Accounting exam, business, inventory, ethics

Please complete my accounting for merchandising exam, 20 questions pertaining to accounting, inventory control, and business ethics. exam is in PDF form 

Student ID: 21563066

Exam: 061690RR – ACCOUNTING FOR MERCHANDISING

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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page
break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. Which of the following is an incorrect statement if ending inventory is overstated?
A. Net income is overstated.
B. Cost of goods sold is overstated.
C. Gross profit is overstated.
D. Income tax is overstated.

2. In a balance sheet prepared in report form, liabilities must be listed after
A. assets with current liabilities listed first.
B. assets with long-term liabilities listed first.
C. stockholders’ equity.
D. assets in alphabetical order.

3. ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to record
the payment of this invoice is
A. debit Accounts Payable $340; debit Inventory $10; credit Cash $350.
B. debit Accounts Payable $350; credit Cash $350.
C. debit Accounts Payable $340; credit Cash $340.
D. debit Accounts Payable $350; credit Inventory $10.50, credit Cash $339.50.

4. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is
the inventory record for Product C124:

What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)?

Date Received Sold Cost/Unit Balance
April 22 534 $6.58 $3,513.72
May 17 433 $6.70 $2,901.10
June 21 389 $6.76 $2,629.64
August 2 436 $6.44 $2,807.84

A. $6.00
B. $7.40
C. $6.63
D. $6.55

5. Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; and
cost of goods sold is $275,000. The inventory turnover is
A. 11.46.
B. 8.59.
C. 9.82.
D. 12.50.

6. Nick Company reports the following inventory information:

What is the total value of the merchandise under LCM (lower-of-cost or market)?

Inventory Number Inventory Quantity Unit Cost Unit Market Value
APD 4837 440 $51.29 $51.48
CPZ 2837 290 $76.59 $77.02
IXL 9291 310 $42.34 $42.47
EOD 1717 200 $22.19 $21.75
DKS 3088 180 $31.22 $31.17

A. $67,961.70
B. $67,864.70
C. $68,210.30
D. $68,113.30

7. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal
entry to record this purchase for Meranda under a perpetual inventory system is
A. debit Inventory; credit Accounts Payable—Ashley.
B. debit Inventory; credit Cash.
C. debit Inventory; credit Accounts Payable—Meranda.
D. debit Accounts Payable-Ashley; credit Inventory.

8. A company’s gross profit percentage decreases from 58% to 51%. What does this mean?
A. This means that net income will be higher.
B. This means that net income will be lower.
C. This means that there will be a net loss.
D. We can’t determine anything definite from the information given.

9. When a company repays the seller for shipping costs on an FOB shipping transaction, which of the
following is true?
A. The shipping costs don’t affect the invoice cost.
B. A purchase discount can still be taken net of the prepaid shipping charges.
C. A purchase discount can still be taken on the gross amount of the invoice.
D. A purchase discount cannot be taken when shipping charges are prepaid.

10. A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory, and $2,000 in
beginning inventory. The company’s cost of goods sold is
A. $5,600.
B. $7,100.
C. $6,200.
D. $5,700.

11. A company’s current ratio increased from 1.23 to 1.45. What does this mean?
A. This means that current assets increased and current liabilities decreased.
B. There isn’t enough information to explain the increase.
C. This means that current assets decreased and current liabilities decreased.
D. This means that current assets increased and current liabilities increased.

12. Which items may not limit the effectiveness of internal control systems in an organization?
A. Overriding controls
B. Costs not worth benefits
C. Collusion
D. Properly designed controls

13. Which of the following would probably not cause inventory shrinkage?
A. Spoilage of items
B. Correct counting of all inventory
C. Employee theft
D. Spills of items

14. Which of the following may not limit the effectiveness of internal control systems in an organization?
A. Costs not worth benefits
B. Poorly designed controls
C. Understanding of policies and procedures
D. Duties not segregated

15. New technology, like the latest cell phones and HDTV, would probably be costed using the
A. specific-identification method of inventory costing.
B. LIFO method of inventory costing.
C. FIFO method of inventory costing.
D. moving-average method of inventory costing.

16. Besides using an overstatement of earnings to inflate a company’s stock price, overstating earnings may
also be used to
A. ensure larger bonuses to upper management at year-end.
B. avoid paying raises to employees.
C. avoid paying dividends to stockholders.
D. deflate the amount of taxes the corporation pays.

End of exam

17. To overstate earnings, a company can
A. understate unearned revenue and understate property, plant, and equipment.
B. overstate receivables and understate payables.
C. overstate expenses and overstate revenue.
D. understate expenses and understate revenue.

18. Under a perpetual inventory system, the account to which transportation charges on incoming
merchandise is generally entered is
A. FOB destination.
B. FOB shipping.
C. delivery expense.
D. inventory.

19. Which of the following is an incorrect statement if ending inventory is understated?
A. Cost of goods sold is overstated.
B. Net income is understated.
C. Income tax is understated.
D. Gross profit is overstated.

20. Under Sarbanes-Oxley, those officers signing off on the reports must have evaluated the company’s
internal control within the previous
A. year.
B. six months.
C. nine months.
D. 90 days.