ACC 557 Midterm Exam Part 2 Assignment

ACC 557 MIDTERM EXAM PART 2
Question 1
Net income is gross profit less
financing expenses.
operating expenses.
other expenses and losses.
other expenses.
Question 2

On November 2, 2014, Kasdan Company has cash sales of $6,000
from merchandise having a cost of $3,600. The entries to record the
day's cash sales will include:
a $3,600 credit to Cost of Goods Sold.
a $6,000 credit to Cash.
a $3,600 credit to Inventory.
d a $6,000 debit to Accounts Receivable.
Question 3
Glenn Company purchased merchandise inventory with an invoice
price of $9,000 and credit terms of 2/10, n/30. What is the net cost of
the goods if Glenn Company pays within the discount period?
$8,100
$8,280
$8,820
$9,000
Question 4
When a seller grants credit for returned goods, the account that is
credited is
Sales Revenue.
Sales Returns and Allowances.
Inventory.
Accounts Receivable.
Question 5
An aging of a company's accounts receivable indicates that $14,000
are estimated to be uncollectible. If Allowance for Doubtful Accounts
has a $1,100 credit balance, the adjustment to record bad debts for
the period will require a
debit to Bad Debt Expense for $14,000.
debit to Allowance for Doubtful Accounts for $12,900.
debit to Bad Debt Expense for $12,900.
credit to Allowance for Doubtful Accounts for $14,000.

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Question 6
The basic issues in accounting for notes receivable include each of
the following except
analyzing notes receivable.
disposing of notes receivable.
recognizing notes receivable.
valuing notes receivable.
Question 7
Three accounting issues associated with accounts receivable are
depreciating, returns, and valuing.
depreciating, valuing, and collecting.
recognizing, valuing, and disposing.
accrual, bad debts, and disposing.
Question 8
A cash discount is usually granted to all of the following except
retail customers.
retailers.
wholesalers.
All of these answers are correct.
Question 9
If a company fails to record estimated bad debts expense,
cash realizable value is understated.
expenses are understated.
revenues are understated.
receivables are understated.

Question 10
Bad Debt Expense is considered
an avoidable cost in doing business on a credit basis.
an internal control weakness.
a necessary risk of doing business on a credit basis.
avoidable unless there is a recession.
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Question 11
The collection of an account that had been previously written off
under the allowance method of accounting for uncollectibles
will increase income in the period it is collected.
will decrease income in the period it is collected.
requires a correcting entry for the period in which the account was
written off.
does not affect income in the period it is collected.
Question 12
The maturity value of a $50,000, 9%, 60-day note receivable dated July
3 is
$50,000.
$50,750.
$54,500.
$59,000.
Question 13
The control principle related to not having the same person authorize
and pay for goods is known as
establishment of responsibility.
independent internal verification.
segregation of duties.
rotation of duties.

Question 14
If the month-end bank statement shows a balance of $54,000,
outstanding checks are $15,000, a deposit of $6,000 was in transit at
month end, and a check for $900 was erroneously charged by the
bank against the account, the correct balance in the bank account at
month end is
$44,100.
$45,000.
$45,900.
$62,100.
Question 15
A system of internal control
is infallible.
can be rendered ineffective by employee collusion.
invariably will have costs exceeding benefits.
is premised on the concept of absolute assurance.
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Question 16
A credit balance in Cash Over and Short is reported as a(n)
asset.
liability.
miscellaneous expense.
miscellaneous revenue.
Question 17
The cash account shows a balance of $40,000 before reconciliation.
The bank statement does not include a deposit of $9,200 made on the
last day of the month. The bank statement shows a collection by the

ank of $3,960 and a customer’s check for $1,300 was returned
because it was NSF. A customer’s check for $1,380 was recorded on
the books as $1,920, and a check written for $318 was recorded as
$390. The correct balance in the cash account was
$42,048.
$42,192.
$43,128.
$51,392.
Question 18
A petty cash fund of $100 is replenished when the fund contains $4 in
cash and receipts for $93. The entry to replenish the fund would
credit Cash Over and Short for $3.
credit Miscellaneous Revenue for $3.
debit Cash Over and Short for $3.
debit Miscellaneous Expense for $3.
Question 19
Jolene is warehouse custodian and also maintains the accounting
record of the inventory held at the warehouse. An assessment of this
situation indicates
documentation procedures are violated.
independent internal verification is violated.
segregation of duties is violated.
establishment of responsibility is violated.
Question 20
Having one person post entries to accounts receivable subsidiary
ledger and a different person post to the Accounts Receivable Control
account in the general ledger is an example of
inadequate internal control.
duplication of effort.
external verification.
segregation of duties.

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Question 21
Which of the following statements is correct with respect to
inventories?
The FIFO method assumes that the costs of the earliest goods
acquired are the last to be sold.
It is generally good business management to sell the most recently
acquired goods first.
Under FIFO, the ending inventory is based on the latest units
purchased.
FIFO seldom coincides with the actual physical flow of inventory.
Question 22
In a manufacturing business, inventory that is ready for sale is called
raw materials inventory.
work in process inventory.
finished goods inventory.
store supplies inventory.
Question 23
Two companies report the same cost of goods available for sale but
each employs a different inventory costing method. If the price of
goods has increased during the period, then the company using
LIFO will have the highest ending inventory.
FIFO will have the highest cost of good sold.
FIFO will have the highest ending inventory.
LIFO will have the lowest cost of goods sold.
Question 24

Indrisano's Used Cars uses the specific identification method of
costing inventory. During March, Indrisano purchased three cars for
$12,000, $14,400, and $19,200, respectively. During March, two cars
are sold for a total of $34,600. Indrisano determines that at March 31,
the $14,400 car is still on hand. What is Indrisano’s gross profit for
March?
$1,000.
$3,400.
$4,200.
$8,200.
Question 25
A company purchased inventory as follows:
150 units at $5
350 units at $6
The average unit cost for inventory is
$5.00.
$5.50.
$5.70.
$6.00.
About Author:
This article covers the topic for the Strayer University ACC 557 Midterm
Exam Part 2. The author is working in the field of education from last 5
years. This article covers the questions & answers of ACC 557 Complete
Course from Strayer University. Other topics in the class are as follows:
ACC 557 Week 1 DQ 1

ACC 557 Week 1 Homework
ACC 557 Week 1 Complete
ACC 557 Midterm Exam Part 1
ACC 557 Midterm Exam Part 2
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