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T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP

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Quiz on T/F CHAPTERS 5, 6, 7, 8 MIDTERM PREP, created by Natalie Balzert on 20/10/2014.
Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
Natalie Balzert
Created by Natalie Balzert almost 10 years ago
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Resource summary

Question 1

Question
INTERNAL CONTROL IS MAINLY CONCERNED WIHT THE AMOUNT OF AUTHORITY A SUPERVISOR EXERCISES OER A SUBORDINATE.
Answer
  • True
  • False

Question 2

Question
A HIGHLY AUTOMATED COMPUTERIZED SYSTEM OF ACCOUNTING ELIMINATES THE NEED FOR INTERNAL CONTROL.
Answer
  • True
  • False

Question 3

Question
THE SAFEGUARDING OF ASSETS IS AN OBJECTIVE OF A COMPANY'S SYSTEM OF INTERNAL CONTROL.
Answer
  • True
  • False

Question 4

Question
MANAGEMENT IS RESPONSIBLE FOR ESTABLISHING A SYSTEM OF INTERNAL CONTROL.
Answer
  • True
  • False

Question 5

Question
THE RESPONSIBILITY FOR KEEPING THE RECORDS FOR AN ASSET SHOULD BE SEPARATE FROM THE PHYSICAL CUSTODY OF THAT ASSET.
Answer
  • True
  • False

Question 6

Question
INTERNAL CONTROL IS MOST EFFECTIVE WHEN SEVERAL PEOPLE ARE RESPONSIBLE FOR A GIVEN TASK.
Answer
  • True
  • False

Question 7

Question
REQUIRING EMPLOYEES TO TAKE VACATIONS IS A WEAKNESS IN THE SYSTEM OF INTERNAL CONTROLS BECAUSE IT DOES NOT PROMOTE OPERATIONAL EFFICIENCY.
Answer
  • True
  • False

Question 8

Question
THE EXTENT OF INTERNAL CONTROL FEATURES ADOPTED BY A COMPANY MUST BE EVALUATED IN TERMS OF COST-BENEFIT.
Answer
  • True
  • False

Question 9

Question
AN EFFECTIVE SYSTEM OF INTERNAL CONTROL REQUIRES THAT AT LEAST TWO INDIVIDUALS BE ASSIGNED TO ONE CASH DRAWER SO THAT EACH CAN SERVE AS CHECK ON THE OTHER.
Answer
  • True
  • False

Question 10

Question
ONLY LARGE COMPANIES NEED TO BE CONCERNED WITH A SYSTEM OF INTERNAL CONTROL.
Answer
  • True
  • False

Question 11

Question
THE RESPONSIBILITY FOR ORDERING, RECEIVING, AND PAYING FOR MERCHANDISE SHOULD BE ASSIGNED TO DIFFERENT INDIVIDUALS.
Answer
  • True
  • False

Question 12

Question
IN ORDER TO PREVENT A TRANSACTION FROM BEING RECORDED MORE THAN ONCE, A COMPANY SHOULD MAINTAIN ONLY ONE BOOK OF ORIGINAL ENTRY.
Answer
  • True
  • False

Question 13

Question
FIRMS USE PHYSICAL CONTROLS PRIMARILY TO SAFEGUARD THEIR ASSETS.
Answer
  • True
  • False

Question 14

Question
TRANSACTIONS THAT AFFECT INVENTORIES ON HAND HAVE AN EFFECT ON BOTH THE BALANCE SHEET AND THE INCOME STATEMENT.
Answer
  • True
  • False

Question 15

Question
MANUFACTURERS USUALLY CLASSIFY INVENTORY INTO TWO CATEGORIES: FINISHED GOODS AND WORK IN PROCESS.
Answer
  • True
  • False

Question 16

Question
RAW MATERIALS INVENTORIES ARE THE GOODS THAT A MANUFACTURER HAS COMPLETED AND ARE READY TO BE SOLD TO CUSTOMERS.
Answer
  • True
  • False

Question 17

Question
GOODS THAT HAVE BEEN PURCHASED FOB DESTINATION BUT ARE IN TRANSIT, SHOULD BE EXCLUDED FROM A PHYSICAL COUNT OF GOODS.
Answer
  • True
  • False

Question 18

Question
WORK IN PROCESS IS THAT PORTION OF MANUFACTURED INVENTORY THAT HAS BENE PLACED INTO THE PRODUCTION PROCESS BUT IS NOT YET COMPLETE.
Answer
  • True
  • False

Question 19

Question
THE SPECIFIC IDENTIFICATION METHOD OF COSTING INVENTORIES TRACKS THE ACTUAL PHYSICAL FLOW OF THE GOODS AVAILABLE FOR SALE.
Answer
  • True
  • False

Question 20

Question
MANAGEMENT MAY CHOOSE ANY INVENTORY COSTING METHOD IT DESIRES AS LONG AS THE COST FLOW ASSUMPTION CHOSEN IS CONSISTENT WITH THE PHYSICAL MOVEMENT OF GOODS IN THE COMPANY.
Answer
  • True
  • False

Question 21

Question
THE FIRST IN, FIRST OUT (FIFO) INVENTORY METHOD RESULTS IN AN ENDING INVENTORY VALUED AT THE MOST RECENT COST.
Answer
  • True
  • False

Question 22

Question
THE EXPENSE RECOGNITION PRINCIPLE REQUIRES THAT THE COST OF GOODS SOLD BE MATCHED AGAINST THE ENDING MERCHANDISE INVENTORY IN ORDER TO DETERMINE INCOME.
Answer
  • True
  • False

Question 23

Question
THE SPECIFIC IDENTIFICATION METHOD OF INVENTORY VALUATION IS DESIRABLE WHEN A COMPANY SELLS A LARGE NUMBER OF LOW-UNIT COST ITEMS.
Answer
  • True
  • False

Question 24

Question
IF A COMPANY HAS NO BEGINNING INVENTORY AND THE UNIT COST OF INVENTORY ITEMS DOES NOT CHANGE DURING THE YEAR, THE VALUE ASSIGNED TO THE ENDING INVENTORY WILL BE THE SAME UNDER LIFO AND AVERAGE COST FLOW ASSUMPTIONS.
Answer
  • True
  • False

Question 25

Question
IF THE UNIT PRICE OF INVENTORY IS INCREASING DURING A PERIOD, A COMPANY USING THE LIFO INVENTORY METHOD WILL SHOW LESS GROSS PROFIT FOR THE PERIOD, THAN IF IT HAD USED THE FIFO INVENTORY METHOD.
Answer
  • True
  • False

Question 26

Question
IF A COMPANY HAS NO BEGINNING INVENTORY AND THE UNIT PRICE OF INVENTORY IS INCREASING DURING A PERIOD, THE COST OF GOODS AVAILABLE FOR SALE DURING THE PERIOD WILL BE THE SAME UNDER THE LIFO AND FIFO INVENTORY METHODS.
Answer
  • True
  • False

Question 27

Question
A COMPANY MAY USE MORE THAN ONE INVENTORY COSTING MTHOD CONCURRENTLY.
Answer
  • True
  • False

Question 28

Question
USE OF THE LIFO INVENTORY VALUATION METHOD ENABLES A COMPANY TO REPORT PAPER OF PHANTOM PROFITS.
Answer
  • True
  • False

Question 29

Question
IF A COMPANY CHANGES ITS INVENTORY VALUATION METHOD, THE EFFECT OF THE CHANGE ON NET INCOME SHOULD BE DISCLOSED IN THE FINANCIAL STATEMENTS.
Answer
  • True
  • False

Question 30

Question
UNDER THE LOWER-OF-COST-OR-MARKET BASIS, MARKET IS DEFINED AS CURRENT REPLACEMENT COST.
Answer
  • True
  • False

Question 31

Question
ACCOUNTANTS BELIEVE THAT THE WRITE DOWN FROM COST TO MARKET SHOULD NOT BE MADE IN THE PERIOD IN WHICH THE PRICE DECLINE OCCURS.
Answer
  • True
  • False

Question 32

Question
AN ERROR THAT OVERSTATES THE ENDING INVENTORY WILL ALSO CAUSE NET INCOME FOR THE PERIOD TO BE OVERSTATED.
Answer
  • True
  • False

Question 33

Question
IF INVENTORIES ARE VALUED USING THE LIFO COST ASSUMPTION, THEY SHOULD NOT BE CLASSIFIED AS A CURRENT ASSET ON THE BALANCE SHEET.
Answer
  • True
  • False

Question 34

Question
A SEGREGATION OF DUTIES AMON EMPLOYEES ELIMINATES THE POSSIBILITY OF COLLUSION.
Answer
  • True
  • False

Question 35

Question
FOR EFFICIENCY OF OPERATIONS AND BETTER CONTROL OVER CASH, A COMPANY SHOULD MAINTAIN ONLY ONE BANK ACCOUNT.
Answer
  • True
  • False

Question 36

Question
CASH REGISTERS ARE AN IMPORTANT INTERNAL CONTROL DEVICE USED IN CONTROLLING OVER THE COUNTER RECEIPTS.
Answer
  • True
  • False

Question 37

Question
CHECKS RECEIVED IN THE MAIL SHOULD BE IMMEDIATELY STAMPED "NSF" TO PREVENT UNAUTHORIZED CASHING OF THE CHECK.
Answer
  • True
  • False

Question 38

Question
CONTROL OVER CASH DISBURSEMENTS IS IMPROVED IF MAJOR EXPENDITURES ARE PAID BY CHECK.
Answer
  • True
  • False

Question 39

Question
IN A VOUCHER SYSTEM, VOUCHERS ARE PREPARED IN THE ACCOUNTS RECEIVABLE DEPARTMENT.
Answer
  • True
  • False

Question 40

Question
ELECTRONIC FUNDS TRANSFER (EFT) IS A DISBURSEMENT SYSTEM THAT USES TELEPHONE OR COMPUTER TO TRANSFER CASH FROM ONE LOCATION TO ANOTHER.
Answer
  • True
  • False

Question 41

Question
RETAILERS AND WHOLESALERS ARE BOTH CONSIDERED MERCHANDISERS.
Answer
  • True
  • False

Question 42

Question
THE STEPS IN THE ACCOUNTING CYCLE ARE DIFFERENT FOR A MERCHANDISING COMPANY THAN FOR A SERVICE COMPANY.
Answer
  • True
  • False

Question 43

Question
SALES MINUS OPERATING EXPENSES EQUALS GROSS PROFIT.
Answer
  • True
  • False

Question 44

Question
UNDER A PERCEPTUAL INVENTORY SYSTEM, THE COST OF GOODS SOLD IS DETERMINED EACH TIME A SALE OCCURS.
Answer
  • True
  • False

Question 45

Question
A PERIODIC INVENTORY SYSTEMS REQUIRES A DETAILED INVENTORY RECOD OF INVENTORY ITEMS.
Answer
  • True
  • False

Question 46

Question
FREIGHT TERMS OF FOB DESTINATION MEANS THAT THE SELLER PAYS THE FREIGHT COSTS.
Answer
  • True
  • False

Question 47

Question
FREIGHT COSTS INCURRED BY THE SELLER ON OUTGOING MERCHANDISE ARE AN OPERATING EXPENSE TO THE SELLER.
Answer
  • True
  • False

Question 48

Question
SALES REVENUES ARE EARNED DURING THE PERIOD CASH IS COLLECTED FROM THE BUYER.
Answer
  • True
  • False

Question 49

Question
THE SALES RETURNS AND ALLOWANCES ACCOUNT AND THE SALES DISCOUNT ACCOUNT ARE BOTH CLASSIFIED AS EXPENSE ACCOUNTS.
Answer
  • True
  • False

Question 50

Question
THE REVENUE RECOGNITION PRINCIPLE APPLIES TO MERCHANDISERS BY RECOGNIZING SALES REVENUES WHEN THEY ARE EARNED.
Answer
  • True
  • False

Question 51

Question
SALES ALLOWANCES AND SALES DISCOUNTS ARE BOTH DESIGNED TO ENCOURAGE CUSTOMERS TO PAY THEIR ACCOUNTS PROMPTLY.
Answer
  • True
  • False

Question 52

Question
TO GRANT A CUSTOMER A SALES RETURN, THE SELLER CREDITS SALES RETURNS AND ALLOWANCES.
Answer
  • True
  • False

Question 53

Question
A COMPANY'S UNADJUSTED LANACE IN INVENTORY WILL USUALLY NOT AGREE WITH THE ACTUAL AMOUNT OF INVENTORY ON HAND AT YEAR-END.
Answer
  • True
  • False

Question 54

Question
FOR A MERCHANDISING COMPANY, ALL ACCOUNTS THAT AFFECT THE DETERMINATION OF INCOME ARE CLOSED TO THE INCOME SUMMARY ACCOUNT.
Answer
  • True
  • False

Question 55

Question
A MERCHANDISING COMPANY HAS DIFFERENT TYPES OF ADJUSTING ENTRIES THAN A SERVICE COMPANY.
Answer
  • True
  • False

Question 56

Question
NON-OPERATING ACTIVITIES EXCLUDE REVENUES AND EXPENSES AT RESULT FROM SECONDARY OR AUXILIARY OPERATIONS.
Answer
  • True
  • False

Question 57

Question
OPERATING EXPENSES ARE DIFFERENT FOR MERCHANDISING AND SERVICE ENTERPRISES.
Answer
  • True
  • False

Question 58

Question
NET SALES APPEARS ON BOTH THE MULTIPLE-STEP AND SINGLE-STEP FORMS OF AN INCOME STATEMENT.
Answer
  • True
  • False

Question 59

Question
A MULTIPLE-STEP INCOME STATEMENT PROVIDES USERS WITH MORE INFORMATION ABOUT A COMPANY'S INCOME PERFORMANCE.
Answer
  • True
  • False

Question 60

Question
THE MULTIPLE-STEP FORM OF INCOME STATEMENT IS EASIER TO READ THAN THE SINGLE-STEP FORM.
Answer
  • True
  • False

Question 61

Question
TRADE RECEIVABLES OCCUR WHEN TWO COMPANIES TRADE OR EXCHANGE NOTES RECEIVABLE.
Answer
  • True
  • False

Question 62

Question
OTHER RECEIVABLES INCLUDE NON-TRADE RECEIVABLES SUCH AS LOANS TO COMPANY OFFICERS.
Answer
  • True
  • False

Question 63

Question
BOTH ACCOUNTS RECEIVABLE AND NOTES RECEIVABLE REPRESENT CLAIMS THAT ARE EXPECTED TO BE COLLECTED IN CASH.
Answer
  • True
  • False

Question 64

Question
RECEIVABLES ARE VALUED AND REPORTED IN THE BALANCE SHEET AT THEIR GROSS AMOUNT LESS ANY SALES RETURNS AND ALLOWANCES AND LESS ANY CASH DISCOUNTS.
Answer
  • True
  • False

Question 65

Question
THE 3 PRIMARY ACCOUNTING PROBLEMS WITH ACCOUNTS RECEIVABLE ARE: (1) RECOGNIZING, (2) DEPRECIATING, AND (3) DISPOSING.
Answer
  • True
  • False

Question 66

Question
ACCOUNTS RECEIVABLE ARE THE RESULT OF CASH AND CREDIT SALES.
Answer
  • True
  • False

Question 67

Question
IF A RETAILER ASSESSES A FINANCE CHARGE ON THE AMOUNT OWED BY A CUSTOMER, ACCOUNTS RECEIVABLE IS DEBITED FOR THE AMOUNT OF INTEREST.
Answer
  • True
  • False

Question 68

Question
IF A COMPANY USES THE ALLOWANCE METHOD TO ACCOUNT FOR UNCOLLECTIBLE ACCOUNTS, THE ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT ONLY INVOLVES BALANCE SHEET ACCOUNTS.
Answer
  • True
  • False

Question 69

Question
THE PERCENTAGE OF RECEIVABLES BASIS OF ESTIMATING EXPECTED UNCOLLECTIBLE ACCOUNTS EMPHASIZES INCOME STATEMENT RELATIONSHIPS.
Answer
  • True
  • False

Question 70

Question
UNDER THE DIRECT WRITE-OFF METHOD, NO ATTEMPT IS MADE TO MATCH BAD DEBTS EXPENSE TO SALES REVENUES IN THE SAME ACCOUNTING PERIOD.
Answer
  • True
  • False

Question 71

Question
ALLOWANCE FOR DOUBTFUL ACCOUNTS IS DEBITED UNDER THE DIRECT WRITE-OFF METHOD WHEN AN ACCOUNT IS DETERMINED TO BE UNCOLLECTIBLE.
Answer
  • True
  • False

Question 72

Question
ALLOWANCE FOR DOUBTFUL ACCOUNTS IS A CONTRA ASSET ACCOUNT.
Answer
  • True
  • False

Question 73

Question
CASH REALIZABLE VALUE IS DETERMINED BY SUBTRACTING ALLOWANCE FOR DOUBTFUL ACCOUNTS FROM NET SALES.
Answer
  • True
  • False

Question 74

Question
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES REQUIRE THAT THE DIRECT WRITE-OFF METHOD BE USED FOR FINANCIAL REPORTING PURPOSES IF IT IS ALSO USED FOR TAX PURPOSES.
Answer
  • True
  • False

Question 75

Question
UNDER THE ALLOWANCE METHOD, BAD DEBTS EXPENSE IS DEBITED WHEN AN ACCOUNT IS DEEMED UNCOLLECTIBLE AND MUST BE WRITTEN OFF.
Answer
  • True
  • False

Question 76

Question
UNDER THE ALLOWANCE METHOD, THE CASH REALIZABLE VALUE OF RECEIVABLES IS THE SAME BOTH BEFORE AND AFTER AN ACCOUNT HAS BEEN WRITTEN OFF.
Answer
  • True
  • False

Question 77

Question
THE PERCENTAGE OF SALES BASIS FOR ESTIMATING UNCOLLECTIBLE ACCOUNTS ALWAYS RESULTS IN MORE BAD DEBTS EXPENSE BEING RECOGNIZED THAN THE PERCENTAGE OF RECEIVABLE BASIS.
Answer
  • True
  • False

Question 78

Question
AN AGING SCHEDULE IS PREPARED ONLY FOR OLD ACCOUNTS RECEIVABLES THAT HAVE BEEN PAST DUE FOR MORE THAN ONE YEAR.
Answer
  • True
  • False

Question 79

Question
AN AGING OF ACCOUNTS RECEIVABLE SCHEDULE IS BASED ON THE PREMISE THAT THE LONGER THE PERIOD AN ACCOUNT REMAINS UNPAID, THE GREATER THE PROBABILITY THAT IT WILL EVENTUALLY BE COLLECTED.
Answer
  • True
  • False

Question 80

Question
SALES RESULTING FROM THE USE OF VISA AND MASTERCARD ARE CONSIDERED CREDIT SALES BY THE RETAILER.
Answer
  • True
  • False
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