Accounting 201 Test #2

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32 Questions - Developed by: Karli - Developed on: - 1.449 taken

  • 1
    Income from operations is gross profit less
    Other expenses
    Other expenses and losses
    Financing expenses
    Operating expenses
  • 2
    An enterprise which sells goods to customers is known as a
    Service firm
  • 3
    Which of the following would NOT be considered a merchandising company?
    Dot Com firm
    Services firm
  • 4
    A merchandising company that sells directly to consumers is a
    Service company
  • 5
    Two categories of expenses for merchandising companies are
    Operating expenses and financing expenses
    Sales and cost of goods sold
    Cost of goods sold and financing expenses
    Cost of goods sold and operating expenses
  • 6
    The primary source of revenue for a wholesaler is
    The sale of merchandise
    Service fees
    Investment income
    The sale of fixed assets the company owns
  • 7
    Sales revenue less cost of goods sold is called
    Marginal income
    Gross profit
    Net income
    Net profit
  • 8
    After gross profit is calculated, operating expenses are deducted to determine
    Net income
    Gross margin
    Net margin
    Gross profit on sales
  • 9
    Inventories affect
    Only the income statement
    Both the balance sheet and the income statement
    Neither the balance sheet nor the income statement
    Only the balance sheet
  • 10
    Inventory is
    Generally valued at the price for which the goods can be sold
    Reported under the classification of Property, Plant, and Equipment on the balance sheet
    Reported of as a current asset on the balance sheet
    Often reported as a current asset on the balance sheet
  • 11
    Items waiting to be used in production are considered to be
    Work in process
    Raw materials
    Finished goods
    Merchandise inventory
  • 12
    In a manufacturing company, inventory that is ready for sale is called
    Store supplies inventory
    Raw materials inventory
    Work in process inventory
    Finished goods inventory
  • 13
    The factor which determines whether or not goods should be included in a physical count of inventory is
    Whether or not the purchase price has been paid
    Physical possession
    Management's judgement
    Legal title
  • 14
    If goods in transit are shipped FOB destination
    No one has legal title to the goods until they are delivered
    The buyer has legal title to the goods until they are delivered
    The seller has legal title to the goods until they are delivered
    The transportation company has legal title to the goods while the goods are in transit
  • 15
    An auto manufacturer would classify vehicles in various stages of production as
    Merchandise inventory
    Raw materials
    Work in process
    Finished goods
  • 16
    Which of the following should be included in the physical inventory of a company?
    Goods in transit to another company shipped FOB shipping point
    Goods held on consignment from another company
    Goods in transit from another company shipped FOB shipping point
  • 17
    Manufacturers usually classify inventory into all of the following general categories except
    Work in process
    Raw materials
    Merchandise inventory
    Finished goods
  • 18
    Which of the following is NOT an objective of a system of internal controls?
    Overstate liabilities in order to be conservative
    Reduce the risk of errors
    Safeguard company assets
    Enhance the accuracy and reliability of accounting records
  • 19
    Internal controls are concerned with
    The extent of government regulations
    Safeguarding assets
    Preparing income tax returns
    Only manual systems of accounting
  • 20
    All of the following requirements about internal controls were enacted under the Sarbanes-Oxley Act except
    Independent outside auditors must eliminate redundant internal controls
    Independent outside auditors must attest to the levee of internal control
    Companies must develop sound internal controls over financial reporting
    Companies must continually assess the functionality of internal controls
  • 21
    Internal control is defined, in part, as a plan that safeguards
    Capital stock
    All balance sheet accounts
  • 22
    Which of the following is not one of the main factors that contribute to fraudulent activity?
    Incompatible duties
    Financial pressure
  • 23
    The most important element of the fraud triangle is
    Incompatible duties
    Financial pressure
  • 24
    Internal controls are NOT designed to safeguard assets from
    Employee theft
    Unauthorized use
    Natural disasters
  • 25
    Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of
    Inadequate internal control
    Segregation of duties
    External verification
    Duplication of effort
  • 26
    Having one person responsible for the related actives of ordering merchandise, receiving goods, and paying for them
    Is an example of goods internal control
    Decreases the potential for errors and fraud
    Is a good example of safeguarding the company's assets
    Increases the potential for errors and fraud
  • 27
    The custodian of a company asset should
    Be an accountant
    Be someone outside the company
    Not have access to the accounting records for that asset
    Have access to the accounting records for that asset
  • 28
    Claims for which formal instruments of credit are issued as proof of the debt are
    Accounts receivable
    Notes receivable
    Interest receivable
    Other receivables
  • 29
    Interest is usually associated with
    Accounts receivable
    Notes receivable
    Doubtful accounts
    Bad debts
  • 30
    The receivable that is usually evidenced by a formal instrument of credit is a(n)
    Trade receivable
    Income tax receivable
    Note receivable
    Accounts receivable
  • 31
    Which of the following receivables would NOT be classified as an "other receivable"?
    Interest receivable
    Advance to an employee
    Refundable income tax
    Notes receivable
  • 32
    Notes or accounts receivables that result from sales transactions are often called
    Non-trade receivables
    Merchandise receivables
    Trade receivables
    Sales receivables

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