1. A sales returns and allowances account is not debited if a customer...
A. Returns defective merchandise.
B. Recieves a credit for merchandise of inferior quality.
C. Utilizes a prompt payment incentive.
D. Returns goods that are not in accordance with specifications.
2. Which of the following statements is incorrect?
A. A major consideration in developing an accounting system is cost effectivness.
B. When an accounting system is designed, no consideration needs to be given to the needs and knowledge of various users.
C. The accounting system should be able to accomodate a variety of users and changing information needs.
D. To be useful, information must be understandable, relevant, reliable, timley and accurate
3. Flip's Market recorded the following events involving a recent purchase of merchandise:
Received goods for $50,000, terms 2/10, n/30.
Returned $1,000 of the shipment for credit.
Paid $250 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory increased by
a. $48,020.
b. $48,265.
c. $48,270.
d. $49,250.
4. A $100 petty cash fund has cash of $16 and receipts of $81. The journal entry to replenish the account would include a
a. debit to Cash for $81.
b. credit to Petty Cash for $84.
c. debit to Cash Over and Short for $3.
d. credit to Cash for $81.
5. In preparing its bank reconciliation for the month of April 2013, Flip, Inc. has available the following information.
Balance per bank statement, 4/30/13 $39,300
NSF check returned with 4/30/13 bank statement 470
Deposits in transit, 4/30/13 5,000
Outstanding checks, 4/30/13 5,200
Bank service charges for April 30
What should be the adjusted cash balance at April 30, 2013?
a. $38,630.
b. $38,800.
c. $39,010.
d. $39,100.
6. If a check correctly written and paid by the bank for $591 is incorrectly recorded on the company's books for $519, the appropriate treatment on the bank reconciliation would be to
a. deduct $72 from the book's balance.
b. add $72 to the book's balance.
c. deduct $72 from the bank's balance.
d. deduct $591 from the book's balance.
7.Flip Company had net credit sales during the year of $1,200,000 and cost of goods sold of $720,000. The balance in accounts receivable at the beginning of the year was $180,000, and the end of the year it was $120,000. What was the accounts receivable turnover ratio?
a. 5.0
b. 6.7
c. 8.0
d. 10.0
8. The financial statements of Flip Manufacturing Company report net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days?
a. 40 days
b. 50 days
c. 54.7 days
d. 80 days
9. Flip Company purchases a new delivery truck for $60,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Flip record as the cost of the new truck?
a. $66,050
b. $65,890
c. $64,000
d. $65,600
10. A company purchased factory equipment on April 1, 2012 for $80,000. It is estimated that the equipment will have an $10,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2012 is
a. $8,000.
b. $7,000.
c. $5,250.
d. $6,000.
11.: Flip's Boutique has total receipts for the month of $30,660 including sales taxes. If the sales tax rate is 5%, what are Flip's sales for the month?
a. $29,127
b. $29,200
c. $32,193
d. It cannot be determined.
12: Flip Electric began operations in 2012 and provides a one year warranty on the products it sells. They estimate that 10,000 of the 200,000 units sold in 2012 will be returned for repairs and that these repairs will cost $8 per unit. The cost of repairing 8,000 units presented for service in 2012 was $64,000. Flip should report
a. warranty expense of $16,000 for 2012.
b. warranty expense of $80,000 for 2012.
c. warranty liability of $80,000 on December 31, 2012.
d. no warranty obligation on December 31, 2012, since this is only a contingent liability.
13: Partners Flip and Flop have capital balances in a partnership of $80,000 and $120,000, respectively. They agree to share profits and losses as follows:
Flip Flop
As salaries $20,000 $24,000
As interest on capital at the beginning of the year 10% 10%
Remaining profits or losses 50% 50%
If income for the year was $60,000, what will be the distribution of income to Flip?
a. $26,000
b. $34,000
c. $20,000
d. $28,000