Midterm for Fi504 Keller Management
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Question:
(TCO E) One of the accounting concepts upon which adjustments for prepayments and accruals are based is
Your Answer:
matching.
CORRECT ANSWER
cost.
monetary unit.
INCORRECT
economic entity.
Instructor Explanation:
chapter 4 page 162
Points Received:
0 of 3
Comments:
Question:
(TCO E) In a merchandising business, revenue may be considered earned when
Your Answer:
cash is received from the customers
a product is delivered to a customer.
CORRECT
an order is received from a customer
a customer shows interest in a product
Instructor Explanation:
chapter 4 page 162
Points Received:
3 of 3
Comments:
Question:
(TCO E) Expenses sometimes make their contribution to revenue in a different period than when the expense is paid. When wages are incurred in one period and paid in the next period, this often leads to which account appearing on the balance sheet at the end of the first period?
Your Answer:
Due from Employees
Due to Employer
Wages Payable
CORRECT
Wages Expense
Instructor Explanation:
chapter 4 page 163
Points Received:
3 of 3
Comments:
Question:
The following is selected information from J Corporation for the fiscal year ending October 31, 2007.
Cash received from customers $75,000
Revenue earned 87,500
Cash paid for expenses 42,500
Cash paid for computers on 11/1/2006
that will be used for 3 years 12,000
Expenses incurred,
not including any depreciation
on the above computers 50,000
(TCO E) Based on the accrual basis of accounting, what is J Corporations net income for the year ending October 31, 2007?
Your Answer:
$28,500
$33,500
CORRECT ANSWER
$20,500
INCORRECT
$37,500
Instructor Explanation:
$87,500 – 50,000 – 4,000 = $33,500
Points Received:
0 of 3
Comments:
Question:
(TCO E) Accounts often need to be adjusted because
Your Answer:
there are never enough accounts to record all the transactions.
many transactions affect more than one time period.
CORRECT
there are always errors made in recording transactions.
management cant decide what they want to report.
Instructor Explanation:
chapter 4 page 165
Points Received:
3 of 3
Comments:
Question:
(TCO B) The primary source of revenue for a wholesaler is
Your Answer:
investment income.
service revenue.
the sale of merchandise.
CORRECT
the sale of plant assets the company owns.
Instructor Explanation:
chapter 5 page 224
Points Received:
3 of 3
Comments:
Question:
(TCO A,B) Detailed records of movements in merchandise (each purchase and sale) are not maintained in the inventory account in a
Your Answer:
perpetual inventory system.
periodic inventory system.
CORRECT
double entry accounting system.
business that sells expensive merchandise.
Instructor Explanation:
chapter 5 page 226
Points Received:
3 of 3
Comments:
Question:
(TCO B) Hunter Company purchased merchandise inventory with an invoice price of $6,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Hunter Company pays within the discount period?