1.A properly designed internal control system: Lowers the company's risk of loss. Requires the use of non-computerized systems. Insures profitable operations. Eliminates the need for an audit. Is not necessary if the company uses a computerized system.
2.A company had net sales and cost of goods sold of $752,000 and $543,000, respectively. Its net income was $17,530. The company's gross margin ratio equals (Round your answer to 1 decimal place): 27.8% 18.9% 35.2% 34.7% 24.5%
3. The acid-test ratio: Measures profitability. Measures return on assets. Measures inventory turnover. Is generally greater than the current ratio. Is also called the quick ratio.
4. Subsidiary ledgers do all of the following except: Aid in error identification for individual accounts. Remove excessive detail from the general ledger. Provide up-to-date information on customer or other specific account balances. Eliminate the need for individual postings to the customer or supplier accounts. Help with division of labor (recordkeeping tasks).
5. Cost of goods sold: Is the term used for the cost of buying and preparing merchandise for sale. Is another term for revenue. Is also called gross margin. Is another term for merchandise sales. Is a term only used by service firms.
6. A debit to Sales Returns and Allowances and a credit to Accounts Receivable: Reflects a decrease in amount due to a supplier. Reflects an increase in amount due from a customer. Is recorded when a customer takes a discount. Recognizes that a customer returned merchandise and/or received an allowance.
Requires a debit memorandum to recognize the customer's return.