1. A sales returns and allowances account is not debited if acustomer…
A. Returns defective merchandise.
B. Recieves a credit for merchandise of inferior quality.
C. Utilizes a prompt payment incentive.
D. Returns goods that are not in accordance withspecifications.
2. Which of the following statements is incorrect?
A. A major consideration in developing an accounting system iscost effectivness.
B. When an accounting system is designed, no consideration needsto be given to the needs and knowledge of various users.
C. The accounting system should be able to accomodate a varietyof users and changing information needs.
D. To be useful, information must be understandable, relevant,reliable, timley and accurate
3. Flip?sMarket recorded the following events involving a recent purchase ofmerchandise:
Received goods for$50,000, terms 2/10, n/30.
Returned $1,000 ofthe shipment for credit.
Paid $250 freight onthe shipment.
Paid the invoicewithin the discount period.
As a result of theseevents, the company?s inventory increased by
4. A $100 petty cash fund hascash of $16 and receipts of $81. The journal entry to replenish theaccount would include a
a. debit to Cash for$81.
b. credit to Petty Cashfor $84.
c. debit to Cash Overand Short for $3.
d. credit to Cash for$81.
5. Inpreparing its bank reconciliation for the month of April 2013,Flip, Inc. has available the following information.
Balance per bankstatement, 4/30/13 $39,300
NSF check returnedwith 4/30/13 bank statement 470
Deposits intransit, 4/30/13 5,000
Outstandingchecks, 4/30/13 5,200
Bank servicecharges for April 30
What should be theadjusted cash balance at April 30, 2013?
6. If a check correctly writtenand paid by the bank for $591 is incorrectly recorded on thecompany?s books for $519, the appropriate treatment on the bankreconciliation would be to
a. deduct $72 from thebook?s balance.
b. add $72 to thebook?s balance.
c. deduct $72 from thebank?s balance.
d. deduct $591 from thebook?s balance.
7.Flip Company had net credit salesduring the year of $1,200,000 and cost of goods sold of $720,000.The balance in accounts receivable at the beginning of the year was$180,000, and the end of the year it was $120,000. What was theaccounts receivable turnover ratio?
8.The financial statements of Flip ManufacturingCompany report net sales of $400,000 and accounts receivable of$80,000 and $40,000 at the beginning and end of the year,respectively. What is the average collection period for accountsreceivable in days?
a. 40 days
b. 50 days
c. 54.7 days
d. 80 days
9. Flip Companypurchases a new delivery truck for $60,000. The sales taxes are$4,000. The logo of the company is painted on the side of the truckfor $1,600. The truck license is $160. The truck undergoes safetytesting for $290. What does Flip record as the cost of the newtruck?
10. A company purchased factoryequipment on April 1, 2012 for $80,000. It is estimated that theequipment will have an $10,000 salvage value at the end of its10-year useful life. Using the straight-line method ofdepreciation, the amount to be recorded as depreciation expense atDecember 31, 2012 is
11.: Flip’s Boutique has total receipts for the month of$30,660 including sales taxes. If the sales tax rate is 5%, whatare Flip’s sales for the month?
d. It cannot bedetermined.
12: Flip Electric began operations in 2012 and provides a oneyear warranty on the products it sells. They estimate that 10,000of the 200,000 units sold in 2012 will be returned for repairs andthat these repairs will cost $8 per unit. The cost of repairing8,000 units presented for service in 2012 was $64,000. Flip shouldreport
a. warranty expense of$16,000 for 2012.
b. warranty expense of$80,000 for 2012.
c. warranty liabilityof $80,000 on December 31, 2012.
d. no warrantyobligation on December 31, 2012, since this is only a contingentliability.
13: Partners Flipand Flop have capital balances in a partnership of $80,000 and$120,000, respectively. They agree to share profits and losses asfollows:
As salaries $20,000 $24,000
As interest on capital at the beginningof the year 10% 10%
Remaining profits or losses 50% 50%
If income for the year was $60,000,what will be the distribution of income to Flip?