select one of the following:

  • True
  • False

Question 42 of 80

Medal-premium 1

THE STEPS IN THE ACCOUNTING CYCLE ARE DIFFERENT FOR A MERCHANDISING COMPANY THAN FOR A SERVICE COMPANY.

Select one of the following:

  • True
  • False

Question 43 of 80

Medal-premium 1

SALES MINUS OPERATING EXPENSES EQUALS GROSS PROFIT.

Select one of the following:

  • True
  • False

Question 44 of 80

Medal-premium 1

UNDER A PERCEPTUAL INVENTORY SYSTEM, THE COST OF GOODS SOLD IS DETERMINED EACH TIME A SALE OCCURS.

Select one of the following:

  • True
  • False

Question 45 of 80

Medal-premium 1

A PERIODIC INVENTORY SYSTEMS REQUIRES A DETAILED INVENTORY RECOD OF INVENTORY ITEMS.

Select one of the following:

  • True
  • False

Question 46 of 80

Medal-premium 1

FREIGHT TERMS OF FOB DESTINATION MEANS THAT THE SELLER PAYS THE FREIGHT COSTS.

Select one of the following:

  • True
  • False

Question 47 of 80

Medal-premium 1

FREIGHT COSTS INCURRED BY THE SELLER ON OUTGOING MERCHANDISE ARE AN OPERATING EXPENSE TO THE SELLER.

Select one of the following:

  • True
  • False

Question 48 of 80

Medal-premium 1

SALES REVENUES ARE EARNED DURING THE PERIOD CASH IS COLLECTED FROM THE BUYER.

Select one of the following:

  • True
  • False

Question 49 of 80

Medal-premium 1

THE SALES RETURNS AND ALLOWANCES ACCOUNT AND THE SALES DISCOUNT ACCOUNT ARE BOTH CLASSIFIED AS EXPENSE ACCOUNTS.

Select one of the following:

  • True
  • False

Question 50 of 80

Medal-premium 1

THE REVENUE RECOGNITION PRINCIPLE APPLIES TO MERCHANDISERS BY RECOGNIZING SALES REVENUES WHEN THEY ARE EARNED.

Select one of the following:

  • True
  • False

Question 51 of 80

Medal-premium 1

SALES ALLOWANCES AND SALES DISCOUNTS ARE BOTH DESIGNED TO ENCOURAGE CUSTOMERS TO PAY THEIR ACCOUNTS PROMPTLY.

Select one of the following:

  • True
  • False

Question 52 of 80

Medal-premium 1

TO GRANT A CUSTOMER A SALES RETURN, THE SELLER CREDITS SALES RETURNS AND ALLOWANCES.

Select one of the following:

  • True
  • False

Question 53 of 80

Medal-premium 1

A COMPANY'S UNADJUSTED LANACE IN INVENTORY WILL USUALLY NOT AGREE WITH THE ACTUAL AMOUNT OF INVENTORY ON HAND AT YEAR-END.

Select one of the following:

  • True
  • False

Question 54 of 80

Medal-premium 1

FOR A MERCHANDISING COMPANY, ALL ACCOUNTS THAT AFFECT THE DETERMINATION OF INCOME ARE CLOSED TO THE INCOME SUMMARY ACCOUNT.

Select one of the following:

  • True
  • False

Question 55 of 80

Medal-premium 1

A MERCHANDISING COMPANY HAS DIFFERENT TYPES OF ADJUSTING ENTRIES THAN A SERVICE COMPANY.

Select one of the following:

  • True
  • False

Question 56 of 80

Medal-premium 1

NON-OPERATING ACTIVITIES EXCLUDE REVENUES AND EXPENSES AT RESULT FROM SECONDARY OR AUXILIARY OPERATIONS.

Select one of the following:

  • True
  • False

Question 57 of 80

Medal-premium 1

OPERATING EXPENSES ARE DIFFERENT FOR MERCHANDISING AND SERVICE ENTERPRISES.

Select one of the following:

  • True
  • False

Question 58 of 80

Medal-premium 1

NET SALES APPEARS ON BOTH THE MULTIPLE-STEP AND SINGLE-STEP FORMS OF AN INCOME STATEMENT.

Select one of the following:

  • True
  • False

Question 59 of 80

Medal-premium 1

A MULTIPLE-STEP INCOME STATEMENT PROVIDES USERS WITH MORE INFORMATION ABOUT A COMPANY'S INCOME PERFORMANCE.

Select one of the following:

  • True
  • False

Question 60 of 80

Medal-premium 1

THE MULTIPLE-STEP FORM OF INCOME STATEMENT IS EASIER TO READ THAN THE SINGLE-STEP FORM.

Select one of the following:

  • True
  • False

Question 61 of 80

Medal-premium 1

TRADE RECEIVABLES OCCUR WHEN TWO COMPANIES TRADE OR EXCHANGE NOTES RECEIVABLE.

Select one of the following:

  • True
  • False

Question 62 of 80

Medal-premium 1

OTHER RECEIVABLES INCLUDE NON-TRADE RECEIVABLES SUCH AS LOANS TO COMPANY OFFICERS.

Select one of the following:

  • True
  • False

Question 63 of 80

Medal-premium 1

BOTH ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE REPRESENT CLAIMS THAT ARE EXPECTED TO BE COLLECTED IN CASH.

Select one of the following:

  • True
  • False

Question 64 of 80

Medal-premium 1

RECEIVABLES ARE VALUED AND REPORTED IN THE BALANCE SHEET AT THEIR GROSS AMOUNT LESS ANY SALES RETURNS AND ALLOWANCES AND LESS ANY CASH DISCOUNTS.

Select one of the following:

  • True
  • False

Question 65 of 80

Medal-premium 1

THE 3 PRIMARY ACCOUNTING PROBLEMS WITH ACCOUNTS RECEIVABLE ARE: (1) RECOGNIZING, (2) DEPRECIATING, AND (3) DISPOSING.

Select one of the following:

  • True
  • False

Question 66 of 80

Medal-premium 1

ACCOUNTS RECEIVABLE ARE THE RESULT OF CASH AND CREDIT SALES.

Select one of the following:

  • True
  • False

Question 67 of 80

Medal-premium 1

IF A RETAILER ASSESSES A FINANCE CHARGE ON THE AMOUNT OWED BY A CUSTOMER, ACCOUNTS RECEIVABLE IS DEBITED FOR THE AMOUNT OF INTEREST.

Select one of the following:

  • True
  • False

Question 68 of 80

Medal-premium 1

IF A COMPANY USES THE ALLOWANCE METHOD TO ACCOUNT FOR UNCOLLECTIBLE ACCOUNTS, THE ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT ONLY INVOLVES BALANCE SHEET ACCOUNTS.

Select one of the following:

  • True
  • False

Question 69 of 80

Medal-premium 1

THE PERCENTAGE OF RECEIVABLES BASIS OF ESTIMATING EXPECTED UNCOLLECTIBLE ACCOUNTS EMPHASIZES INCOME STATEMENT RELATIONSHIPS.

Select one of the following:

  • True
  • False

Question 70 of 80

Medal-premium 1

UNDER THE DIRECT WRITE-OFF METHOD, NO ATTEMPT IS MADE TO MATCH BAD DEBTS EXPENSE TO SALES REVENUES IN THE SAME ACCOUNTING PERIOD.

Select one of the following:

  • True
  • False

Question 71 of 80

Medal-premium 1

ALLOWANCE FOR DOUBTFUL ACCOUNTS IS DEBITED UNDER THE DIRECT WRITE-OFF METHOD WHEN AN ACCOUNT IS DETERMINED TO BE UNCOLLECTIBLE.

Select one of the following:

  • True
  • False

Question 72 of 80

Medal-premium 1

ALLOWANCE FOR DOUBTFUL ACCOUNTS IS A CONTRA ASSET ACCOUNT.

Select one of the following:

  • True
  • False

Question 73 of 80

Medal-premium 1

CASH REALIZABLE VALUE IS DETERMINED BY SUBTRACTING ALLOWANCE FOR DOUBTFUL ACCOUNTS FROM NET SALES.

Select one of the following:

  • True
  • False

Question 74 of 80

Medal-premium 1

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRE THAT THE DIRECT WRITE-OFF METHOD BE USED FOR FINANCIAL REPORTING PURPOSES IF IT IS ALSO USED FOR TAX PURPOSES.

Select one of the following:

  • True
  • False

Question 75 of 80

Medal-premium 1

UNDER THE ALLOWANCE METHOD, BAD DEBTS EXPENSE IS DEBITED WHEN AN ACCOUNT IS DEEMED UNCOLLECTIBLE AND MUST BE WRITTEN OFF.

Select one of the following:

  • True
  • False

Question 76 of 80

Medal-premium 1

UNDER THE ALLOWANCE METHOD, THE CASH REALIZABLE VALUE OF RECEIVABLES IS THE SAME BOTH BEFORE AND AFTER AN ACCOUNT HAS BEEN WRITTEN OFF.

Select one of the following:

  • True
  • False

Question 77 of 80

Medal-premium 1

THE PERCENTAGE OF SALES BASIS FOR ESTIMATING UNCOLLECTIBLE ACCOUNTS ALWAYS RESULTS IN MORE BAD DEBTS EXPENSE BEING RECOGNIZED THAN THE PERCENTAGE OF RECEIVABLE BASIS.

Select one of the following:

  • True
  • False

Question 78 of 80

Medal-premium 1

AN AGING SCHEDULE IS PREPARED ONLY FOR OLD ACCOUNTS RECEIVABLES THAT HAVE BEEN PAST DUE FOR MORE THAN ONE YEAR.

Select one of the following:

  • True
  • False

Question 79 of 80

Medal-premium 1

AN 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.

Select one of the following:

  • True
  • False

Question 80 of 80

Medal-premium 1

SALES RESULTING FROM THE USE OF VISA AND MASTERCARD ARE CONSIDERED CREDIT SALES BY THE RETAILER.

Select one of the following:

  • True
  • False
Icon_fullscreen

T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP

Natalie Balzert
Quiz by , created about 2 years ago

Quiz on T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP, created by Natalie Balzert on 20/10/2014.

Eye 255
Pin 0
Balloon-left 0
Tags No tags specified
Natalie Balzert
Created by Natalie Balzert about 2 years ago
Close