Petersons Accounting DSST

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Petersons Accounting DSST
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2013-05-14 14:50:16
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Petersons Accounting DSST
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  1. On a ten-column worksheet, the net income is reported in which column of the income statement section?

    a. Credit b. Losses c. Balance d. Debit
    Debit
  2. Charmonte Couriers has the following balances in its accounts:

    Cash: $101,500
    Accounts Receivable: $3,800
    Vehicle: $35,000
    Accounts Payable: $6,800
    Revenue: $15,200

    The amount of the capital account isa. $40,700 b. $118,300 c. $133,500 d. $162,300
    B. 118,300
  3. In an accounting cycle, the period end reports are written in a specific sequence. Which of the following shows the three reports in the correct sequence?
    A. Statement of owner's equity, income statement, balance sheet
    B. Balance sheet, income statement, statement of owner's equity
    C. Income statement, balance sheet, statement of owner's equity
    D. Income statement, statement of owner's equity, balance sheet
    D. Income statement, statement of owner's equity, balance sheet
    (this multiple choice question has been scrambled)
  4. Organization costs are classified in an accounting system as a(n)
    A. current liability
    B. long-term asset
    C. owner's equity
    D. intangible asset
    D. intangible asset
    (this multiple choice question has been scrambled)
  5. On September 1, 2007, Turner's Teas accepted a six-month note for $2,000 at 7% interest. The amount of the adjusting entry for the interest payable, recorded on December 31, 2007, would be
    a. $93.33 b. $46.67 c. $35.00 d. $11.67
    b. $46.67
  6. The merchandise inventory costing method that does NOT require a physical count of the inventory to determine value is thea. FIFO (First In, First Out) b. LIFO (Last In, First Out) c. weighted average d. retail method
    The correct answer is D. The retail method of merchandise costing doesn't require a physical inventory count because the inventory cost is derived by applying the ratio of cost to selling price of the retail value of the inventory. You can eliminate choices A, B, and C because these three methods of merchandise inventory costing require a physical count of the inventory.
  7. The transaction to remove the beginning inventory during period-end adjustments is

    a. Dr. merchandise inventory; Cr. purchases b. Dr. purchases; Cr. merchandise inventory c. Dr. merchandise inventory; Cr. accounts payable
    d. Dr. income summary; Cr. merchandise inventory
    The correct answer is D.

    The amount in the beginning merchandise inventory for the period is removed from the books by adding it to the income summary account by debiting income summary and crediting merchandise inventory. You can eliminate choice A because this transaction would increase the merchandise inventory balance and reduce the purchases balance. You can eliminate choice B because it would increase the purchases by the amount already purchased and in the inventory. You can eliminate choice C because it increases both merchandise inventory and the accounts payable balances.
  8. The average cost method of merchandise valuation involves the

    a. cost of all quantities of an item divided by the total number of units available

    b. beginning inventory cost of an item divided by the number of units purchased during a period

    c. purchases of an item during a period divided by the number of units purchased during the same period

    d. change in number of units available during a period divided by the number of units sold
    a. cost of all quantities of an item divided by the total number of units available
  9. When reconciling a bank statement, which of the following would NOT appear on the bank statement?

    a. Non-sufficient fund items
    b. Service charges
    c. Credit memoranda
    d. Deposits in transit
    The correct answer is D. The deposits in transit that are recorded in the cash receipts journal, but haven't yet reached the bank, wouldn't be acknowledged by the bank on the current period bank statement. You can eliminate items A, B, and C because these items would appear on a bank statement.
  10. An example of an item that may appear in the cash payments journal is the

    a. sale of services on credit
    b. payment of a cash refund
    c. accrual of a tax liability
    d. deferment of the interest on a note payable
    The correct answer is B. The payment of a cash refund, which records when a customer purchases goods for cash and returns them at a later date, would be entered in a cash payments journal. You can eliminate choice A because the sale of services on credit would be recorded in either the general journal or the sales journal. You can eliminate choices C and D because accruals and deferrals are recorded in the general journal.
  11. Skylar's Sweets had cash sales of $680 plus sales tax of $54.40 with a cash overage of $5.60. The transaction in the cash receipts journal would include

    a. Dr. cash $734.40; Cr. sales $680; Cr. sales tax payable $54.40

    b. Dr. cash $740; Cr. sales $680; Cr. sales tax payable $54.40; Cr. cash short and over $5.60

    c. Dr. cash $734.40; Dr. cash short and over $5.40; Cr. sales $680; Cr. sales tax payable $54.40

    d. Dr. cash $680; Dr. sales tax payable $54.40; Dr. cash short and over $5.60; Cr. sales $740
    The correct answer is B. Cash sales in which a cash overage occurs include a credit to the cash short and over account. The correct transaction is Dr. cash $740, Cr. sales $680, Cr. sales tax payable $54.40, and Cr. cash short and over $5.60. You can eliminate choice A because the cash short and over is omitted. You can eliminate choices C and D because the cash short and over is debited, which is inappropriate for an overage.
  12. Under the allowance method, the estimate for accounts receivable deemed uncollectible for the next period are recorded with the transaction

    a. Dr. uncollectible account expense; Cr. allowance for doubtful accounts
    b. Dr. allowance for doubtful accounts; Cr. uncollectible account expense
    c. Dr. accounts receivable; Cr. allowance for doubtful accounts
    d. Dr. allowance for doubtful accounts; Cr. accounts receivable
    The correct answer is A. The estimate of uncollectible accounts receivable contains a credit to the allowance for doubtful accounts, a contra-asset account. You can eliminate choice B because a debit to a contra-asset account decreases the balance of the account. You can eliminate choice C because accounts receivable isn't involved in the transaction to record estimated uncollectible debts. You can eliminate choice D because accounts receivable isn't involved in the transaction to record estimated uncollectible debts; similarly, a debit to a contra-asset account decreases the balance of the account.
  13. The type of corporate stock that a publicly-held company is required to offer is

    a. preferred b. no-par value c. treasury d. common
    The correct answer is D. The only type of stock that a corporation is legally required to issue is common stock. You can eliminate choice A because preferred stock assumes that more than one class of stock exists, so one class may receive preferential treatment. You can eliminate choice B because no-par value stock isn't a class of stock by itself. You can eliminate choice C because treasury stock is the stock held by the company itself.
  14. Which method of inventory valuation assumes that the ratio of gross profit on sales to the cost of goods sold remains constant?a. FIFO b. Retail c. LIFO d. Gross profit
    The correct answer is D. Gross profit method of inventory valuation uses the ratio of the gross profit of sales to the cost of goods sold as a method of estimating inventory. You can eliminate choices A and C because the FIFO and LIFO methods don't use a ratio as a method of inventory valuation. You can eliminate choice B because the retail method of inventory valuation uses a ratio involving the cost of the goods to the retail sales price to estimate inventory value.

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