Acc 557 Midterm Exam Part 2, Essay

1242 Words May 27th, 2016 5 Pages
Question 1
Net income is gross profit less
• financing expenses.
• operating expenses.
• other expenses and losses.
• other expenses.

Question 2
On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:
• a $3,600 credit to Cost of Goods Sold.
• a $6,000 credit to Cash.
• a $3,600 credit to Inventory.
• d a $6,000 debit to Accounts Receivable.

Question 3
Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?
• $8,100
• $8,280
• $8,820
• $9,000

Question 4
When a seller grants
…show more content…
• All of these answers are correct.

Question 9
If a company fails to record estimated bad debts expense,
• cash realizable value is understated.
• expenses are understated.
• revenues are understated.
• receivables are understated.

Question 10
Bad Debt Expense is considered
• an avoidable cost in doing business on a credit basis.
• an internal control weakness.
• a necessary risk of doing business on a credit basis.
• avoidable unless there is a recession.

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Question 11
The collection of an account that had been previously written off under the allowance method of accounting for uncollectibles
• will increase income in the period it is collected.
• will decrease income in the period it is collected.
• requires a correcting entry for the period in which the account was written off.
• does not affect income in the period it is collected.

Question 12
The maturity value of a $50,000, 9%, 60-day note receivable dated July 3 is
• $50,000.
• $50,750.
• $54,500.
• $59,000.

Question 13
The control principle related to not having the same person authorize and pay for goods is known as
• establishment of responsibility.
• independent internal verification.
• segregation of duties.
• rotation of duties.

Question 14
If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in

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