Question 1

The following information comes from P Co.'s income statements for 2010 and 2009:
1.Compute the gross profit percentage for
a.2012 __________
b.2011 __________
2.Provide at least two potential causes for the change in P Co's gross profit percentage.

Accepted Answer

The answer of The following information comes from P Co.'s...

Question 2

Deposits in transit to the bank have not been recorded in the depositor's books but they have been recorded by the bank.

Accepted Answer

Deposits in transit have been recorded in the depositor's books but have not yet been recorded by the bank.

Question 3

A portion of the income statement for Tea Company is shown below.Provide the missing account titles and amounts.

Accepted Answer

The answer of A portion of the income statement for...

Question 4

When a company records adjusting entries following the completion of a bank reconciliation,the cash account is debited for the amount of any deposit in transit.

Accepted Answer

The cash account should not be debited for a deposit in transit in adjusting entries following a bank reconciliation. This adjustment would have already been made during the bank reconciliation process. Instead, the company may need to make other adjustments such as recording bank fees, interest income, or outstanding checks.

Question 5

"Toys 4 U" has reported the following information on their income statements for the years 2006 through 2010:
1.Compute the gross profit percentage for
a.2012 ___________
b.2011 ___________
c.2010 ___________
d.2009 ___________
e.2008 ___________
2.Has the gross profit ratio for "Toys 4 U" improved over time or worsened? Explain your reason.

Accepted Answer

The answer of "Toys 4 U" has reported the following...

Question 6

The following data were taken from the records of Milius Corporation on December 31,20B:
Items not included in above amounts: Estimated bad debt loss,1% of credit sales.Average income tax rate,25%.Number of shares of common shares outstanding,9,000
Requirements:
1.Based on the above data,prepare a multiple-step income statement (including gross margin,pretax profit,and earnings per share).
2a.How much was the gross margin?
b.What was the gross margin ratio?
c.Explain what these two amounts mean.

Accepted Answer

The answer of The following data were taken from the...

Question 7

A bank service charge is added to the depositor's "book balance" in a bank reconciliation.

Accepted Answer

A bank service charge is deducted from the depositor's "book balance" in a bank reconciliation, as it represents a fee charged by the bank that reduces the account balance.

Question 8

One of the internal control tools to verify a company's cash balance is the bank reconciliation.

Accepted Answer

The bank reconciliation is indeed an internal control tool used to verify a company's cash balance by comparing the company's cash records with those of the bank. This helps identify any discrepancies and errors, and ensures that the company's cash balance is accurate and up-to-date.

Question 9

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

Accepted Answer

Deposits in transit refer to deposits made but not yet processed by the bank, therefore they will not appear on the current bank statement.

Question 10

A bank reconciliation compares the ending cash balance in the company's records to the ending cash balance reported by the bank on the monthly bank statement.

Accepted Answer

A bank reconciliation is a process to compare the ending cash balance in a company's records with the ending cash balance reported by the bank on the monthly bank statement. This is done to identify any discrepancies and ensure that both records match.

Question 11

Under the completed contracted method of accounting for long-term construction projects,revenue is not recognized until the project is complete.

Accepted Answer

Under the completed contracted method, revenue is recognized only when the project is complete.

Question 12

In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.

Accepted Answer

Segregation of duties is crucial in cash control to prevent fraud and errors; different individuals should handle cash and account for it.

Question 13

The following data were taken from the records of McMullen Appliances,Incorporated,at December 31,20D:
Requirements:
1.Prepare a complete single-step income statement for the company (including pretax profit and earnings per share).
2.Prepare a complete multiple-step income statement for the company (including gross margin,pretax profit,and earnings per share).

Accepted Answer

The answer of The following data were taken from the...

Question 14

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

Accepted Answer

This is the correct definition of outstanding cheques on a bank reconciliation.

Question 15

The primary purpose of preparing a bank reconciliation is to reconcile the bank balance at the beginning of the period with the bank balance at the end of the period.

Accepted Answer

The primary purpose of preparing a bank reconciliation is to reconcile the bank balance per company records (i.e. the balance on the books) with the bank balance per the bank statement.

Question 16

A portion of the income statement for Sun Company is shown below.Provide the missing account titles and amounts.

Accepted Answer

The answer of A portion of the income statement for...

Question 17

Tweed Feed & Seed recorded sales revenue during the year of $120,000,of which $60,000 was on credit.The company has experienced an average loss rate of 3% of credit sales.Give the adjusting journal entry at the end of the year to record bad debt expense.

Accepted Answer

The answer of Tweed Feed & Seed recorded sales revenue...

Question 18

When using the instalment method,revenue is recognized at the time goods are delivered to the customer.

Accepted Answer

Under the instalment method, revenue is recognized over a period of time as instalment payments are received from the customer. It is not recognized at the time of goods delivery.

Question 19

When completing a bank reconciliation,bank service charges should be added to the cash balance appearing on the bank statement.

Accepted Answer

Bank service charges should be deducted from the cash balance appearing on the bank statement because they have already been subtracted by the bank.

Question 20

Journal entries made to update the cash account,after a bank reconciliation has been prepared,should affect the "Bank Statement" part of the reconciliation rather than the "Depositor's Books" part of the reconciliation.

Accepted Answer

Journal entries made after a bank reconciliation adjust the depositor's books to align with the reconciled balance, not the bank statement part, which reflects the bank's records.

Quiz 7: Reporting and Interpreting Cost of Goods Sold and Inventory

The following information comes from P Co.'s income statements for 2010 and 2009: 1.Compute the gross profit percentage for a.2012 b.2011 2.Provide at least two potential causes for the change in P Co's gross profit percentage.

Deposits in transit to the bank have not been recorded in the depositor's books but they have been recorded by the bank.

A portion of the income statement for Tea Company is shown below.Provide the missing account titles and amounts.

When a company records adjusting entries following the completion of a bank reconciliation,the cash account is debited for the amount of any deposit in transit.

A bank service charge is added to the depositor's "book balance" in a bank reconciliation.

One of the internal control tools to verify a company's cash balance is the bank reconciliation.

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

A bank reconciliation compares the ending cash balance in the company's records to the ending cash balance reported by the bank on the monthly bank statement.

Under the completed contracted method of accounting for long-term construction projects,revenue is not recognized until the project is complete.

In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

The primary purpose of preparing a bank reconciliation is to reconcile the bank balance at the beginning of the period with the bank balance at the end of the period.

A portion of the income statement for Sun Company is shown below.Provide the missing account titles and amounts.

Tweed Feed & Seed recorded sales revenue during the year of $120,000,of which $60,000 was on credit.The company has experienced an average loss rate of 3% of credit sales.Give the adjusting journal entry at the end of the year to record bad debt expense.

When using the instalment method,revenue is recognized at the time goods are delivered to the customer.

When completing a bank reconciliation,bank service charges should be added to the cash balance appearing on the bank statement.

Journal entries made to update the cash account,after a bank reconciliation has been prepared,should affect the "Bank Statement" part of the reconciliation rather than the "Depositor's Books" part of the reconciliation.

Quiz 7: Reporting and Interpreting Cost of Goods Sold and Inventory

The following information comes from P Co.'s income statements for 2010 and 2009: 1.Compute the gross profit percentage for a.2012 __________ b.2011 __________ 2.Provide at least two potential causes for the change in P Co's gross profit percentage.

Deposits in transit to the bank have not been recorded in the depositor's books but they have been recorded by the bank.

A portion of the income statement for Tea Company is shown below.Provide the missing account titles and amounts.

When a company records adjusting entries following the completion of a bank reconciliation,the cash account is debited for the amount of any deposit in transit.

A bank service charge is added to the depositor's "book balance" in a bank reconciliation.

One of the internal control tools to verify a company's cash balance is the bank reconciliation.

Deposits in transit that appear on a bank reconciliation are those deposits that were made during the current month but which were not included by the bank on the current bank statement.

A bank reconciliation compares the ending cash balance in the company's records to the ending cash balance reported by the bank on the monthly bank statement.

Under the completed contracted method of accounting for long-term construction projects,revenue is not recognized until the project is complete.

In order to achieve effective control of cash,it is important that one person assume the jobs for handling cash and accounting for cash.

Outstanding cheques that appear on a bank reconciliation are those cheques written during the current and previous periods that have not yet cleared the bank during the current period.

The primary purpose of preparing a bank reconciliation is to reconcile the bank balance at the beginning of the period with the bank balance at the end of the period.

A portion of the income statement for Sun Company is shown below.Provide the missing account titles and amounts.

Tweed Feed & Seed recorded sales revenue during the year of $120,000,of which $60,000 was on credit.The company has experienced an average loss rate of 3% of credit sales.Give the adjusting journal entry at the end of the year to record bad debt expense.

When using the instalment method,revenue is recognized at the time goods are delivered to the customer.

When completing a bank reconciliation,bank service charges should be added to the cash balance appearing on the bank statement.

Journal entries made to update the cash account,after a bank reconciliation has been prepared,should affect the "Bank Statement" part of the reconciliation rather than the "Depositor's Books" part of the reconciliation.

The following information comes from P Co.'s income statements for 2010 and 2009: 1.Compute the gross profit percentage for a.2012 b.2011 2.Provide at least two potential causes for the change in P Co's gross profit percentage.