SURVEY OF ACCOUNTING TEST EXAM 2 STUDY
QUESTIONS WITH CORRECT VERIFIED ANSWERS 100%
GUARANTEED PASS | RATED A+
What effect does recording a capital expenditure as repairs and maintenance expense have on the
financial statements of the current period? - Answer>>> It overstates expenses and understates
net income
Under IFRS, if it is greater than ____ probability that an obligation is going to arise, and the
amount can be estimated, then a "provision" should be recorded by making a journal entry -
Answer>>> 50%
A bookkeeper recorded a capital expenditure as an asset. As a result - Answer>>> the books are
correct as capital expenditures should be recorded as assets, not expenses
The gross profit ratio for Profits, Inc., increased from 45% in 2018 to 50% in 2019. Which of the
following must be true? - Answer>>> Profits cost of goods sold was lower relative to sales in
2019 than in 2018
What is the effect of using FIFO during a period of rising prices under a perpetual inventory
system? - Answer>>> Higher gross profit than LIFO
Which of the following accounting treatments violates the matching principle? - Answer>>>
Inventory is expensed in the period when it is purchased
The journal entry to accrue salaries earned by employees will debit - Answer>>> Salary Expense
for gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary
Payable for net pay
What amount should Donovan Company project for cost of goods sold for 2019 - Answer>>>
17,600,000
Because gross profit is 45% for the past 5 years, that means that Cost of Goods Sold has average
55% of Sales (100% - 45%). Projected Cost of Goods Sold is then calculated as ($32,000,000 x
55%)
, Which of the following treatments of contingent liabilities is correct? - Answer>>> ABC had
several contingent liabilities for which it believes it is reasonably possible it will result in a loss,
so ABC disclosed all of these in the notes to the financial statements.
The journal entry to record accrued interest on a short-term note payable includes a debit to -
Answer>>> Interest Expense and a credit to Interest Payable
The journal entry to accrue salaries earned by employees will debit - Answer>>> Salary Expense
for gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary
Payable for net pay
Which account is NOT an example of an accrued liability? - Answer>>> Accounts Payable
What is the effect on the financial statements when writing off an uncollectible account under the
allowance method? - Answer>>> No effect
Frosty Drive In recorded credit card sales of $14,000 for the month. The credit card fee
associated with the transactions totaled 2%.
How to find inventory turnover - Answer>>> Inventory Turnover = Cost of Goods Sold /
Average Inventory
The lower-of-cost-or-market rule requires a company to - Answer>>> adjust the inventory
balance downward if its replacement cost is lower than its historical cost
Which of the following problems might explain an unusually high inventory turnover ratio? -
Answer>>> The inventory may be too low, causing goods to be out of stock and sales to be lost
During a period of rising prices, which inventory valuation method produces the lowest reported
net income? - Answer>>> LIFO
During periods of falling prices, which inventory valuation method produces the lowest reported
net income? - Answer>>> FIFO
In a time of rising prices, which inventory valuation method will report higher cost of goods
sold? - Answer>>> LIFO
QUESTIONS WITH CORRECT VERIFIED ANSWERS 100%
GUARANTEED PASS | RATED A+
What effect does recording a capital expenditure as repairs and maintenance expense have on the
financial statements of the current period? - Answer>>> It overstates expenses and understates
net income
Under IFRS, if it is greater than ____ probability that an obligation is going to arise, and the
amount can be estimated, then a "provision" should be recorded by making a journal entry -
Answer>>> 50%
A bookkeeper recorded a capital expenditure as an asset. As a result - Answer>>> the books are
correct as capital expenditures should be recorded as assets, not expenses
The gross profit ratio for Profits, Inc., increased from 45% in 2018 to 50% in 2019. Which of the
following must be true? - Answer>>> Profits cost of goods sold was lower relative to sales in
2019 than in 2018
What is the effect of using FIFO during a period of rising prices under a perpetual inventory
system? - Answer>>> Higher gross profit than LIFO
Which of the following accounting treatments violates the matching principle? - Answer>>>
Inventory is expensed in the period when it is purchased
The journal entry to accrue salaries earned by employees will debit - Answer>>> Salary Expense
for gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary
Payable for net pay
What amount should Donovan Company project for cost of goods sold for 2019 - Answer>>>
17,600,000
Because gross profit is 45% for the past 5 years, that means that Cost of Goods Sold has average
55% of Sales (100% - 45%). Projected Cost of Goods Sold is then calculated as ($32,000,000 x
55%)
, Which of the following treatments of contingent liabilities is correct? - Answer>>> ABC had
several contingent liabilities for which it believes it is reasonably possible it will result in a loss,
so ABC disclosed all of these in the notes to the financial statements.
The journal entry to record accrued interest on a short-term note payable includes a debit to -
Answer>>> Interest Expense and a credit to Interest Payable
The journal entry to accrue salaries earned by employees will debit - Answer>>> Salary Expense
for gross pay, credit FICA Tax Payable, credit Employee Income Tax Payable and credit Salary
Payable for net pay
Which account is NOT an example of an accrued liability? - Answer>>> Accounts Payable
What is the effect on the financial statements when writing off an uncollectible account under the
allowance method? - Answer>>> No effect
Frosty Drive In recorded credit card sales of $14,000 for the month. The credit card fee
associated with the transactions totaled 2%.
How to find inventory turnover - Answer>>> Inventory Turnover = Cost of Goods Sold /
Average Inventory
The lower-of-cost-or-market rule requires a company to - Answer>>> adjust the inventory
balance downward if its replacement cost is lower than its historical cost
Which of the following problems might explain an unusually high inventory turnover ratio? -
Answer>>> The inventory may be too low, causing goods to be out of stock and sales to be lost
During a period of rising prices, which inventory valuation method produces the lowest reported
net income? - Answer>>> LIFO
During periods of falling prices, which inventory valuation method produces the lowest reported
net income? - Answer>>> FIFO
In a time of rising prices, which inventory valuation method will report higher cost of goods
sold? - Answer>>> LIFO
