Accounting Flashcards
(19 cards)
two categories of expenses for merchandising companies
cost of goods sold and operating expense
sales revenue less cost of goods sold is
gross profit
Under a perpetual inventory system, acquisition of merchandise for resale is debited to
the inventory account
if goods in transit are shipped fob destination
the seller has legal rights until the goods are delievered
which of the following should be included in the physical inventory of a company
goods in transit from another company shipped FOB shipping point
the cost flow method that often parrelells
FIFO method
the cost flow method that results in the lowest income tax
LIFO method
the cost of goods available for sale is allocated to the cost of goods sold and the
ending inventory
overstatement in ending inventory would mean
cost of goods sold: understated
Net Income: overstated
the inventory turnover ratio is computed by dividing cost of goods sold by
average inventory
which of the following is not one of the main factors that contribute to fraudulent activity
Incompatible Duties
the custodian of an assest
should not have access to the accounting of that asset
When two or more people get together for the purpose of circumventing prescribed controls, it is called
collusion
a checked marked nsf means
non suffieciet funds
a bank reconciliation should be prepared
to explain any difference between the depositor’s balance per books with the balance per bank.
Notes or accounts receivables that results from sales transactions are often called
“Trade receivables”
writing off an uncollectible account under the allowance method requires a debit to
allowance for doubtful accounts
the direct write off method
shows only actual losses from the uncollectable accounts recieveable
