Reference no: EM132345493
Question
1) Which of the following are clues that a company may have been "cooking the books" by fraudulently increasing their level of net sales?
A) Several company warehouses reported burglaries.
B) There was a high level of inventory purchases in the following period.
C) Several shipping clerks checked into hospitals from lifting heavy boxes.
D) There was a very high level of returned goods shortly after year-end.
2) Using the FIFO costing method will always produce the same results whether a company uses perpetual or periodic inventory.
A) TRUE
B) FALSE
3) Using the LIFO costing method will always produce the same results whether a company uses perpetual or periodic inventory.
A) TRUE
B) FALSE
4) When using periodic inventory, the closing process begins with closing out the Beginning inventory to Cost of goods sold.
A) TRUE
B) FALSE
5) When using periodic inventory, the closing process begins with closing out the Beginning inventory to Cost of goods sold. The second step is to set up the ending inventory by debiting Cost of goods sold and crediting Inventory.
A) TRUE
B) FALSE
6) Under periodic inventory, the company first calculates Cost of goods sold for the period, and then determines what the Ending inventory balance is.
A) TRUE
B) FALSE
7) Samson Company had the following balances and transactions during 2012.
Beginning inventory
March 10
June 10
October 30
Net income
10 units at $70
Sold 8 units
Purchased 20 units at $80
Sold 15 units
What would the company's Inventory amount be on the December 31, 2012 balance sheet if the periodic FIFO costing method is used? (Answers are rounded to the nearest dollar.)
A) $554
B) $537
C) $490
D) $560
8) With a periodic inventory method, purchases, purchase discounts, and purchase returns and allowances are recorded in separate accounts.
A) TRUE
B) FALSE
9) With a periodic inventory method, it is necessary to conduct a physical count of inventory to determine cost of goods sold.
A) TRUE
B) FALSE
10) Which of the following would appear on the income statement of a company that uses the periodic inventory method, but would NOT appear on the income statement of a company that uses the perpetual inventory method?
A) Cost of goods sold
B) Insurance expenses
C) Net sales
D) Cost of goods available for sale
11) A company uses the periodic inventory method. Which of the following entries would be made to record a $1,200 purchase of inventory on account?
A) The accounting entry would be a $1,200 debit to Inventory and a $1,200 credit to Accounts payable.
B) The accounting entry would be a $1,200 debit to Accounts payable and a $1,200 credit to Inventory.
C) The accounting entry would be a $1,200 debit to Accounts payable and a $1,200 credit to Purchases.
D) The accounting entry would be a $1,200 debit to Purchases and a $1,200 credit to Accounts payable.
12) Under the Sarbanes-Oxley Act, the outside auditor must issue an internal control report
A) TRUE
B) FALSE
13) The Public Company Oversight Board oversees the work of auditors of public companies.
A) TRUE
B) FALSE
14) Under the Sarbanes-Oxley Act, accounting firms are prohibited from both auditing a client and providing certain consulting services for the same client.
A) TRUE
B) FALSE
15) Under the Sarbanes-Oxley Act, violators may be sentenced to prison for securities fraud.
A) TRUE
B) FALSE
16) Which of the following is a requirement of the Sarbanes-Oxley Act?
A) The outside auditor must issue an internal control report for each public company.
B) Accounting firms may not both audit a public client and provide certain consulting services for the same client.
C) The Public Company Oversight Board must create new accounting standards.
D) The Public Company Oversight Board must conduct audits of public companies.