ACC-1A Lecture Notes - Lecture 30: Perpetual Inventory, Current Asset, Tax Deferral

16) Petty cash payments are recorded in the accounting systemwhen:

the petty cash fund needs to be replenished

a payment is made out of petty cash

a bank reconciliation is prepared for the petty cash fund

cash is received from returns of merchandise

21)

In a perpetual system, when inventory is sold on account:

Sales Revenue is increased and Accounts Receivable isdecreased.

Sales Revenue, Cost of Goods Sold, and Accounts Receivable areincreased while Inventory is decreased.

Sales Revenue and Accounts Receivable are increased, and Cost ofGoods Sold and Inventory are decreased.

Sales Revenue is increased and Inventory is decreased.

22 )

Multistep income statements:

are required for merchandise companies.

contain more detail than just listing revenues and expenses.

are required when the perpetual inventory method is used.

classify Cost of Goods Sold as a selling expense.

1. Beginning inventory plus purchases equals:

a) cost of goods sold

b) goods available for sale

c) net purchases

d) ending inventory

2. Accounts receivable:

a) arise from the purchase of goods or services on credit

b) are amounts owed to a business by its customers.

c) are reported on the income statement.

d) will be collected within the discount period or when due.

3. A perpetual inventory system will always give updated balances for:

a) goods available for sale and sales revenue

b) inventory and cost of goods sold

c) accounts receivable and inventory

d) Inventory and sales revenue

4. What is the primary goal of internal controls for cash payments?

a) To make payments as quickly as possible

b) To ensure that payments are made only for properly authorized transactions

c) To independently verify cash payments

d) To ensure the lowest prices possible are paid

During July 2014, Micanopy, sold 500 units of its productsEmpire for $8,000. The following units were available.

Units Cost

BeginningInventory 200 $2

Purchase1 80 $4

Purchase2 120 $6

Purchase3 300 $9

Purchase4 180 $12

A sale of 500 units was made after purchase 3. Of the unitssold, 200 came from beginning inventory and 300 came from purchase3.

Determine the costs of goods available for sale and endinginventory in units. Then determine the costs that should beassigned to cost of goods sold and ending inventory under ach ofthe following assumptions. (For each alternative, show the grossmargin. Round unit costs to cents and totals to dollars.)

Costs are assigned under the periodic inventory system using a.)the specific identification method, b) the average-cost method, c.)FIFO method and d.) LIFO method

Costs are assigned under the perpetual inventory system usinga.) the average-cost method, b.) the FIFO method, and c) the LIFOmethod