A consistent application of an inventory costing method enhances

1) Which financial statement is used to determine cash generated from operations?
A. Income statement
B. Statement of operations
C. Statement of cash flows
D. Retained earnings statement

2) In terms of sequence, in what order must the four basicfinancial statements be prepared?
A. Balance sheet, income statement, statement of cash flows, andcapital statement
B. Income statement, capital statement, statement of cash flows,and balance sheet
C. Balance sheet, capital statement, statement of cash flows, andincome statement
D. Income statement, capital statement, balance sheet, andstatement of cash flows

3) In classifying transactions, which of the following is true inregard to assets?
A. Normal balances and increases are debits.
B. Normal balances and decreases are credits.
C. Normal balances can either be debits or credits for assets.
D. Normal balances are debits and increases can be debits orcredits.

4) An increase in an expense account must be
A. debited
B. credited
C. either debited or credited, depending on the circumstances
D. capitalized

5) ABC Corporation issues 100 shares of $1 par common stock at $5per share, which of the following is the correct journal entry?
A.
Cash $100
Common Stock $100

B.
Cash $500
Common Stock $500

C.
Cash $500
Paid-in Capital, Excess of Par $400
Common Stock $100

D.
Cash $100
Paid-in Capital, Excess of Par $400
Common Stock $500

6) In the first month of operations, the total of the debit entriesto the cash account amounted to $1,400 and the total of the creditentries to the cash account amounted to $600. The cash account hasa
A. $600 credit balance
B. $1,400 debit balance
C. $800 debit balance
D. $800 credit balance

7) Which ledger contains control accounts?
A. Accounts receivable subsidiary ledger
B. General ledger
C. Accounts payable subsidiary ledger
D. General revenue and expense ledger

8) Smith is a customer of ABC Corporation. Smith typicallypurchases merchandise from ABC on account. Which ledger would ABCuse to keep track of the details of Smith’s account?
A. Accounts receivable subsidiary ledger
B. Accounts receivable control ledger
C. General ledger
D. Accounts payable subsidiary ledger

9) Under the cash basis of accounting,
A. revenue is recognized when services are performed
B. expenses are matched with the revenue that is produced
C. cash must be received before revenue is recognized
D. a promise to pay is sufficient to recognize revenue

10) Under the accrual basis of accounting,
A. cash must be received before revenue is recognized
B. net income is calculated by matching cash outflows against cashinflows
C. events that change a company’s financial statements arerecognized in the period they occur rather than in the period inwhich the cash is paid or received
D. the ledger accounts must be adjusted to reflect a cash basis ofaccounting before financial statements are prepared under generallyaccepted accounting principles

11) The Vintage Laundry Company purchased $6,500 worth of laundrysupplies on June 2 and recorded the purchase as an asset. On June30, an inventory of the laundry supplies indicated only $2,000 onhand. The adjusting entry that should be made by the company onJune 30 is
A. debit Laundry Expense, $2,000; credit Laundry Expense $2,000
B. debit Laundry Expense, $4,500; credit Laundry Supplies Expense,$4,500

12) Greese Company purchased office supplies costing $4,000 anddebited Office Supplies for the full amount. At the end of theaccounting period, a physical count of office supplies revealed$1,100 still on hand. The appropriate adjusting journal entry to bemade at the end of the period would be
A. debit Office Supplies Expense, $1,100; credit debit OfficeSupplies Expense
B. debit Office Supplies, $2,900; credit Office Supplies Expense,$2,900

13) Based on the account balance below, what is the total of thedebit and credit columns of the adjusted trial balance?

A.
$9,150
B.
$10,840
C.
$9,560
D.
$10,430

14) An adjusted trial balance
A. is prepared after the financial statements are completed
B. proves the equality of the total debit balances and total creditbalances of ledger accounts after all adjustments have beenmade
C. is a required financial statement under generally acceptedaccounting principles
D. cannot be used to prepare financial statements

15) Given the following adjusted trial balance:

Net income for the year is
A. $248
B. $135
C. $162
D. $49

16) Given the following adjusted trial balance, what will be thetotals for the debit and credit columns of the post-closing trialbalance?

After closing entries have been posted, the balance in retainedearnings will be
A. $3,256
B. $3,170
C. $3,440
D. $3,354 (This is not correct)

18) Net income is recorded on the work sheet under the
A. debit column of the adjusted trial balance and the credit columnof retained earnings
B. debit column of the income statement and the credit column ofthe balance sheet

19) At the beginning of the year, Uptown Athletic had an inventoryof $400,000. During the year, the company purchased goods costing$1,500,000. If Uptown Athletic reported ending inventory of$600,000 and sales of $2,000,000, their cost of goods sold andgross profit rate would be
A. $900,000 and 65%
B. $1,300,000 and 35%
C. $900,000 and 35%
D. $1,300,000 and 65%

20) During the year, Sarah’s Pet Shop’s merchandise inventorydecreased by $30,000. If the company’s cost of goods sold for theyear was $450,000, purchases would have been
A. $480,000
B. $420,000
C. $390,000
D. Insufficient data to determine

21) At the beginning of the year, Wildcat Athletic had an inventoryof $200,000. During the year, the company purchased goods costing$700,000. If Wildcat Athletic reported ending inventory of $300,000and sales of $1,000,000, their cost of goods sold and gross profitrate would be
A. $400,000 and 60%
B. $600,000 and 40%
C. $400,000 and 40%
D. $600,000 and 60%

22) The entry to record of sale of $900 with terms of 2/10, n/30will include a
A. debit to Sales Discount for $18354 (This is not correct)
B. debit to Sales Revenue for $882

23) Dobler Company uses a periodic inventory system. Details forthe inventory account for the
month of January 2012 are as follows:

Units Per unit price Total
Balance, 1/1/2012 200 $5.00 $1,000
Purchase, 1/15/2012 100 5.30 530
Purchase, 1/28/2012 100 5.50 550

An end of the month (1/31/2012), inventory showed that 140 unitswere on hand. If the company uses LIFO, what is the value of theending inventory?
A. $737
B. $700
C. $762
D. $1,380

24) The difference between ending inventory using LIFO and endinginventory using FIFO is referred to as
A. FIFO reserve
B. inventory reserve
C. LIFO reserve
D. periodic reserve

25) A consistent application of an inventory costing method enhances
A. conservatism
B. accuracy
C. comparability
D. efficiency

26) The accountant at Patton Company has determined that incomebefore income taxes amounted to $11,000 using the FIFO costingassumption. If the income tax rate is 30% and the amount of incometaxes paid would be $300 greater if the LIFO assumption were used,what would be the amount of income before taxes under the LIFOassumption?
A. $11,300
B. $12,000
C. $10,000
D. $10,700

27) A very small company would have the most difficulty inimplementing which of the following internal controlactivities?
A. Separation of duties
B. Limited access to assets
C. Periodic independent verification
D. Sound personnel procedures

28) A system of internal control
A. is infallible
B. can be rendered ineffective by employee collusion
C. invariably will have costs exceeding benefits
D. is premised on the concept of absolute assurance

29) The custodian of a company asset should
A. have access to the accounting record for that asset
B. be someone outside the company

30) The Sarbanes Oxley Act (2002) applies to
A. U.S. companies but not international companies
B. international companies but not U.S. companies

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