Financial Accounting: Exam 1 Review

Match the following

• Expenses

• Represents payments of future expenses.

• Merchandise Inventory

• Cost of assets or services to earn revenue.

• Sales Allowance

• Promises to pay later which usually arise from purchases of merchandise.

• Accounts Payable

• Consists of products that a company buys to sell to customers.

• Prepaid Accounts

• A reduction in the selling price of merchandise sold to a customer for damaged or defective merchandise that the customer is keeping.

Match the following

• Accounts Receivable

• Creditors' claims on assets.

• Assets

• Owner's claim on assets.

• Revenue

• Increases equity from sales of products and services.

• Liabilities

• Resources a company owns or controls.

• Equity

• Promises of payment from customers to sellers.

Match the following

• Establish responsibilites

• The employee responsible for ordering inventory is a different employee than the one who makes

• Divide responsibility

• Company uses time clock versus hand written time records.

• Insure assets and bond employees

• A company pays for external auditors to audit their financial statements.

• Preform regular and independent reviews

• Company buys an insurance policy to protect against employee theft.

• Apply technological controls.

• Cashier has access to cash in drawer, but does not have access to the cash register tape.

Accounting is an information and measurement system that does all the following except:

• Records business activities

• Identifies business activities

• Communicates business activities

• Eliminates the need for interpreting financial data

• Helps people make better decisions

Using the Specific Identification inventory system we use the sales records to identify the following:

Aug. 14 Sold 8 bikes costing $91 each and 12 bikes costing $106 each.

Aug. 30 Sold 2 bikes costing $91 each, 3 bikes costing $106 each, 15 bikes costing $115 each, and 3 bikes costing $119 each.

Total cost of 55 units available for sale is $5,990.

Calculate cost of the ending inventory.

• $2,490

• $1,408

• $2,408

• $1,308

Calculate the Units available for Sale and the Goods available for sale ($) using the following information:

Purchases: Jan: 8 units @ $140; Feb: 10 @ $135; March: 13 @ $130; April: 15 @$120; May: 8 @ $115.

• 50 units/$5,400

• 76 units/$8,740

• 64 units/$7,890

• 54 units/$6,880

Yellowjacket Company reported the following January purchases and sales data for its only product.

Using the periodic LIFO Inventory costing method, what is the cost of the ending inventory?

• $1,225

• $1,140

• $2,140

• $2,225

Match the following

• Common Stock

• Equity

• Rent Expense

• Expense

• Accounts Receivable

• Asset

• Consulting Revenue

• Revenue

• Accounts Payable

• Liability

The journal entry for when prepaid insurance expires:

• Debit Insurance Expense

  Credit Prepaid Insurance

• Debit Prepaid Insurance

  Credit Insurance Expense

• Debit Cash

  Credit Prepaid Insurance

• Debit Prepaid Insurance

  Credit Cash

Journal Entry for when supplies are used up:

• Debit Supplies

  Credit Supplies Expense

• Debit Cash

  Credit Supplies

• Debit Supplies Expense

  Credit Supplies

• Debit Supplies

  Credit Cash