Test 3

Question 1

3 types of financial assets

Answer 1

Cash/cash equivalents
Marketable securities
Receivables

Question 2

Cash/ Cash equivalents

Answer 2

Must mature in 90 days

Most every payment except credit

Question 3

Marketable securities

Answer 3

Investments 
4 basis events 
Purchases of investments 
Receipt of dividends or interest revenue 
Sale of investment 
End of period adjustments

Question 4

Accounts receivable

Answer 4

Largest in merchandise

Liquid turn to cash in 30-60 days

Question 5

Internal control over cash summary

Answer 5

Fraud prevention
Efficient cash management
Accurate accounting transactions
Maintenance of adequate but not excessive cash balances

Question 6

Sale of investments gain entry

Answer 6

Debit cash

Credit marketable securities

Question 7

Sale of investment loss entry

Answer 7

Debit cash / loss on sale investments

Credit marketable securities

Question 8

Net realize value

Answer 8

Accounts receivable - allowance for doubtful accounts

Question 9

How to write off uncollectible accounts

Answer 9

Debit allowance for doubtful accounts

Credit accounts recivable

Question 10

Financial assets

Answer 10

Unrealized holding gain or loss on investments

Balance sheet under stockholders equity

Question 11

3 cost flow assumption

Answer 11

FIFO
LIFO
Average cost

Question 12

LIFO

Answer 12

Last in last out
Only in the us
Better representation of COGS on income statement
Computing go top to bottom

Question 13

FIFO

Answer 13

First in first out

Computing go bottom to top

Question 14

When shipping who owns the item

Answer 14

Person paying

FOB

Question 15

Computing COGS periodic

Answer 15

Beginning inventory+ net purchase = cost of goods available for sale - ending inventory = cost of goods sold

Question 16

Inventory turnover

Answer 16

Cost of goods sold/average inventory

Question 17

Number of sales in inventory

Answer 17

365/inventory turnover

Question 18

LCM/ lower of cost market

Answer 18

If inventory replacement is lower than current price balance sheet will show replacement lower cost

Question 19

Gross profit margin

Answer 19

Net sales / revenue - COGS

Question 20

SEC

Answer 20

Security exchange commission

Guardians of the capital market,looking out for the inventory

Question 21

FASB

Answer 21

Financial accounting standards board
GAAP authority
Under SEC

Question 22

IASB

Answer 22

International accounting standard board

Issue IFRS

Question 23

IFRS

Answer 23

International financial recording standards

Question 24

PCAOB

Answer 24

Public company accounting oversight board

Monitor and examine public accounting firms

Question 25

Principle of conservation

Answer 25

Rather have a higher estimate than lower

Question 26

If a package is shipped from Virginia to Wisconsin with FOB Wisconsin who is responsible for the inventory

Answer 26

Virginia

Question 27

Under periodic inventory method cost of goods sold

Answer 27

Determined only at the end of the period

Question 28

GAAP

Answer 28

Generally accepted accounting principles

Requires that inventory be presented at the lower of the cost or market value

Question 29

Entry to record bad debt expense for the year

Answer 29

Debit unrealized accounts expense

Credit allowance for doubtful accounts

Question 30

Compute ending inventory

Answer 30

BI+NP=GAS

GAS- (COGS x GP)=EI