Exam- ACCOUNTING FOR MERCHANDISING

1.Which of the following would probably not cause inventory shrinkage?

2.Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; andcost of goods sold is $275,000. The inventory turnover is

3.Which items may not limit the effectiveness of internal control systems in an organization?

4.The balance sheet format that lists assets above liabilities is the _______ form.

5.Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below isthe inventory record for Product C124:Date Received Sold Cost/Unit BalanceApril 22 534 $6.58 $3,513.72May 17 433 $6.70 $2,901.10June 21 389 $6.76 $2,629.64August 2 436 $6.44 $2,807.84

6.Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journalentry to record this purchase for Meranda under a perpetual inventory system is

7.If current assets decrease and current liabilities increase, the current ratio

8.Net sales times the historical gross profit percentage yields the estimated

9.When a merchandiser sells on account, which of the following is not needed to record the transaction?

10.The major difference in the statement of retained earnings between a service business and amerchandising business is

11.Committing a fraud because the employee feels that it will be easy to do is indicative of which part ofthe fraud triangle?

12.A company’s gross profit percentage decreases from 58% to 51%. What does this mean?

13.Casey Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012,were as follows: (Note: The company uses a perpetual system of inventory.)What is the cost of goods sold for Casey Company for 2012 using LIFO?Units Unit Price Total CostJanuary 1—Beginning Inventory 20 $12 $240March 8—Sold 14April 2—Purchase 30 $13 $390June 5—Sold 25Aug 6—Purchase 25 $14 $350Sept 11—Sold 22Total Cost of Inventory $980Ending inventory is 14 units.

14.Which of the following may not limit the effectiveness of internal control systems in an organization?

15.ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to recordthe payment of this invoice is

16.In a balance sheet prepared in report form, liabilities must be listed after

17.Under a perpetual inventory system, the account to which transportation charges on incomingmerchandise is generally entered is

18.Which of the following is an incorrect statement if ending inventory is understated?

19.To overstate earnings, a company can

20.Physical inventory counts must be done