Financial Accounting

Topics: Revenue, Generally Accepted Accounting Principles, Double-entry bookkeeping system Pages: 8 (1594 words) Published: August 21, 2010
Financial Accounting Assignment 2

1 of 25
The credit term 2/10 n/30 means:
that after 10 days 2% interest is charged.
that there is a 10% discount if payment is received within 30 days. that there is a 2% discount if payment is received within 10 days. there is a 10% discount if paid immediately and 2% if paid within 30 days.

2 of 25
Family Food Stores purchased canned goods at an invoice price of $3,000 and terms of 2/10, n/30. Half of the goods had been mislabeled and were returned immediately to the supplier. If Family Food pays the remaining amount of the invoice within the discount period, the amount paid should be: $1,440.


3 of 25
The balance shown on a bank statement is always equal to the month-end balance of a company’s cash account in the general ledger. True

4 of 25
The allowance for Doubtful Accounts is called a valuation account or contra-asset account and normally has a credit balance. True

5 of 25
The allowance for Doubtful Accounts is an expense account and appears on the income statement. True

6 of 25
In a perpetual inventory system, two entries usually are made to record each sale transaction.  The purpose  of these entries are best described as follows: one entry recognizes the sales revenue, and the other recognizes the cost of goods sold. one entry records the purchase of the merchandise, and the other records the sale. one entry records the cost of goods sold, and the other reduces the balance in the inventory account. one entry updates the general ledger, and the other updates the subsidiary ledgers.

7 of 25
Television Depot is a small retail business that specializes in the sale of top-of-the-line televisions.  This year, the store has begun to carry the Flat TV manufactured by Panasar Co. Thus far this year, Television Depot has recorded the following transactions involving the Flat TV:

Jan. 5.  Purchased 7 Flat TVs at a unit cost of $1,200
Jan. 18.  Purchased 4 additional Flat TVs at $1,200 each
Feb. 12.  Sold 8 Flat TVs to the Empire Hotel for $13,600

If Television Depot uses a perpetual inventory system, the journal entry to record the sale on February 12th would include all of the following except: a debit to the Cost of Goods Sold for $9,600.

a credit to Sales Revenue for $13,600.
a credit to Purchases for $9,600.
a credit to Inventory for $9,600.

8 of 25
Accounts receivable:
are usually converted into cash in 30 to 60 days.
are relatively liquid assets.
usually appear after short-term investments in marketable securities. all of the above

9 of 25
A company that sells a low volume of high-cost merchandise is more likely to use a _____ than is a company that sells a high volume of low-cost merchandise. perpetual inventory system
periodic inventory system
manufacturing inventory system
physical inventory system

10 of 25
Eagle Company's bank statement showed a balance at May 31 of $301,624.  The only reconciling items consisted of a large number of outstanding checks totaling $86,412.  At May 31, what balance should Eagle's Cash account show? $301,624

some other amount

11 of 25
At the end of January, the unadjusted trial balance of VIP, Inc., included the following accounts:  
 | Debit| Credit|
Sales (80% represent credit sales)|  | $400,000|
Accounts Receivable| $240,000|  |
Allowance for Doubtful Accounts|  | $700|

Refer to the above data. VIP uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $6,200.  What is the amount of uncollectible accounts expense recognized in VIP's income statement for January? $6,200

some other amount

12 of 25
At the end of January, the unadjusted trial balance of VIP, Inc., included the following accounts:  | Debit| Credit|
Sales (80% represent...
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