Exam- ACCOUNTING FOR MERCHANDISING

1.Which of the following would probably not cause inventory shrinkage?2.Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; andcost of goods sold is $275,000. The inventory turnover is3.Which items may not limit the effectiveness of internal control systems in an organization?4.The balance sheet format that lists assets above liabilities is the _______ form.5.Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below isthe inventory record for Product C124:Date Received Sold Cost/Unit BalanceApril 22 534 $6.58 $3,513.72May 17 433 $6.70 $2,901.10June 21 389 $6.76 $2,629.64August 2 436 $6.44 $2,807.846.Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journalentry to record this purchase for Meranda under a perpetual inventory system is7.If current assets decrease and current liabilities increase, the current ratio8.Net sales times the historical gross profit percentage yields the estimated9.When a merchandiser sells on account, which of the following is not needed to record the transaction?10.The major difference in the statement of retained earnings between a service business and amerchandising business is11.Committing a fraud because the employee feels that it will be easy to do is indicative of which part ofthe fraud triangle?12.A company’s gross profit percentage decreases from 58% to 51%. What does this mean?13.Casey Company‘s beginning inventory and purchases during the fiscal year ended December 31, 2012,were as follows: (Note: The company uses a perpetual system of inventory.)What is the cost of goods sold for Casey Company for 2012 using LIFO?Units Unit Price Total CostJanuary 1—Beginning Inventory 20 $12 $240March 8—Sold 14April 2—Purchase 30 $13 $390June 5—Sold 25Aug 6—Purchase 25 $14 $350Sept 11—Sold 22Total Cost of Inventory $980Ending inventory is 14 units.14.Which of the following may not limit the effectiveness of internal control systems in an organization?15.ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to recordthe payment of this invoice is16.In a balance sheet prepared in report form, liabilities must be listed after17.Under a perpetual inventory system, the account to which transportation charges on incomingmerchandise is generally entered is18.Which of the following is an incorrect statement if ending inventory is understated?19.To overstate earnings, a company can20.Physical inventory counts must be done