Question

1) If a work sheet is used, it is prepared

a.before journalizing transactions.

b.after closing the accounts.

c.after recording and posting adjustments.

d.before preparing financial statements.

2)CBA Corp. has grown significantly over the past year. One area that has plagued the controller of CBA is the reconciliation of supplies expense. The end-of-year supplies on hand totaled $20, purchases totaled $500, and supplies on hand at the beginning of the year amounted to $300. How much will CBA report as supplies expense for the current year?

a.$500

b.$300

c.$20

d.$780

3) Stockton Co. received advance payments from customers during 2017 of $6,000. At December 31, 2016, $1,300 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2016, what will the balances be in the Unearned Book Revenue and Book Revenue accounts?

Unearned Book Revenue

Book Revenue

a.

$1,300 $4,700

b.

$1,300 $6,000

c.

$6,000 $1,300

d.None of these choices are correct.

4) Chamberlain Company buys designer clothing to sell in its retail stores. Since much of the merchandise comes from Dallas and Europe, Chamberlain Company must pay freight charges to get the merchandise shipped in. Which of the following statements is true?

a.Transportation-in, paid by Chamberlain Company, is subtracted from purchases under the periodic system.

b.Transportation-in is added to net purchases to determine cost of goods purchased in a periodic system.

c.Freight charges are only paid by a buyer in a periodic system.

d.Transportation-in, paid by Chamberlain Company, is added to the inventory account under the periodic system.

5) Which of the following statements is not true?

a.Both U.S. GAAP and international financial reporting standards (IFRS) require the use of the lower-of-cost-or-market rule to value inventories.

b.IFRS uses net realizable value with no upper or lower limits imposed.

c.U.S. GAAP defines market value as replacement cost.

d.Write-downs of inventory can be reversed in later periods under U.S. GAAP.

6. Which of the following statements is true?

a.The perpetual system eliminates the need for an annual inventory count.

b.Inventory can only be sold at the end of an accounting period under the periodic system.

c.Inventory losses can be identified and controlled better under the perpetual system.

d.There is no difference in cost to implement a perpetual as compared to a periodic system.

Answer 1

Answer(1) Option() is the correct answer. Explanation: A worksheet is prepared after recording and posting adjustment. Answer(2) Option(d) $780 is the correct answer. Calculation: Beginning Balance of Supplies Add: Purchases Less: Ending balance of Supplies Supplies Expense $300 500 20 $780 Answer(3) Option(a) $1300 and $ 4,700 is the correct answer. Explanation: December 31 Unearned Book Revenue $1,300 December 31 Book Revenue $4,700 Answer(4) Option(b) is the correct answer. Explanation: Transportation in is added to net Purchases to determine cost of good Purchased in a periodic system. Answer(5) Option(a) is the correct answer. Explanation: Both US GAAP and IFRS requires the use of lower of Cost or Market rule to Value Inventory Answer(6) Option(c) is the correct answer. Explanation: Inventory losses can be identified and Controlled better under the perpetual system.