Acct 1 - Exam 2

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Acct 1 - Exam 2
2014-10-08 18:57:46
acct exam2
accounting exam 2 ch 4-6
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  1. Net Sales-COGS=GP-Exp= ??
    Net Income
  2. Merchandise Inventory
    Asset on balance sheet
  3. Beg. Inv. + Net purchases = ??
    Cost of Goods Available for Sale (COGAS)
  4. COGAS - EI = ??

  5. buy and sell merchandise (wholesale, retail)
  6. buy from manufacturer, sell to retailer
  7. buy from manufacturer, sell to consumer
  8. net sales - COGS =
    GP or (gross margin)
  9. Merchandise sole is an ______ on the ______
    expense, BS
  10. FOB shipping
    buyer pays

    (ownership xfer at departure from dock)
  11. FOB destination
    shipper pays

    (ownership xfer at arrival of delivery)
  12. transportation out, delivery expense
    transportation costs
  13. sales discount, sales return are both
    contra revenue
  14. loss of inventory
  15. quick assets / current liabilities
    acid test ratio
  16. cash, short term investments, current receivables
    quick asset
  17. net sales-COGS/net sales
    gross margin ratio

    (GP/net sales)
  18. Consignment:

  19. Consignment:

  20. sales price - cost of making sale
    net realizable value (NRV)
  21. Effects on financial statement:

    ↓COGS,↑GP and ↑NI

    ↑COGS, ↓GP and ↓NI
  22. Effects on financial statement:

    ↑COGS, ↓GP and ↓NI

    ↓COGS, ↑GP and ↑NI
  23. If used for tax purposes, IRS requires use in financial statements:
    LIFO conformity rule
  24. inventory must be reported at market value when market is lower than cost (if market is lower, loss reported in COGS and inventory balance)
    lower of cost and market (LCM)
  25. Effects on inventory errors:

    EI ↑
    EI ↑ then COGS ↓ and NI↑

    EI ↓ then COGS ↑ and NI ↓
  26. COGS / avg inventory
    inventory turnover
  27. (BI + EI)/2
    avg inventory
  28. (EI/COGS)*365
    days sales in inventory
  29. COGAS - COGS =
  30. FIFO > WA >LIFO
    WA is always between FIFO and LIFO
  31. SOX requires companies to document and test internal controls and requires auditors to test the controls
    Section 404
  32. reduces processing errors
    limits evidence of processing
    increases e-commerce
    makes seperation of duties more difficult
    allows more extensive testing of records
    technology and ICP
  33. human error vs. human fraud
    limitations of ICP

    • error = accident
    • fraud = intentional
  34. opportunity, pressure, rationalization
    fraud triangle
  35. should be seperate from recordkeeping
    cash receipts promptly deposited
    disbursements made by check
    controls of cash
  36. currency, coins, amt of deposits in bank accts, checking acct, savings acct, checks, cashier's checks, certified checks, money orders
    cash equivalents
  37. 1. plan cash receipts to meet cash payments when due
    2. keep minimum level of cash necessary to operate
    cash management principles
  38. 1. bank acct
    2. signature cards
    3. deposit tickets
    4. checks
    banking controls
  39. JE required only when adjusting the book balances, not bank statement
    journal entry requirement
  40. check written by depositor that has not been rec'd by the bank
    outstanding check
  41. deposit made and recorded by depositor, but not yet recorded on bank statement
    deposit in transit
  42. LCM adjustment:
    • COGS    XXX
    •    Inv.             XXX
  43. As purchasing prices rise:
    • 1. FIFO pays higher taxes
    • 2. FIFO has lower COGS
    • 3. FIFO has higher GP and NI
  44. prescribes that notes to the financial statements describe the changes, its justification, and its effect on income
    full disclosure statement
  45. Buyer:

    purchase on credit
    • Dr Inventory    XXX
    •      Cr AP                   XXX
  46. Buyer:

    pay within discount period
    • Dr AP     XXX
    •    Cr Inv                 XXX
    •    Cr Cash               XXX
  47. Buyer:

    pay after discount period
    • Dr. AP     XXX
    •     Cr  Cash         XXX
  48. Buyer:

    pay shipping charges
    • Dr.   Inventory    XXX
    •      Cr. Cash                  XXX
  49. Buyer:

    receive a credit memo for damaged inv.
    • Dr.  AP    XXX
    •     Cr.   Inventory     XXX
  50. Seller:

    sell inventory on credit
    • Dr.  AR   XXX
    •    Cr.  Sales      XXX

    • Dr. COGS XXX
    •    Cr.  Inventory  XXX
  51. Seller:

    receive payment within discount period
    • Dr.  Cash         XXX
    • Dr.  Sales Dis.  XXX
    •       Cr.  AR                XXX
  52. Seller:

    receive payment outside discount period
    • Dr.  Cash     XXX
    •    Cr.  AR             XXX
  53. Seller:

    customer returns merchandise
    • Dr. Sales Return and Allow.    XXX
    •     Cr.  AR                                      XXX

    • Dr.  Inventory                       XXX
    •     Cr. COGS                                  XXX
  54. Seller:

    issue a credit memo-damaged merchandise
    • Dr. Sales Ret and Allow    XXX
    •    Cr.  AR                                XXX
  55. Seller:

    pay for shipping charges
    • Dr.  Shipping Exp    XXX
    •    Cr.  Cash                      XXX
  56. Seller:

    JE for shrinkage
    • Dr.  COGS             XXX
    •    Cr.  Inventory            XXX