Question 1: The largest expense on a retailer's income statement is typically:
- Salaries and wages.
- Cost of goods sold.
- Income tax expense.
- Depreciation expense.
Question 2: Net accounts receivable (net realizable value) is:
A. gross accounts receivable minus cost of goods sold.
B. also known as net pretax income.
C. gross accounts receivable minus allowance
Question 3: The factor which determines whether or not goods should be included in a physical count of inventory is:
A. physical possession.
B. legal title.
C. management's judgment.
D. whether or not the purchase price has been paid.
Question 4: Today Thomas deposited $100,000 in a three-year, 12% CD that compounds quarterly. What is the maturity value of the CD?
A. $109,270
B. $119,410
C. $142,576
D. $309,090
Question 5: Frankenstein Enterprises received two notes from customers for sales that Frankenstein made to them in 2011. The notes included:
Note A: Dated 5/31/11, principal of $120,000 and interest due 3/31/12.
Note B: Dated 7/1/11, principal of $200,000 and interest at 8% annually, due on 4/1/12.
Frankenstein had accrued interest receivable from these notes of $14,400 in its 12/31/11 balance sheet. What is the annual interest rate on Note A?
A. 9.14%
B. 8%
C. 9.74%
D. 9.44%
Question 6: Inventories affect:
- only the balance sheet.
- only the income statement.
- both the balance sheet and the income statement.
- neither the balance sheet nor the income statement.
Question 7: Journal entries are required by the depositor for all of the following except:
A. collection of a note receivable.
B. bank errors.
C. bank service charges.
D. an NSF check.
Question 8: In a period of rising prices, the inventory method which tends to give the highest reported net income is:
A. base stock.
B. first-in, first-out.
C. last-in, first-out.
D. weighted-average.
Question 9: ATC reported the following financial data for 2011 and 2010:
2011 2010
Sales $305,000 $284,000
Sales returns and allowances 9,000 6,000
Net Sales 296,000 278,000
Cost of Goods Sold:
Inventory, 1/1 43,000 36,000
Net purchases 152,000 146,000
Goods available for sale 195,000 182,000
Inventory, 12/31 57,000 43,000
Cost of Goods Sold 138,000 139,000
Gross Profit $158,000 $139,000
The average days inventory for ATC (rounded) for 2011 is:
A. less than 100 days.
B. 114 days.
C. 132 days.
D. 151 days.
Question 10: Goods in transit which are shipped f.o.b. destination should be:
A. included in the inventory of the seller.
B. included in the inventory of the buyer.
C. included in the inventory of the shipping company.
D. none of these.
Question 11: Which of the following is recorded by a credit to Accounts receivable?
A. Sale of inventory on account.
B. Estimating the annual allowance for doubtful accounts.
C. Estimating annual sales returns.
D. Write-offs of bad debts.