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Question 1

Fob shipping point ownership

Answer 1

ownership is transferred when goods are passed to the carrier for delivery

Question 2

Fob Destination owne4rship

Answer 2

ownership is transferred when goods are passed to the purchaser

Question 3

What are goods on consignment

Answer 3

goods that are held by one company for another - they are not included in the inventory of the holding company

Question 4

specific identification

Answer 4

When the cost of goods sold can be determined at any time.
used when goods are not interchangeable.
each product has unique price

Question 5

FIFO cost determination

Answer 5

assumed the goods bought first are also sold first

Question 6

ending inventory equation ( 2 steps)
Works for both inventory

Answer 6

1. beginning inventory + cost of goods purchased = cost of goods available for sale
2. cost of goods available for sale - cost of goods sold = ending inventory

Question 7

Weighted average unit cost equation

Answer 7

Cost of goods available for sale / Total units available = weighted average unit cost

Question 8

Journal entry to adjust inventory from cost to net realizable value

Answer 8

Dr. cost of goods sold ( the difference)
Cr. merchandise inventory

Question 9

inventory turnover calculation
+ what is average inventory from

Answer 9

cost of goods sold / average inventory
(average inventory = starting inventory + ending inventory divided by two)

Question 10

days in sales inventory

Answer 10

days in a year / inventory turnover

Question 11

fraud triangle

Answer 11

opportunity, financial pressure, rationalization

Question 12

internal controls (6)

Answer 12

• establishment of responsibilities
• segregation of duties
• documentation procedures
• physical and IT controls
• independant checks of performance
• human resources

Question 13

cash over and short account?

Answer 13

-debit balance
-expense account
-income statement

Question 14

how do you journal a cash shortage

Answer 14

debit the cash over and short account
shown as an expense on the income statement

Question 15

how do you journal a cash overage

Answer 15

credit the cash over and short account
shown as miscellaneous revenue on the income statement

Question 16

journal entry to record sales with debit or credit card fees
800 revenue + %3 fee ($24)

Answer 16

DR. Debit or Credit card expense: for the fee $24
DR. cash: for the remaining amount $776
CR. sales revenue800

Question 17

Entry to establish Petty cash fund

Answer 17

DR. petty cash
Cr. Cash

Question 18

what is a bank reconciliation

Answer 18

compares the bank’s balance with the company’s balance and explains any differences.

Question 19

what is an outstanding check

Answer 19

A check recorded by a company that has not been cleared by the bank yet

Question 20

reconciling items per bank

Answer 20

-add deposits in transit
-subtract outstanding cheques
-add or subtract bank errors

Question 21

reconciling items per books

Answer 21

• plus credit memoranda and other deposits
• minus debit memoranda and other payments
• plus or minus company errors

Question 22

is a deposit in transit recorded in the bank statement

Answer 22

deposit in transit has yet not been included in the bank statement and should be added to the bank side of the reconciliation

Question 23

examples of credit memoranda

Answer 23

miscellaneous funds added to the companies bank account
- interest earned on accounts
- EFT

Question 24

examples of debit memoranda

Answer 24

-when additional information is needed to explain a charge on the bank statement
- these charges need to be subtracted from the book statement as they have already been deducted from the bank statement
- NSF fees for cheques that bounced need to be deducted from the books statement
- Interest charges

Question 25

in a period of rising prices which inventory system would produce higher profits

Answer 25

FIFO

Question 26

in a period of lowering prices which inventory system would produce higher profits

Answer 26

weighted average

Question 27

when prices are constant :

Answer 27

ending inventory and cost of goods sold are the same for all three inventory methods

Question 28

inventory turnover calculation

Answer 28

cost of goods sold / (starting inventory + ending inventory / 2)

Question 29

days sales calculation

Answer 29

days in year / inventory turnover

Question 30

bad debt expense

Answer 30

expense account for allowance for doubtful accounts