COST OF GOODS SOLD

The company sold 10 items at the end of each month.

1.What are the number of units and the cost of the goods available for sale?__________units $_____cost of goods available for sale
2.Assuming the LIFO periodic cost flow assumption, what will be the company's cost of goods sold for the 120 items sold in 2016?
3.Assuming the FIFO periodic cost flow assumption, what will be the company's cost of goods sold for the 120 items sold in 2016?
4.Assuming the periodic weighted-average cost flow assumption, what is the company's cost of goods sold for the 120 items sold in 2016?
5.Assuming the LIFO perpetual cost flow assumption, what will be the company's cost of goods sold if 10 units were sold on the last day of each month
during the year 2016?
6.Assuming the perpetual moving-average cost flow assumption, what is the company's cost of goods sold for the 120 items sold in 2016?

7.A company's inventory was destroyed in a fire on January 28, 2017. The company's December 31, 2016 inventory had a cost of $40,000. The company's
gross profit has consistently been 30% of sales. During January the company purchased merchandise costing $36,000 and sales of $50,000 at regular
selling prices. What is the estimated cost of the inventory that was destroyed on January 28, 2017?

A retailer has the following information:

8. The estimated cost of inventory to be shown on the retailer's January 31, 2017 balance sheet is _______

1.The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the _______.
A. Balance Sheet
B.Income Statement
C.Statement Of Cash Flows
2.The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the_______.
A.Balance Sheet
B.Income Statement
C.Statement Of Cash Flows
3.Under the accrual basis of accounting, revenues are reported in the accounting period when the _____.
A.Cash Is Received
B.Service Or Goods Have Been Delivered
4.Under the accrual basis of accounting, expenses are reported in the accounting period when the _____.
A.Cash Is Paid
B.Expense Matches The Revenues Or Is Used Up
5.Revenues minus expenses equals _____.
6.Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as______.
7.Assets are usually reported on the balance sheet at which amount?
A.Cost
B.Current Market Value
C.Expected Selling Price
8.Obligations (amounts owed) are reported on the balance sheet and are referred to as _______.
9.Liabilities often have the word__________in their account title.
10.Unearned Revenues is what type of account?
A.Asset
B.Liability
C.Stockholders' (Owner's) Equity
11.Accounting entries involve a minimum of how many accounts?
A.One
B.Two
C.Three
12.The listing of all of the accounts available for use in a company's accounting system is known as the______.
13.Assets minus liabilities equals ______.
14.Which term is associated with "left" or "left-side"?
A.Debit
B.Credit
15.Which term is associated with "right" or "right-side"?
A.Debit
B.Credit
16.When cash is received, the account Cash will be
A.Debited
B.Credited
17.When a company pays a bill, the account Cash will be
A.Debited
B.Credited
18.What will usually cause an asset account to increase?
A.Debit
B.Credit
19.What will usually cause the liability account Accounts Payable to increase?
A.Debit
B.Credit
20.Entries to expenses such as Rent Expense are usually
A.Debits
B.Credits
21.Entries to revenues accounts such as Service Revenues are usually
A.Debits
B.Credits
1.What type of entry will increase the normal balance of the general ledger account Service Revenues?
A.Debit
B.Credit
2.What type of entry will increase the normal balance of the general ledger account that reports the amount owed as of the balance sheet date for a
company's accrued expenses?
A.Debit
B.Credit
3.What type of entry will increase the normal balances of the general ledger accounts Electricity Expense, Insurance Expense, Interest Expense, and
Repairs Expense?
A.Debit
B.Credit
4.What type of accounts are Interest Receivable and Fees Receivable?
A.Asset C.Liability
B.Equity D.Revenue
E.Expense
5.What type of entry will decrease the normal balances of the general ledger accounts Interest Receivable and Fees Receivable?
A.Debit
B.Credit
6.What type of accounts are Deferred Revenues and Unearned Revenues?
A.Asset C.Liability
B.Equity D.Revenue
7.What type of entry will decrease the normal balances of the accounts Deferred Revenues and Unearned Revenues?
A.Debit
B.Credit
8.What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
A.Asset C.Liability
B.Equity D.Revenue
E.Expense
9.What type of entry will decrease the normal balances of the accounts Prepaid Insurance and Prepaid Expenses, and Insurance Expense?
A.Debit
B.Credit
10.What type of accounts are Accumulated Depreciation and Allowance for Doubtful Accounts?
A Contra Asset C.Equity
B.Expense D.Liability
E.Revenue
11.What type of entry will increase the balances that are normally found in the accounts Accumulated Depreciation and Allowance for Doubtful
Accounts?
A.Debit
B.Credit
12.In the case of a company's accrued interest expense, which of the following occurs first?
A.Incurring The Interest Expense
B.Paying The Interest To The Lender
13.In the case of a bank's accrued interest revenues, which occurs first?
A.Earning The Interest Revenues
B.Receiving The Interest From The Borrower
14.In the case of a company deferring insurance expense, which occurs first?
A.Incurring The Insurance Expense
B.Paying The Insurance Company
15.In the case of a company's deferred revenues, which occurs first?
A.Earning The Revenues
B.Receiving The Money From The Customer
16.Which of the following will be included in the adjusting entry to accrue interest expense?
A. A Debit To Cash C. A Debit To Interest Payable
B. A Credit To Interest Payable D. A Debit To Prepaid Interest
17.Which of the following will be included in the adjusting entry to accrue interest income or interest revenues?
A. A Debit To Cash C. A Credit To Interest Receivable
B. A Debit To Interest Income D. A Debit To Interest Receivable
18.The adjusting entry that reduces the balance in Prepaid Insurance will also include which of the following?
A. A Credit To Cash C. A Debit To Insurance Expense
B. A Credit To Insurance Expense D. A Debit To Insurance Payable
19.The adjusting entry that reduces the balance in Deferred Revenues or Unearned Revenues will also include which of the following?
A. A Debit To Cash B. A Credit To Fees Earned
C. A Debit To Fees Earned D. A Credit To Fees Receivable
20.The ending balance in the account Prepaid Insurance is expected to report which of the following?
A. The Accrued Amount Of Insurance Expense B. The Original Amount Of The Insurance Premiums Paid
C. The Expired Portion Of The Insurance Premiums Paid D. The Unexpired Portion Of The Insurance Premiums Paid
21.The ending balance in the account Deferred Revenues (or Unearned Fees) should report which of the following?
A. The Accrued Amount Of Fees That Have Been Earned B. The Original Amount Of Fees Received In Advance From A Customer
C. The Fees Received In Advance Which Are Not Yet Earned D. The Amount Of Fees Received In Advance And Which Are Now Earned
22.Which type of adjusting entry is often reversed on the first day of the next accounting period?
A. Accrual B. Deferral
C. Depreciation
23.Typically an adjusting entry will include which of the following?
A. One Balance Sheet Account And One Income Statement Account B. Two Balance Sheet Accounts
C. Two Income Statement Accounts

PROBLEMS:
1. A company borrowed $100,000 on December 1 by signing a six-month note that specifies interest at an annual percentage rate (APR) of 12%. No
interest or principal payment is due until the note matures on May 31. The company prepares financial statements at the end of each calendar month.
The following questions pertain to the adjusting entry that should be entered in the company's records.

2. A bank lent $100,000 to a customer on December 1 that required the customer to pay an annual percentage rate (APR) of 12% on the amount of the
loan. The loan is due in six months and no payment of interest or principal is to be made until the note is due on May 31. The bank prepares monthly
financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that the bank will be making for its
accounting records.

3. On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on
December 1. The $2,400 payment was recorded on December 1 with a debit to the current asset Prepaid Insurance and a credit to the current asset Cash.
Your company prepares monthly financial statements at the end of each calendar month. The following questions pertain to the adjusting entry that will
be written by the company.

4. On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on
December 1. The $2,400 payment was recorded on December 1 with a debit to the income statement account Insurance Expense and a credit to the
current asset Cash. Your company prepares monthly financial statements at the end of each calendar month. The following questions pertain to the
adjusting entry that will be written by the company.

5. On December 1, XYZ Insurance Co. received $2,400 from your company for the annual insurance premium covering the twelve-month period
beginning on December 1. XYZ Insurance Co. recorded the $2,400 receipt as of December 1 with a debit to the current asset Cash and a credit to the
current liability Unearned Revenues. XYZ Insurance Co. prepares monthly financial statements at the end of each calendar month. The following
questions pertain to the adjusting entry that will be written by the XYZ Insurance Co.

6. On December 1, your company began operations. On December 3 it purchased $1,500 of supplies and recorded the transaction with a debit to the
current asset Supplies and a credit to the current liability Accounts Payable. Your company prepares monthly financial statements at the end of each
calendar month. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the supply room. The
following questions pertain to the adjusting entry that should be entered by your company.

7. On December 1, your company began operations. On December 4 it purchased $1,500 of supplies and recorded the transaction with a debit to the
income statement account Supplies Expense and a credit to the current liability Accounts Payable. Your company prepares monthly financial statements
at the end of each calendar month. At the end of the day on December 31, your company estimated that $700 of the supplies were still on hand in the
supply room. The following questions pertain to the adjusting entry that should be entered by your company.

1.Which of the following names is NOT associated with the income statement?
A. P & L B. Statement Of Financial Position
C. Statement Of Operations
2.The income statement heading will specify which of the following?
A. A POINT In Time B. A PERIOD Of Time
3.Amounts earned by a company in its main operating activities are
A. Revenues B. Gains
4.A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is
carried at in the accounting records. The company will report a(n)
A. Expense B. Gain
C.Loss D. Revenue
5.On December 1 a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What
should the company report on its income statement for December?
A. Nothing B.Interest Expense Of $1,000
6. Is a retailer's Interest Expense an operating expense or a non-operating expense?
A. Operating Expense B. Non-operating Expense
7.The income statement line gross profit will appear on which income statement format?
A. Single-step B. Multiple-step
8.The income statement format that segregates the operating revenues and expenses from the non-operating revenues and expenses is the
A. Single-step B. Multiple-step
9.Interest earned on investments would appear in which section of a retailer's multiple-step income statement?
.10.Under the accrual basis of accounting, revenues are recognized in the accounting period in which ______.
11.Net Sales minus the Cost of Goods Sold equals ________.
12. The combination of Selling Expenses and Administrative Expenses is referred to as ________.
13. Which basis of accounting best measures profitability during a short time interval?
14. Gross Profit minus Operating Expenses is best defined as _________.
15. What is defined as sales minus all variable expenses?
16. Where on the income statement will a gain on discontinued operations be reported?
17. A corporation's net income will cause an increase to which of the following?
18. If a company's stock is publicly traded, is it a requirement that the earnings per share appear on the income statement?
19.Are the notes to the financial statements considered to be an integral part of the financial statements?
20.Is it acceptable that some of the expenses reported on the income statement be estimates?

CASH FLOWS
There are four parts to the Statement of Cash Flows (or Cash Flow Statement):
A. Operating Activities
B. Investing Activities
C. Financing Activities
D.Supplemental

1.Depreciation Expense.
2.Proceeds from the sale of equipment used in the business.
3.The Loss on the Sale of Equipment in Question #2.
4.Declaration and payment of dividends on company's stock.
5.Gain on the Sale of Automobile formerly used in the business.
6.An increase in the balance in a retailer's Merchandise Inventory.
7.An increase in the balance in Accounts Payable.
8.Retirement of long-term Bonds Payable.
9.Purchase of Treasury Stock (company's own stock).
10.The purchase of a new delivery truck to be used in the business.
11.A decrease in the balance of Accounts Receivable.
12.An increase in Bonds Payable (a long-term liability).
13.A decrease in the current asset account Prepaid Insurance.
14.A decrease in the current liability Income Taxes Payable.
15.The proceeds from issuing additional Common Stock.
16.The amortization of the cost of an intangible asset.
17.The exchange/conversion of long-term bonds into common stock.

BANK RECONCILATION

1.Checks that have been written by a company but have not yet been charged to the company's checking account are referred to as______checks
2.A company's receipts from September 30 that get deposited to the company's bank account on October 1st are referred to as deposits_______as of
September 30.
3.A general guide for reconciling the bank statement is "Put it where it_______

A. For items 4-15, select the action necessary to reconcile the bank statement.
a. Add To BOOK Balance c. Add To BANK Balance
b. Deduct From BOOK Balance d.Deduct From BANK Balance

4. Outstanding checks.
5.Bank service charge.
6.Interest credited to bank account.
7.Interest charged to bank account.
8.Deposit in transit.
9.Bank inadvertently charged your bank account for another company's bank fees.
10.Bank erred by posting another company's credit memo to your company's bank account.
11.Fee charged by bank for returned check.
12.A company wrote a check for $76 and it cleared the bank for $76. However, the company recorded the check in its Cash account as $67. How is
the difference of $9 handled on the bank reconciliation?
13.A company had a receipt of $989 and correctly prepared its bank deposit slip for $989. However, the company recorded the receipt in its Cash account
as $998. How is the difference of $9 handled on the bank reconciliation?
14.The bank collected a Note Receivable for the company and credited the company's bank account for $1,000.
15.A company deposited a check from a customer into its checking account. A few days later the check was returned with the notation account closed
and the bank deducted the amount on the bank statement.
16.A company's Cash account has a balance of $851 as of October 31. The bank statement for this account reports a balance of $1,430 as of October 31.
There are outstanding checks totaling $840 and a deposit in transit of $60. The bank statement shows interest earned of $19, service charges of $30, a
customer's returned check of $100, and a check printing fee of $90. The reconciled Cash balance that should be reported on the company’s balance sheet
as of October 31 is $ _______.
17.Which of the following items will require a journal entry to the company's books?
18.Which of the following will NOT require a journal entry to the company's books?
19.A company recorded its check #2754 in its accounting records as $98. However, check #2754 was actually written for $89 and it cleared the bank as
$89. What adjustment is needed to the Cash Balnce per books?
20.A company recorded its August 15 receipts on its books as $165. However, the receipts were actually $156. The deposit slip for the bank was prepared
correctly as $156. What adjustment is needed to the Cash Balace per books?

DEBT EXPENSE

1.When a sale is made with the credit terms of 2/10, net 30, the "10" refers to the_______period.
2.On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if the buyer pays on June 8?
3.On June 1, $800 of goods are sold with credit terms of 1/10, n/30. On June 3 the customer returned $100 of the goods. How much should the seller
expect to receive if the buyer pays on June 8?
4.With credit terms of 2/10, n/30, the annual interest rate for paying in 10 days instead of 30 days is closest to
5.When the terms of a sale are FOB ________, ownership of goods will transfer to the customer at the customer's dock.
6.The seller is responsible for the costs of shipping its goods to the buyer when the terms of the sale are FOB
7.The buyer is responsible for the costs of shipping when goods are sold with the terms FOB
8.When the Allowance for Doubtful Accounts appears on a company's financial statements, its balance will be a __________ balance.
9.On which financial statement would you expect to find Allowance for Doubtful Accounts?
10.Which method of reporting losses on accounts receivable is required in the U.S. for income tax purposes?
a. Allowance b.Direct Write-off
11.Which method of reporting losses on accounts receivable is to be used for financial reporting?
a.Allowance b. Direct Write-off
12.The seller of goods that is offering credit terms of net 30 days will likely be one of its customer's __________ creditors until it receives payment.
a. Secured b. Unsecured
13.After several years of operations, a company's Bad Debts Expense for a given year is likely to be the same as its balance in Allowance for Doubtful
Accounts.
a. True b. False
14.A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a
credit balance of $8,000. The adjusting entry will include a __________ to the Allowance for Doubtful Accounts.
15.A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a
credit balance of $18,000. The adjusting entry will include a __________ to Bad Debts Expense.
16.A company estimates that $20,000 of its $500,000 of accounts receivable will be uncollectible. Its Allowance for Doubtful Accounts presently has a
debit balance of $3,000. The adjusting entry will include a __________ to Allowance for Doubtful Accounts.

Use the following information for questions 17-21:

A company is expecting thousands of credit sales transactions each week with terms of net 30 days. The company uses the allowance method and it
prepares weekly financial statements. It believes that 0.001 of its credit sales will be uncollectible. The company's credit sales for its first week of
operations are $500,000. The credit sales for its second week are $600,000.
17.The company's bad debts expense for its first week of operations will be $__________.
18.The balance in Allowance for Doubtful Accounts at the end of the first week will likely be $__________
19.The company's bad debts expense for its second week of operations will be $__________
20.The amount of accounts receivable that you expect will be written off by the end of the company's second week of operations is $______
21.The balance in Allowance for Doubtful Accounts at the end of the second week of operations will likely be $__________

Use the following information for questions 22-25:

A company's Allowance for Doubtful Accounts has a credit balance of $25,000. It learns that one of its accounts receivable amounting to $1,800 is
worthless and needs to be written off.
22.Which account should be debited for $1,800 when writing off the account?
a. Allowance For Doubtful Accounts b. Accounts Receivable
C.Bad Debts Expense
23.Which account should be credited for $1,800 when writing off the account?
a. Allowance For Doubtful Accounts b. Accounts Receivable
c. Bad Debts Expense
24.Assuming that after the account is written off, the supplier receives full payment from the customer. Which account will not be involved in the
accounting entries made at the time when the payment is received?
a.Allowance For Doubtful Accounts b. Accounts Receivable
c.Bad Debts Expense
25.Under the direct write off method, which account is debited when a company writes off one of its accounts receivable?
a.Allowance For Doubtful Accounts b. Accounts Receivable
c.Bad Debts Expense
26.Sorting a company's accounts receivable into classifications such ascurrent, 1-30 days past due, and 31-60 days past due is known as the______of
accounts receivables.
27.The receivable turnover ratio is computed by dividing the net credit_______for the year by the average amount of accounts receivable during the year.
28.The days' sales in accounts receivable is calculated by dividing______days by the receivables turnover ratio during the year.
29.A company's accounts receivable minus its allowance for doubtful accounts equals the net_________value of the accounts receivable.
30.In some industries, companies often sell their accounts receivable to a firm known as a_________

ACCOUNTS PAYABLE

1.The general ledger account Accounts Payable is a current_________account.

2.A __________ balance is typical for Accounts Payable.
3.The balance in Accounts Payable is decreased with a __________ entry.
4.An account payable on the books of the buyer should be an account__________on the books of the seller.
5.Accounts payable are also known as_________payables.
6.PO is the abbreviation for__________________
7.Suppliers are also referred to as __________.