following lifo perpetual inventory records B u s i n e s s F i n a n c e

Embezzlement usually involves the misappropriation of business:Embezzlement usually involves the misappropriation of business:Embezzlement usually involves the misappropriation of business:Syrio’s Snowboards uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $28,000 in the Inventory account. Actual inventory on hand per a physical count was $24,000. What action does the company now need to take?

A. Debit Purchases and credit Cost of Goods Sold, $4,000.

B. Debit Inventory and credit Cost of Goods Sold, $4,000.

C. No action is required because the amount is not material.

D. Debit Cost of Goods Sold and credit Inventory, $4,000

Leo Corp has received an invoice for $3,500 with terms of 3/15, n/45 and uses the net method to record purchases. If Leo pays the invoice on the seventeenth day, the Cash account will be:

A. debited for $3,395.

B. credited for $3,395

C. credited for $105.

D. credited for $3,500.

The time period within which an invoice may be paid early to receive a discount is called the:

A. credit period.

B. payment period.

C. cash period.

D. discount period.

The Outlet Store has cash sales for the week of $4,000 and credit sales of $2,500. The account(s) to be debited for these transactions is/are:

A. Cash only.

B. MasterCard sales; Visa sales.

C. Cash; Accounts Receivable.

D. MasterCard sales; Visa sales; and cash.

he entry to record the company’s cost of selling merchandise under a perpetual inventory system would be a:

A. debit to Accounts Receivable and a credit to Sales.

B. debit to Inventory and a credit to Cost of Goods Sold.

C. debit to Cost of Goods Sold and a credit to Sales.

D. debit to Cost of Goods Sold and a credit to Inventory.

Carlton Company purchases $6,000 of inventory with shipping terms, FOB Portland. Carlton is based in Seattle and the supplier is based in Portland. The shipping costs are $460.What is the cost of Carlton’s inventory?

A. $6,000

B. $6,460

C. Either $6,000 or $6,460 is an acceptable amount to assign to inventory cost under GAAP.

D. There is not enough information to calculate inventory cost.

A company has sales revenue of $227,000, cost of goods sold $81,000, operating expenses of $48,000, and other expenses of $5,000. The company’s net income is:

A. $93,000.

B. $98,000.

C. $33,000.

D. $141,000.

A method of valuing inventory based on the assumption that the newest goods will be sold first is called the:

A. specific identification method.

B. FIFO method.

C. LIFO method.

D. average cost method.

A manufacturer’s goods available for sale represents:

A. work −in −process inventory.

B. raw materials inventory.

C. finished goods inventory.

D. cost of goods sold inventory.

Syrio’s Snowboards has the following list of inventory:

Item	Unit Cost	Selling Price
ARK	$2,087	$20,362
NED	$6,840	$7,204
SKS	$18,262	$19,743
CCS	$9,444	$11,244
FRD	$27,424	$33,439

Under specific−identification, what is Syrio’s ending inventory if NED and FRD are not sold during the current period?

A. $29,793

B. $40,643

C. $51,349

D.$ 34,264

Illusion, Inc. had the following inventory data:

Date		Quantity	Unit Cost
July 1	Beginning inventory	5	$ 54
July 4	Purchase	10	$ 56
July 7	Sale	12
July 11	Purchase	9	$ 60
July 14	Sale	8

Assuming LIFO, what is the cost of goods sold for the July 7 sale? (Round your final answer to the nearest dollar.)

A.$ 672

B. $ 664

C. $ 668

D. $ 662

________ produces the highest cost of goods sold and the lowest gross profit when prices are increasing.

A. LIFO

B. Specific identification

C. FIFO

D. Average cost

The consistency principle is mandated by:

A. GAAP.

B. the IRS.

C. the SEC.

D. the federal government Syrio’s Snowboards has the following LIFO perpetual inventory records:

Date	Purchases	Cost of Goods Sold	Inventory on Hand
February 1			$ 600
February 5	$ 500		$1,100
February 10		$ 300	$ 800
February 28	$ 100		$ 900

The current replacement cost of the ending inventory is $1,100. To apply the

lower−of−cost−or−market rule, the journal entry would be:

A. No entry required, since the amount is not material.

B. No entry required, since historical cost is less than replacement.

C. debit Inventory $200, credit Cost of Goods Sold $ 200

D. debit Cost of Goods Sold $200, credit Inventory $ 200

If shrinkage is found for $ 600, an adjusting entry would be made as follows:

A. debit Inventory for $600; credit Cost of Goods Sold for $600.

B. debit Cost of Goods Sold for $600; credit Inventory for $600.

C. debit Inventory Returns & Allowances for $600; credit Inventory for $ 600

D. debit Inventory for $600; credit Inventory Returns & Allowances for $ 600

In terms of valuation, U.S. GAAP generally uses ________, while IFRS generally uses ________.

A. market values, historical values

B. historical values, market values

C. market values, market values

D. historical values, historical values

Which of the following would NOT be considered a control activity?

A. Changing passwords regularly

B. Not having employees take vacations

C. Keeping accounting records

D. Having written job descriptions

Which of the following items is NOT a limit to the effectiveness of internal control systems in an organization?

A. Collusion

B. Properly designed controls

C. Costs exceed benefits

D. Overriding controls

A requirement that customers receive a receipt is an example of:

A. information and communication.

B. control activities.

C. monitoring.

D. risk assessment.

The goal of overstating earnings by using fraud is to:

A. overstate the cost of goods sold.

B. deflate the amount of taxes the corporation pays.

C. help increase the stock price of the company.

D. overstate receivables.

Embezzlement usually involves the misappropriation of business:

A. equity by an employee.

B. information by an employee.

C. liabilities by an employee.

D. assets by an employee

Receiving favors from a supplier by turning a blind eye to the delivery of inferior goods is a form of:

A. bribe.

B. fraudulent financial reporting.

C. management fraud.

D. cash register scheme.

Committing a fraud because of a gambling addiction or excessive debt is an example of:

A. perceived pressure.

B. rationalization.

C. realization.

D. perceived opportunity.

The audit opinion issued when the financial statements are fairly presented without exception is the:

A. disclaimer of opinion.

B. adverse opinion.

C. unqualified opinion.

D. qualified opinion.

Another name for an “except for” audit opinion is a(n):

A. disclaimer of opinion.

B. unqualified opinion.

C. qualified opinion.

D.adverse opinion.