ACCT 2000 UPDATED EXAMS SCRIPT QUESTIONS
AND ANSWERS SURE A+
✔✔Sales return and allowances sales would not be reduced because - ✔✔it would
obscure importance of sales returns and allowances as a percentage of sales, could
distort comparisons
✔✔Sales discounts - ✔✔offered to customer to promote promote promo payment
✔✔Net sales = - ✔✔sales revenue
- sales returns and allowances
- sales discounts
✔✔Balance sheet includes - ✔✔an inventory account (current asset)
✔✔Income statement - ✔✔most prefer multi step income statement
✔✔Single step income statement - ✔✔revenue - expenses = net income
advantage simple to read
✔✔Multiple step income statement advantages - ✔✔highlights the components of net
income
three important line items
, - gross profit
- income form operations "the line"
- net income
✔✔Gross profit rate - ✔✔gross profit/ net sales
✔✔Profit margin - ✔✔net income/ net sales
✔✔Control features use of bank - ✔✔contributes to good internal control over cash
minimizes the amount of cash on hand
creates a double record of bank transactions
bank reconciliation
✔✔EFT or electronic founds transfer - ✔✔allow the transfer of founds without paper
(deposit tickets, checks, etc). include disbursement systems that use wires, telephone
and computers to transfer cash
✔✔many employers send payroll through which system? - ✔✔EFT system
✔✔How are bank statements prepared? - ✔✔through the banks perspective
✔✔Bank statement debits - ✔✔bank service charge
NSF (not sufficient founds)
electronic and paper payments
✔✔Bank statement credits - ✔✔electronic and paper deposits
interest earned
✔✔The need for a reconciliation has 2 causes - ✔✔time logs- which prevent one of the
parties from recording the transactions in the same period
error- can be made by either party (bank or company books)
✔✔adjustment to the bank balance- bank balance - ✔✔+ deposits in transits
- outstanding checks
= bank error
✔✔adjustment to the books balance- company's T-acccounts - ✔✔+ unrecorded
receipts (interest)
- unrecorded payments (NSF)
= company error
✔✔ Periodicity Assumption - ✔✔requires accountants to divide the economic life of a
business into artificial time periods
AND ANSWERS SURE A+
✔✔Sales return and allowances sales would not be reduced because - ✔✔it would
obscure importance of sales returns and allowances as a percentage of sales, could
distort comparisons
✔✔Sales discounts - ✔✔offered to customer to promote promote promo payment
✔✔Net sales = - ✔✔sales revenue
- sales returns and allowances
- sales discounts
✔✔Balance sheet includes - ✔✔an inventory account (current asset)
✔✔Income statement - ✔✔most prefer multi step income statement
✔✔Single step income statement - ✔✔revenue - expenses = net income
advantage simple to read
✔✔Multiple step income statement advantages - ✔✔highlights the components of net
income
three important line items
, - gross profit
- income form operations "the line"
- net income
✔✔Gross profit rate - ✔✔gross profit/ net sales
✔✔Profit margin - ✔✔net income/ net sales
✔✔Control features use of bank - ✔✔contributes to good internal control over cash
minimizes the amount of cash on hand
creates a double record of bank transactions
bank reconciliation
✔✔EFT or electronic founds transfer - ✔✔allow the transfer of founds without paper
(deposit tickets, checks, etc). include disbursement systems that use wires, telephone
and computers to transfer cash
✔✔many employers send payroll through which system? - ✔✔EFT system
✔✔How are bank statements prepared? - ✔✔through the banks perspective
✔✔Bank statement debits - ✔✔bank service charge
NSF (not sufficient founds)
electronic and paper payments
✔✔Bank statement credits - ✔✔electronic and paper deposits
interest earned
✔✔The need for a reconciliation has 2 causes - ✔✔time logs- which prevent one of the
parties from recording the transactions in the same period
error- can be made by either party (bank or company books)
✔✔adjustment to the bank balance- bank balance - ✔✔+ deposits in transits
- outstanding checks
= bank error
✔✔adjustment to the books balance- company's T-acccounts - ✔✔+ unrecorded
receipts (interest)
- unrecorded payments (NSF)
= company error
✔✔ Periodicity Assumption - ✔✔requires accountants to divide the economic life of a
business into artificial time periods
