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CharlesShay

ACCT 220 WEEK 2 QUIZ (UMUC)

CharlesShay

ACCT 220 WEEK 2 QUIZ (UMUC)

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ACCT 220 WEEK 2 QUIZ (UMUC)

 

 

 

 

 

 

Question 1 (4 points)

 

One advantage to using a perpetual inventory system is that the company never has to physically count the inventory.

Question 1 options:

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True

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False

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Question 2 (4 points)

 

The weighted-average inventory method will likely result in neither the highest nor the lowest ending inventory.

Question 2 options:

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True

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False

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Question 3 (4 points)

 

When calculating accounts receivable turnover, a company would prefer a higher number rather than a lower number (within reason).

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True

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False

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Question 4 (4 points)

 

When performing a bank reconciliation, checks outstanding are added back to the bank balance.

Question 4 options:

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True

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False

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Question 5 (4 points)

 

Usually the quick ratio will be a lower number than the current ratio.

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True

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False

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Multiple Choice

Select the best answer for each of the following questions.

Question 6 (4 points)

 

The bad-debt method that uses the accounts receivable aging report is _______________.

Question 6 options:

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the direct write-off method

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the percentage-of-receivables method

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the percentage-of-sales method

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the bad-debt expense method

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Question 7 (4 points)

 

When it is determined that too much money has been set aside for uncollectible accounts, we will _______________.

Question 7 options:

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credit cash

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debit reserve for uncollectible accounts

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debit accounts receivable

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credit reserve for uncollectible accounts

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Question 8 (4 points)

 

A customer whose account was previously written off unexpectedly pays us. If we are using the allowance method we would _______________.

Question 8 options:

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debit accounts receivable and credit allowance for uncollectible accounts AND debit cash and credit accounts receivable

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debit bad-debt expense and credit cash

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debit reserve for uncollectible accounts and credit cash

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debit cash and credit bad-debt expense

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Question 9 (4 points)

 

When a retailer accepts a bank card (VISA or MasterCard), they will make what entry for the day’s receipts?

Question 9 options:

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debit cash and debit “credit card expense”; credit sales

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debit accounts receivable; credit sales, and credit “credit card expense”

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debit cash and credit sales

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debit accounts receivable and credit sales

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Question 10 (4 points)

 

The company prepares, but does not yet pay, its first payroll of the new year. Salaries total $10,000 and 7.65% is withheld from paychecks for FICA tax. Ignore all other payroll deductions. The journal entries will be _______________.

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debit wage expense $10,000 and credit wages payable $10,000; debit payroll tax expense for $765 and credit FICA tax payable $765

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debit wage expense $10,000 and credit wages payable 10,000; debit payroll tax expense for $1,530 and credit FICA tax payable $1,530

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debit wage expense $10,000 and debit payroll tax expense $765; credit wages payable $9,235 and credit FICA tax payable $1,530

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debit wage expense $10,000; credit wages payable $8,470 and FICA tax payable $1,530

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Question 11 (4 points)

 

A company buys a $10,000 bond at 102 as an investment. The correct entry is _______________.

Question 11 options:

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debit investment in bonds and credit cash for $10,200

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credit investment in bonds and debit cash for $10,200

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debit investment in bonds and credit cash for $9,800

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credit investment in bonds and debit cash for $9,800

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Question 12 (4 points)

 

A company issues bonds having a stated value of $100,000 for $102,500. At maturity, the company will _______________.

Question 12 options:

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debit bonds payable for $102,500

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credit bonds payable for $102,500

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debit bonds payable for $100,000

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credit bonds payable for $100,000

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Question 13 (4 points)

 

A company uses the percentage-of-receivables method for establishing the bad-debt reserve. They want the reserve balance to equal 0.5% of debts 30 days old or less, 2% of debts aged 31 to 60 days, and 4% of debts aged over 60 days. An aging report shows $780,000 relating to the past month, $232,600 relating to the prior month, and $89,200 relating to more than two months ago. The balance in the reserve account before adjustment is $10,175. What is the adjusting journal entry?

Question 13 options:

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debit bad-debt expense, credit accounts receivable $1,945

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debit allowance for bad debts, credit bad-debt expense $1,945

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debit bad-debt expense, credit allowance for bad debts $12,120

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debit bad-debt expense, credit allowance for bad debts $1,945

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Save

Question 14 (4 points)

 

A company is closing out the accounting period. The inventory balance at the beginning of the period was $222,750, and at the end of the period it was $215,600. Purchases of goods for resale during the period equaled $682,500. What was the cost of goods sold total?

Question 14 options:

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$682,500

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$689,650

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$675,350

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$905,250

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Question 15 (4 points)

 

A merchandising company has beginning inventory of 50 units with a total cost of $500.  They have the following transactions during the month of January: 1/5 bought 10 units at $11.00 each; 1/8 bought 15 units at $11.25 each; 1/15 sold 8 units for $16 each; 1/22 bought 10 units at $11.50 each and sold 12 units for $16.50 each. The ending inventory is $693.75. What inventory costing method is the company using?

Question 15 options:

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FIFO

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LIFO – perpetual

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LIFO – periodic

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weighted average

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Short Answer

Prepare the following journal entries. Dates and descriptions are not required.

Question 16 (4 points)

 

What is the difference between the periodic-inventory and perpetual-inventory methods?

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Question 17 (4 points)

 

Name two costs, in addition to the purchase price, that are added to merchandise inventory cost.

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Question 18 (4 points)

 

What will be the result to inventory values, cost of goods sold, and net income if the LIFO method is used during times of inflation?

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Question 19 (4 points)

 

When comparing financial ratios, it is important to make comparisons only within an industry or between like companies. Why might a retail store have a much higher accounts receivable turnover than a manufacturing company?

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Question 20 (4 points)

 

How is gross margin or gross profit calculated on a merchandizing company income statement?

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Question 21<

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