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Exam 6: Internal Control, Cash, and Merchandise Sales

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Question 61

True/False

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Gross profit is not a ledger account name.

A) True
B) False

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Question 62

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Sales discounts,sales returns & allowances,and cost of goods sold are all temporary accounts which are closed to retained earnings at the end of the accounting period.

A) True
B) False

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Question 63

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Which of the following statements regarding sales returns and allowances is true?

B-Mart sells $5,000 of blue jeans.The customer later tells B-Mart that $200 of them are defective.The sale of the $5,000 of blue jeans on account has already been recorded.The customer agrees to keep the blue jeans and B-Mart agrees to a $200 allowance.Assuming a perpetual inventory system is used,B-Mart will:

A company reported a gross profit percentage of 25% with net sales of $347,800.What is the amount of cost of goods sold?

The perpetual inventory method of tracking inventory is considered superior to the periodic method because the perpetual method:

A company reported a decrease in sales from $860,000 last year to $760,000 this year and a decrease in gross profit from $400,000 last year to $360,000 this year.Was the drop in gross profit caused by a decline in the gross profit per sale,a decline in the sales volume,or a combination of the two?

If a company achieves a small increase in its gross profit percentage from one year to the next,the company:

In a retail business that uses a perpetual inventory system,scanning a bar code does not:

Sales revenue is $367,810 while sales returns and allowances and sales discounts total $24,180.The cost of goods sold is $216,490,operating and other expenses are $28,500,and the company pays $31,640 in income tax.Which of the following is true?

You have received the bank statement for your company's account and need to reconcile it with your general ledger cash account.Your records show an ending balance for the month of $12,722.40 while the bank's records show an ending balance of $12,367.16. The bank charged $8 in service fees and paid $26.05 in interest.All but three checks written during the month were processed by the bank without incident during the month.The three exceptions were: 1)Check #841 was correctly processed by the bank as $981.27 but was mistakenly recorded by you as $781.27. 2)Check #853 for $64.57 had not yet been processed by the bank. 3)Check #855 for $683.46 had not yet been processed by the bank. All but two of the deposits made during the month were processed by the bank without incident.The two exceptions were: 1)A customer check for $307.95,which had been deposited during the month,was returned NSF. 2)A deposit totaling $613.37 had not yet been processed by the bank. Using the information provided above,prepare a bank reconciliation.

Which of the following is not a reason why businesses need an effective internal control system?

Use the information above to answer the following question.The gross profit percentage for 2014 would be closest to:

On October 31,2013,your company's records say that the company has $16,451.03 in its checking account.A review of the bank statement shows you have three outstanding checks totaling $5,643.01,and the bank has paid you interest of $12.19 and charged you $9.00 in fees.The bank statement dated October 31,2013 would report a balance of:

At the end of the accounting period,which of the following accounts would not be closed?

Which one of the statements appearing below is true regarding bank reconciliations?

The following merchandise transactions occurred during December for two different companies: Rippen and Burnen.Both companies use a perpetual inventory system. On December 3,Rippen Corporation sold merchandise on account to Burnen Corp.for $480,000,terms 2/10,n/30.This merchandise originally cost Rippen $320,000. On December 8,Burnen Corp.returned merchandise to Rippen Corporation for a credit of $30,000.Rippen returned this merchandise to inventory at its original cost of $20,000. December 12,Burnen Corp.paid Rippen Corporation for the amount owed. Required: A)Prepare the journal entries to record these transactions on the books of Rippen Corporation. B)What is the amount of net sales to be reported on Rippen Corporation's income statement? C)What is the Rippen Corporation's gross profit percentage?

Cash equivalents are short-term,highly liquid investments purchased within one year of maturity.

Which of the following statements regarding gross profit is true?

Which of the following is not a reason why it is especially important for companies to have internal controls over cash?