Acct 2301 Exam 2_v2 Key2

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ACCT 2301 Exam 2

1. The system through which management is given financial information for use in conducting the affairs ofthe business and in reporting to owners and other interested parties is called thea. accounting systemb. fiduciary system

c. operations systemd. auditing system

ANS: A DI: !asy "#$: %&'%1

(. The primary ledger containing all the balance sheet and income statement accounts is thea. general ledgerb. creditors ledgerc. customers ledgerd. subsidiary ledger

ANS: A DI: !asy "#$: %&'%(

). A purchase of supplies for cash is recorded in thea. *evenue +ournalb. ,urchases +ournalc. -ash *eceipts +ournald. -ash ,ayments +ournal

ANS: D DI: !asy "#$: %&'%(

. /hich of the following transactions is recorded in the purchases +ournal0a. purchase of store supplies on accountb. return of damaged office euipmentc. purchase of store supplies for cashd. purchase of office euipment for cash

ANS: A DI: 2oderate "#$: %&'%(

&. /hich of the following transactions is recorded in the revenue +ournal0a. sale of e3cess office euipment for cashb. rendering services for cashc. rendering services on accountd. sale of e3cess office euipment on account

ANS: - DI: Difficult "#$: %&'%(4. /hich of the following is recorded in the general +ournal0

a. services rendered for cashb. correction of error in billing clientc. purchases of euipment on account

d. purchases of euipment for cash

ANS: # DI: Difficult "#$: %&'%(

5. /hich of the following is recorded in the cash receipts +ournal0a. cash withdrawn by the ownerb. cash purchase of euipmentc. cash received on customer6s accountd. ad+usting entry for depreciation

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ANS: - DI: 2oderate "#$: %&'%(

Ch 6

7. The term 8inventory8 indicatesa. merchandise held for sale in the normal course of businessb. materials in the process of production or held for productionc. suppliesd. both 9a and 9b

ANS: D DI: !asy "#$: %4'%1

;. The primary difference between a periodic and perpetual inventory system is that aa. periodic system determines the inventory on hand only at the end of the accounting periodb. periodic system n)%. The +ournal entry to recordthe sale would include aa. debit to -ash for ?&%%b. Debit to Sales Discounts for ?1%c. -redit to Sales for ?&%%d. Debit to Accounts *eceivable for ?;%

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ANS: - DI: 2oderate "#$: %4'%)

1). 2erchandise sub+ect to terms 11%> n)%> "# shipping point> is sold on account to a customer for ?1&>%%%.The seller paid transportation costs of ?1>%%% and issued a credit memorandum for ?&>%%% prior to payment./hat is the amount of the cash discount allowable0

a. ?14%b. ?1&%c. ?1%d. ?1%%

ANS: D DI: Difficult "#$: %4'%)

1. /hen a buyer returns merchandise purchased for cash> the buyer may record the transaction using thefollowing entrya. debit 2erchandise InventoryB credit -ashb. debit -ashB credit 2erchandise Inventoryc. debit -ashB credit Sales *eturns and Allowancesd. debit Sales *eturns and AllowancesB credit -ash

ANS: # DI: 2oderate "#$: %4'%)

1&. /hen merchandise is returned under the perpetual inventory system> the buyer would credita. 2erchandise Inventoryb. ,urchases *eturns and Allowancesc. Accounts ,ayabled. depending on the inventory system used.

ANS: A DI: 2oderate "#$: %4'%)

14. /hen purchases of merchandise are made for cash> the transaction may be recorded with the followingentry

a. debit -ashB credit 2erchandise Inventoryb. debit 2erchandise InventoryB credit -ashc. debit 2erchandise InventoryB credit -ash Discountsd. debit 2erchandise InventoryB credit ,urchases


15. A retailer purchases merchandise with a catalog list price of ?1%>%%%. The retailer receives a (&C tradediscount and credit terms of (1%> n)%. /hat amount should the retailer debit to the 2erchandiseInventory account0a. ?5>&%%b. ?1%>%%%c. ?;>7%%

d. ?5>)&%

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ANS: A DI: 2oderate "#$: %4'%)17. A sales invoice included the following information: merchandise price> ?>%%%B transportation> ?)%%B terms

11%> neom> "# shipping point. Assuming that a credit for merchandise returned of ?4%% is granted priorto payment> that the transportation is prepaid by the seller> and that the invoice is paid within the discountperiod> what is the amount of cash received by the seller0

a. ?)>)44b. ?)>%%c. ?)>444d. ?)>;&%

ANS: - DI: Difficult "#$: %4'%)1;. #lac< -ompany sold *ed -ompany merchandise on account "# shipping point> (1%> net )%> for ?1%>%%%.

#lac< prepaid the ?(%% shipping charge. /hich of the following entries does #lac< ma debit ?1%>%%%B Sales> credit ?1%>%%%> and

Accounts *eceivable'*ed> debit ?(%%B -ash> credit ?(%%c. Accounts *eceivable'*ed> debit ?1%>%%B Sales> credit ?1%>%%

d. Accounts *eceivable'*ed> debit ?1%>%%%B Sales> credit ?1%>%%%>and

Transportation "ut> debit ?(%%B -ash> credit ?(%%

ANS: # DI: Difficult "#$: %4'%)

(%. "range -o. sold *ed -o. merchandise on account "# shipping point> (1%> net )%> for ?1%>%%%. "range-o. prepaid the ?(%% shipping charge. =sing the perpetual inventory method> which of the followingentries will *ed -o. ma debit ?1%>%%%B Transportation In> debit ?(%%B -ash> credit ?1%>(%%d. Accounts ,ayable'"range -o.> debit ?1%>(%%B 2erchandise Inventory> debit ?(%%B -ash> credit

?1%>%%

ANS: # DI: Difficult "#$: %4'%)

(1. /ho pays the freight costs when the terms are "# shipping point0a. the ultimate customerb. the buyerc. the seller d. either the seller or the buyer

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((. The ,aula -orp. sold merchandise for cash> ?4>;%%. The cost of the merchandise sold was ?>(&%. The+ournal entry9s to record this transaction would bea. -ash 4>;%%

2erchandise Inventory 4>;%%

-"2S >(&% Sales >(&%

b. Accounts *ec 4>;%% Sales 4>;%%

-"2S >(&% 2erchandise Inv >(&%

c. -ash 4>;%% Sales 4>;%%

-"2S 4>;%% 2erchandise Inventory 4>;%%

d. -ash >(&% Sales >(&%

-"2S >(&% 2erchandise Inventory >(&%

e. -ash 4>;%% Sales 4>;%%

-"2S >(&% 2erchandise Inventory >(&%

ANS: ! DI: 2oderate "#$: %4'%)

Ch 7

(). Ta

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Assuming the business maintains aperpetualinventory system> calculate the cost of merchandise sold andending inventory uner "irst-in, first-out#a. cost of merchandise sold ;1B ending inventory ;%b. cost of merchandise sold 1(%B ending inventory 41c. cost of merchandise sold 41B ending inventory 1(%d. cost of merchandise sold ;%B ending inventory ;1

ANS: -

(;. The following lots of a particular commodity were available for sale during the year:

#eginning inventory 1% units at ?41irst purchase (& units at ?4)Second purchase )% units at ?4Third purchase 1& units at ?5)

The firm uses the periodic system and there are (% units of the commodity on hand at the end of the year./hat is the amount of the inventory at the end of the year according to the a$erage cost metho%a. ?1>)%%b. ?1>)%&c. ?1>1&d. ?1>()4

ANS: A DI: 2oderate "#$: %5'%

)%. 2erchandise inventory at the end of the year was inadvertently overstated. /hich of the followingstatements correctly states the effect of the error on net income> assets> and owner6s euity0a. net income is overstated> assets are overstated> owner6s euity is understatedb. net income is overstated> assets are overstated> owner6s euity is overstatedc. net income is understated> assets are understated> owner6s euity is understatedd. net income is understated> assets are understated> owner6s euity is overstated

ANS: # DI: Difficult "#$: %5'%4

Ch 8

)1. /hich one of the following below is notan element of internal control0a. ris< assessmentb. monitoringc. information and communicationd. behavior analysis

ANS: D DI: !asy "#$: %7'%(

)(. /hich one of the following below is nota factor that influences a business6s control environment0a. management6s philosophy and operating styleb. organi@ational structurec. proofs and security measurersd. personnel policies

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ANS: - DI: !asy "#$: %7'%(

)). /hen a firm uses internal auditors> it is adhering to which one of the following internal control elements0a. ris< assessmentb. monitoring

c. proofs and security measuresd. separating responsibilities for related operations

ANS: # DI: !asy "#$: %7'%(NAT: AA-S# Analytic G AI-,A ##'Industry

). The ob+ectives of internal control are toa. control the internal organi@ation of the accounting department personnel and euipmentb. provide reasonable assurance that operations are managed to achieve goals> financial reports are

accurate> and laws and regulations are complied withc. prevent fraud> and promote the social interest of the companyd. provide control over 8internal'use only8 reports and employee internal conduct

ANS: # DI: !asy "#$: %7'%(

)&. /hich one of the following below reflects a wea< internal control system0a. all employees are well supervisedb. a single employee is responsible for comparing a receiving report to an invoicec. all employees must ta&%% were recorded incorrectly in the cash receipts +ournal as ?&>;%%. Thisitem would be included on the ban< reconciliation as a9na. deduction from the balance per depositor6s recordsb. addition to the balance per ban< statementc. deduction from the balance per ban< statementd. addition to the balance per depositor6s records

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ANS: D DI: 2oderate "#$: %;'%NAT: AA-S# Analytic G AI-,A N'2easurement

7 . A 4%'day> 1(C note for ?1%>%%%> dated 2ay 1> is received from a customer on account. If the note isdiscounted on 2ay (1 at 1&C> the amount of interest revenue or e3pense to be recorded by the payee of thenote on 2ay (1 is

a. ?)% interest e3penseb. ?)% interest revenuec. ?15% interest revenued. ?15% interest e3pense

ANS: # DI: 2oderate "#$: %;'AppNAT: AA-S# Analytic G AI-,A N'2easurement

;. A ?4>%%%> )%'day> 1(C note recorded on November (1 is not paid by the ma ?4>%4%B credit Notes *eceivable> ?4>%4%

b. debit Accounts *eceivable> ?4>%4%B credit Notes *eceivable> ?4>%%%B -redit Interest *eceivable>?4%c. debit Notes *eceivable> ?4>%4%B credit Accounts *eceivable> ?4>%4%d. debit Accounts *eceivable> ?4>%4%B credit Notes *eceivable> ?4>%%%B -redit Interest *evenue> ?4%

ANS: D DI: 2oderate "#$: %;'%4NAT: AA-S# Analytic G AI-,A N'2easurement

&%. "n November 1> Him -ompany accepted a )'month note receivable as payment for services provided to-hu -ompany. The terms of the note were ?7>%%% face value and 4C interest. Him -ompany closes itsboo

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Acct 2301 Exam 2_v2 Key2