Questions:
1. The major difference in the statement of retained earnings between a service business and a merchandising business is
A. that the retained earnings statement of a merchandising business includes dividends.
B. that the retained earnings statement of a service business includes dividends.
C. nothing. There are no differences between the two.
D. that the retained earnings statement of a merchandising business shows the cost of goods sold.
2. A company's gross profit percentage decreases from 58% to 51%. What does this mean?
A. We can't determine anything definite from the information given.
B. This means that net income will be lower.
C. This means that there will be a net loss.
D. This means that net income will be higher.
3. Casey Company's beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (
Note: The company uses a perpetual system of inventory.)
What is the cost of goods sold for Casey Company for 2012 using LIFO?
Units Unit Price Total Cost
January 1 Beginning Inventory 20 $12 $240
March 8 Sold 14
April 2 Purchase 30 $13 $390
June 5 Sold 25
Aug 6 Purchase 25 $14 $350
Sept 11 Sold 22
Total Cost of Inventory $980
Ending inventory is 14 units.
A. $801
B. $264
C. $308
D. $784
4. Which of the following may not limit the effectiveness of internal control systems in an organization?
A. Poorly designed controls
B. Duties not segregated
C. Costs not worth benefits
D. Understanding of policies and procedures