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Accounting Homework Questions

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30. A company just starting in business purchased three merchandise
     inventory items at the following prices. First purchase $80; second
     purchase $95; Third purchase $85. If the company sold two units for
     a total of $250 and used FIFO costing, the gross profit for the
     period would be
     a. $75.
     b. $85.
     c. $70.
     d. $60.
     A company just starting business made the following four inventory
     purchases in June:
            June 1        150 units           $ 770
            June 10        200 units            1,180
            June 15        200 units            1,260
            June 28        150 units              990
                                         &nbs p;      ——————
                                         &nbs p;                 $4,200
                                         &nbs p;

A physical count of merchandise inventory on June 30 reveals that
     there are 200 units on hand.

31. Using the LIFO inventory method, the value of the ending inventory
     on June 30 is
     a. $1,065.
     b. $1,305.
     c. $2,895.
     d. $3,135.

32. The cost of goods available for sale is allocated between
     a. beginning inventory and ending inventory.
     b. beginning inventory and cost of goods on hand.
     c. ending inventory and cost of goods sold.
     d. beginning inventory and cost of goods purchased.

33. The managers of Tong Company receive performance bonuses based on
     the net income of the firm. Which inventory costing method are they
     likely to favor in periods of declining prices?
     a. LIFO
     b. Average Cost
     c. FIFO
     d. Physical inventory method

34. The accountant at Lloyd Company is figuring out the difference in
     income taxes the company will pay depending on the choice of either
     FIFO or LIFO as an inventory costing method. The tax rate is 30%
     and the FIFO method will result in income before taxes of $5,244.
     The LIFO method will result in income before taxes of $4,740. What
     is the difference in tax that would be paid between the two
     a. $504.
     b. $353.
     c. $151.
     d. Cannot be determined from the information provided.

35. Which one of the following is not an objective of financial
     reporting according to the conceptual framework?
     a. To provide information that will increase the value of the
     b. To provide information in assessing future cash flow
     c. To provide information that is useful for making investment and
        credit decisions
     d. To provide information that identifies economic resources, the
        claims to those resources, and the changes in those resources and

36. Expenses are recognized when
     a. cash is paid.
     b. the work is performed.
     c. the product is produced.
     d. they make their contribution to revenue.

37. Internal controls are not designed to safeguard assets from
     a. natural disasters.
     b. employee theft.
     c. robbery.
     d. unauthorized use.

38. An accounts payable clerk also has access to the approved supplier
     master file for purchases. The control principle of
     a. establishment of responsibility is violated.
     b. independent internal verification is violated.
     c. documentation procedures is violated.
     d. separation of duties is violated.

39. For accounting purposes, postdated checks (checks payable in the
     future) are considered to be
     a. money orders.
     b. cash.
     c. petty cash.
     d. accounts receivable.

40. An employee authorized to sign checks should not record
     a. owner cash contributions.
     b. mail receipts.
     c. cash disbursement transactions.
     d. sales transactions.

41. Which one of the following would not cause a bank to debit a
     depositor's account?
     a. Bank service charge
     b. Collection of a note receivable
     c. wiring of funds to other locations
     d. Checks marked NSF

42. A company maintains the asset account, Cash in Bank, on its books,
     while the bank maintains a reciprocal account which is
     a. a contra-asset account.
     b. a liability account.
     c. also an asset account.
     d. an owner's equity account.

43. Deposits in transit
     a. have been recorded on the company's books but not yet by the
     b. have been recorded by the bank but not yet by the company.
     c. have not been recorded by the bank or the company.
     d. are checks from customers which have not yet been received by the

44. In preparing a bank reconciliation, outstanding checks is
     a. added to the balance per bank.
     b. deducted from the balance per books.
     c. added to the balance per books.
     d. deducted from the balance per bank.

45. Notification by the bank that a deposited customer check was
     returned NSF requires that the company make the following adjusting
     a. Accounts Receivable
     b. Cash
            Accounts Receivable
     c. Miscellaneous Expense
            Accounts Receivable
     d. No adjusting entry is necessary.

46. Eaton Company had checks outstanding totaling $4,400 on its June
     bank reconciliation. In July, Eaton Company issued checks totaling
     $38,900. The July bank statement shows that $28,300 in checks
     cleared the bank in July. A check from one of Eaton Company's
     customers in the amount of $300 was also returned marked "NSF." The
     amount of outstanding checks on Eaton Company's July bank
     reconciliation should be
     a. $10,600.
     b. $15,000.
     c. $14,700.
     d. $6,200.

47. Gagne Company gathered the following reconciling information in
     preparing its July bank reconciliation:
        Cash balance per books, 7/31                           $3,000
        Deposits-in-transit                                      150
        Notes receivable and interest collected by bank      850
        Bank charge for check printing                                20
        Outstanding checks                                      2,000
        NSF check                                          170

The adjusted cash balance per books on July 31 is
     a. $3,660.
     b. $3,510.
     c. $1,810.
     d. $1,960.

48. An adjusting entry is not required for
     a. outstanding checks.
     b. collection of a note by the bank.
     c. NSF checks.
     d. bank service charges.

49. Weber Company developed the following reconciling information in
     preparing its September bank reconciliation:
        Cash balance per bank, 9/30               $15,000
        Note receivable collected by bank           6,000
        Outstanding checks                          9,000
        Deposits-in-transit                         4,500
        Bank service charge                            75
        NSF check                                   1,200

Using the above information, determine the cash balance per books
     (before adjustments) for the Weber Company.
     a. $11,775.
     b. $19,500.
     c. $5,775.
     d. $15,000.

50. 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.

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