What amount should jot recognize as gross profit for project

Reference no: EM131220918

Q1. The following is a record of Tiller Corporation's inventory transactions for the current month:

January 1	Balance, 500 units @ $10 each	January 5	Sale, 290 units @ $25
January 11	Purchase 300 units @ $12 each	January 13	Sale, 250 units @ $25
January 23	Purchase 400 units @ $13 each	January 27	Sale, 310 units @ $25

Tiller uses the periodic inventory system. Using the weighted-average inventory method, what is the amount of ending inventory on January 31?

14004

9775

4085

4025

Q2. All of the following are considered primary user of financial reports, except:

Employees

Investors

Creditors

All of the above

Q3. As of December 31, Wiliams Corporation has outstanding accounts receivable of $3.6 million. Sales on credit during the year were $12.5 million. The allowance for doubtful accounts has a credit balance of $62,000. If the company estimates that 1% of its net credit sales will be uncollectible, what will be the amount of bad debt expense recognized for the year?

63000

125000

187000

360000

Q4. The month-end bank statement for Guthrie Motors shows a balance of $125,000 and a bank service charge of $40. Outstanding checks are $35,000, and a deposit of $11,500 was in transit at month end. The correct balance in the bank account at month end is

101500

101460

98500

98460

Q5. At December 31, Norman Industrial Inc. had account balances before year-end adjusting entries for accounts receivable and the related allowance for doubtful accounts of $850,000 and $79,000 respectively. An aging of accounts receivable indicated that $88,000 of December 31, receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is

938000

929000

771000

762000

Q6. The following is a record of Meyer Corporation's inventory transactions for the current month:

October 1	Balance, 600 units @ $24 each	October 9	Sale, 600 units @ $51
October 12	Purchase 550 units @ $26 each	October 19	Sale, 500 units @ $51
October 25	Purchase 700 units @ $27 each

Meyer uses the periodic inventory system. Using the LIFO method, what is the amount of ending inventory on October 31?

18300

20200

18000

29300

Q7. Accounting information is made useful for decision making by which two fundamental qualities?

Faithful representation and comparability

Comparability and timeliness

Relevance and faithful representation

Materiality and neutrality

Q8. On June 1, 2014, Vision Corporation consigned 100 TVs, costing $1,000 each, to Future Electronics. The cost of shipping the TVs amounted to $2,500 and was paid by Vision Corporation. On December 31, Future Electronics emailed a report to Vision, indicating that 72 of the TVs had been sold for $1,800 each. Future also included remittance for the amount due, after deducting a commission of 5%, advertising of $500, and installation costs of $1,440. What amount should Vision Corporation include on its December 31, 2014 balance for the consigned TVs?

28000

28700

30643

Q9. Hemmer Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was 450,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

Date	Inventory at Current Prices	Current Price Index
December 31, 2012	$513,600	107
December 31, 2013	$580,000	125
December 31, 2014	$650,000	130

What is the ending inventory at December 31, 2012 under dollar-value LIFO?

464000

464980

482100

497080

Q10. Jot Construction Company uses the percentage-of-completion method of accounting. In 2013, Jot began work on a contract it had received which provided for a contract price of $6,000,000. Additional information related to the project includes: costs incurred during the year were $2,100,000; estimated costs to complete as of December 31, 2013 were $1,400,000. What amount should Jot recognize as gross profit for the project in 2013?

700000

1000000

1500000

2500000

Q11. How is the gross profit method used as it relates to inventory valuation?

To provide an inventory value of LIFO inventories.

To estimate inventories for annual statements.

To verify the accuracy of the perpetual inventory records.

To verify the accuracy of the physical inventory.

Q12. At December 31, 2013, Vega Vaccum Corporation has cash in bank of 104,000, restricted cash in a separate account of $19,000, and a bank overdraft at another bank of $500. How much should it report as cash on the balance sheet?

123000

122500

104500

104000

Q13. A company has satisfied its performance obligation when the

company has transferred physical possession of the asset.

company has significant risks and rewards of ownership.

The company has legal title to the asset

The company has received payments for goods and services

Q14. The following is a record of Caulder Corporation's inventory transactions for the current month:

March 1	Balance, 500 units @ $40 each	March 12	Sale, 200 units @ $85
March 16	Purchase, 300 units @ $42 each	March 22	Sale, 350 units @ $85
March 28	Purchase, 300 units @ $43 each

Caulder uses the perpetual inventory system. Using the LIFO method, what is the ending inventory on March 31?

22900

22100

22600

23400

Q15. Swift Builders, Inc. uses the completed-contract method of accounting for a $450,000 contract that it expects will take two years to complete. At December 31, 2013, the end of the first year of the contract, additional information related to the project includes: costs incurred to date were $290,000; estimated costs to complete were $180,000; billings to date were $325,000; collections to date were $300,000. What amount should Swift recognize as gross profit or loss for 2013?

20000 loss

40000 loss

110000 loss

Q16. Which of the following is not a characteristic of generally accepted accounting principles?

each principle is approved by the SEC

standards are considered useful by the profession

a common set of standards and principles

practices which have become universally accepted over time.

Q17. Kandris Corporation had a balance in accounts receivable of $600,000 and a balance in allowance for doubtful accounts of $55,000, when management decided the account receivable from Dunn Corporation of $2,000 had become uncollectible. What journal entry should Kandris Corporation make to write-off the uncollectible account?

Debit Bad Debt Expense, credit Allowance for Doubtful Accounts, $2,000

Debit Accounts Receivable, credit Allowance for Doubtful Accounts, $2,000

Debit Allowance for Doubtful Accounts, credit Accounts Receivable, $2,000

Debit Allowance for Doubtful Accounts, credit Bad Debt Expense, $2,000

Q18. If the historical cost of product X is $55, the selling price of product X is $90, the costs to sell product X are $14, the replacement cost for product X is $50, and the normal profit margin is 30% of sales price, what is the market value that should be used in the lower-of-cost-or-market comparison?

Q19. Inventories are primarily accounted for at cost on the balance sheet. In a departure from the cost basis, inventory is accounted for at market when

There is any decrease in the future utility

Mangement wants to decrease the value of ending inventory

There is a decrease in the future utility below the original cost

Management wants to defer profits to a future period

Q20. Which of the following is classified as cash on the balance sheet?

checking account balance

post-dated checks

postage stamps

cash rectricted for plant expansion

Q21. In the context of dollar-value LIFO, when inventory in base year dollars decreases,

the LIFO reserve increase

A LIFO layer is liquidated

A LIFO layer is created

The LIFO price index decreases

Q22. Energy Solutions Corporation estimates the cost of its physical inventory at November 30 for use in an interim financial statement. Management uses a gross profit rate on sales of 30%. The following information is available:

Inventory, November 1	$500,000
Purchases during November	$650,000
Sales during November	$900,000

The estimated cost of inventory at November 30 is

270000

630000

650000

520000

Q23. In the financial statements, under what qualitative characteristic of accounting information should a change in inventory valuation method be reported?

Verifiability

Consistency

Neutrality

Timeliness

Q24. Generally, product costs are recognized as expenses

In the period when the related revenue is recognized

In the period when the vendor invoice is recieved

In the period when the expenses are paid.

In the period when the expenses are incurred

25. As of December 31, Gammelguard Corporation has outstanding accounts receivable of $1.5 million. Sales on credit during the year were $9 million. The allowance for doubtful accounts has a credit balance of $20,000. If the company estimates that 9% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year?

115000

135000

155000

810000

Q26. Capital City Corporation uses the conventional retail inventory method to determine its ending inventory at cost. The following information is available for the current year:

	Cost	Retail
Beginning Inventory	$350,000	$500,000
Purchases	$1,600,000	$2,440,000
Net Markups		$60,000
Net Markdowns		$30,000
Sales		$2,350,000

Capital City determines that the cost-to-retail ratio is 65%. What is the ending inventory at cost?

620000

350000

470000

403000

Q27. The following is a record of Axis Corporation's inventory transactions for the current month:

June 1	Balance, 400 units @ $65 each	June 16	Sale, 500 units @ $90
June 14	Purchase 900 units @ $68 each	June 20	Sale, 300 units @ $90
June 25	Purchase 250 units @ $70 each

Axis uses the periodic inventory system. Using the FIFO method, what is the amount of cost of goods sold for the month?

51500

52000

53200

54900

Q28. Which of the following is a major challenge facing the accounting profession?

Timeless

Forward-looking data

Nonfinancial measurements

All of the above

Q29. Arrow Corporation uses the conventional retail inventory method to value its merchandise inventory. The following information is available for the current year:

	Cost	Retail
Beginning Inventory	$30,000	$50,000
Purchases	$180,000	$250,000
Freight-In	$2,500	----
Net Markups		$8,500
Net Markdowns		$10,000
Employee Discounts		$1,000
Sales		$205,000

What is the cost to retail ratio?

68.88%

68.07%

70.35%

70.83%

Q30. When a firm reports financial results on an annual basis, which basic assumption is illustrated?

Periodicity assumption

Economic entity assumption

Going concern assumption

Monetary unit assumption

Q31. In the context of standard setting at the FASB, which of the following describe due process?

public hearings are held on proposed accounting standards

FASB operates in full view of the public

interested parties can express their views

all of the above

Q32. If Collier Costumes, Inc. has the following items at year-end, how much should it report as cash on the balance sheet?

Cash in bank	$42,600
Cash on hand	$580
Post-dated checks	$1,420
Certificates of deposit	$90,000

42600

43180

44600

133180

Reference no: EM131220918

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