Old MathJax webview

plz help me with my assignment I need it within 20 mints

Name:.. R.No: Time allowed: 30 minutes Marks: 30. Note: Any cutting, overwriting, half correct and incorrect answer will be considered as wrong. 1. State whether the following statements are true or false? If one hundred units of merchandise were purchased at $15 per unit and the end-of-period replacement cost of the merchandise is $8 per unit, the merchandise will be reported at $8 per unit in the balance sheet. Shrinkage losses are usually debited to the Inventory account when a perpetual inventory system is used. The net realizable value of accounts receivable decreases each time an account receivable is written off through the allowance method. A perpetual inventory should be checked periodically against a physical inventory count. The accounting principle of consistency prohibits any changes in the method of inventory valuation. The full recovery of account previously written off will increase the net realizable value of the accounts receivable. Under the LIFO method of inventory valuation, the ending merchandise inventory would be valued at the purchase price of the most recent purchases. The FIFO method of inventory valuation is based on an assumption that the most recent costs incurred should be charged against current-year revenues. Failure to record an adjusting entry for uncollectible accounts expense will cause the operating income for the period to be overstated and current assets to be understated. Receivables appear in the balance sheet at the estimated collectible amount, called the net realizable value. The gross profit is 45% of net sales. The cost of goods sold then must be 55% of the net sales The unused portion of a credit line is not considered an asset or a liability. For good cash control, the custody of cash should be included with the record keeping of cash. Mark-to-market, the balance sheet valuation standard applied to investments in marketable securities, is an exception to the cost principle. The specific identification method of inventory valuation would be more appropriate for a car dealer than for a hardware store. 2. Choose the correct answer (more than one option may be correct.) Net sales for the business totals $70,000, and goods available for sale totals $50,000. If gross profit for the business runs 40% of net sales, what is the cost of goods sold? o $30,000 o $32,000 o $42,000 o $28,000 Which of the following would be considered a major step in achieving internal control over cash transactions? o Separate the function of handling cash from the maintenance of accounting records. o Require that all cash receipts be deposited daily. o Make all payments by check (with the exception of the Petty Cash fund) o All of the above The proper treatment of outstanding checks on a bank reconciliation is to show them as which of the following? o Addition per book balance of cash o Deduction per book balance of cash o Addition per bank statement balance o None of the above The proper treatment of a deposit recorded by the business but not yet recorded by the bank, is to report the deposit on the bank reconciliation as which of the following? o Addition per book balance of cash o Deduction per book balance of cash o Addition per bank statement balance o Deduction per bank statement balance Which of the following is the proper treatment on a bank reconciliation of a note receivable collected by the bank for the firm? o Addition per book balance of cash o Deduction per book balance of cash o Addition per bank statement balance o None of the above Which of the following is proper treatment on bank reconciliation of NSF check returned with bank statement? o Addition per book balance of cash o Deduction per book balance of cash o Addition per bank statement balance o Deduction per bank statement balance The bookkeeper recorded a bank deposit at $450, but the bank recorded the deposit at its correct amount of $540. The proper treatment of this issue on the bank reconciliation is to show it as which of the following? o Deduction per book balance of cash o Addition per bank statement balance o Deduction per bank statement balance o None of the above The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The uncollectible accounts are estimated at 3% of credit sales of $650,000. After the appropriate adjusting entry to recognize the uncollectible account expense, the Allowance for Doubtful Accounts account should have a credit balance of which of the following? o $19,950 o $19,500 o $19,050 o None of the above The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustments, of $600. Estimated uncollectible accounts, based on an aging of the accounts receivable, are $6,200. The appropriate adjusting entry to recognize the uncollectible accounts expense should include a credit to the Allowance for Doubtful Accounts account of which of the following? o $6,800 o $5,600 o $6,200 o None of the above Which accounting principle or concept permits the direct write-off method of accounting for uncollectible accounts? o Full-disclosure principle o Business entity concept o Matching principle o Materiality principle When a firm collects (recovers) part of an account receivable that was previously written off under the allowance method of accounting for bad debts, which of the following will occur? o The realizable value of accounts receivable will increase. o The allowance account will decrease by the amount collected. o The realizable value of accounts receivable will decrease. o The gross amount of accounts receivable will decrease. Under which cost flow assumption is the ending inventory composed of the most recently purchased merchandise? o FIFO o LIFO o Specific Identification o None of the above Which journal entry indicates that a perpetual inventory system is being used? o Accounts Receivable, debit, 500; Sales, credit, 500 o Inventory, debit, 45,000; Income Summary, credit, 45,000 o Cost of Goods Sold, debit, 30,000; Inventory, credit, 30,000 o Purchases, debit, $34,000; Accounts payable, credit, $34,000 An item of inventory with an invoice price of $80, on which 50% is added as markup, has a current replacement cost of $82. Under LCM, which amount should be used to determine the value of inventory? o $120 o $123 o $ 82 o None of the above During a period of falling prices, which method of assigning costs to inventory offers the best tax advantage? o Straight-line o FIFO o LIFO o None of the above