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Thirty years ago,most companies relied mainly upon periodic inventory systems.Why?


A) Theft was an insignificant source of loss compared to today.
B) Tax laws required physical inventory counts.
C) New technology,allowing perpetual inventory systems to be installed more easily and inexpensively,was not available thirty years ago.
D) Before the advent of computers,perpetual systems were less accurate than periodic systems.

E) B) and C)
F) A) and B)

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When you identify outstanding cheques in performing a bank reconciliation,you must:


A) deduct the amount of the outstanding cheques from the balance per books.
B) deduct the amount of the outstanding cheques from the balance per bank.
C) add the amount of the outstanding cheques to the balance per books.
D) add the amount of the outstanding cheques to the balance per bank.

E) B) and C)
F) A) and B)

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and sells it for $4 a half litre.Which of the following statements is true?


A) Your gross profit per half litre is $2.50.
B) Your gross profit per half litre is $1.75.
C) $2.50 is recorded in an account titled Gross Profit.
D) $1.75 is recorded in an account titled Gross Profit.

E) C) and D)
F) B) and C)

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When preparing this month's bank reconciliation,you find that you failed to record a $95 deposit for a payment you received from a customer.You immediately prepare a journal entry to record the deposit.Which of the following describes the actions to be taken when preparing next month's bank reconciliation?


A) You must decrease the balance per bank by $95.
B) You must increase the balance per bank by $95.
C) You must increase the balance per books by $95.
D) No further action is necessary.

E) A) and B)
F) None of the above

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Which of the following statements is true?


A) Because gross profit percentages are so consistent from period to period they are not very useful for analyzing one company over time.
B) Because gross profit percentages are so variable across industries they are most useful in comparing companies from different industries.
C) Because gross profit percentages are so variable across industries they are more useful in analyzing one company over time.
D) Because gross profit percentages are so consistent across industries they are most useful in comparing companies from different industries.

E) None of the above
F) A) and B)

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Purrfect Pets announces that its gross profit rose 5% and its net income fell.Which of the following statements is true?


A) This is not possible given that net income is determined by gross profit.
B) This must mean that other expenses have risen more than 5%.
C) This must mean that other expenses fell.
D) This must mean that sales revenue fell.

E) None of the above
F) B) and D)

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When a company makes a sale and accepts a credit card payment from a customer,the company:


A) debits Cash.
B) credits Accounts Receivable.
C) credits Cash.
D) debits Accounts Receivable.

E) A) and C)
F) None of the above

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The following merchandise transactions occurred during December for two different companies: Rippen and Burnen.Both companies use a perpetual inventory system. On December 3,Rippen Corporation sold merchandise on account to Burnen Corp.for $480,000,terms 2/10,n/30.This merchandise originally cost Rippen $320,000. On December 8,Burnen Corp.returned merchandise to Rippen Corporation for a credit of $30,000.Rippen returned this merchandise to inventory at its original cost of $20,000. December 12,Burnen Corp.paid Rippen Corporation for the amount owed. Required: a.Prepare the journal entries to record these transactions on the books of Rippen Corporation. b.Prepare the journal entries to record these transactions on the books of Burnen Corp.

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Journal entries to record thes...

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Businesses need to control their day-to-day operations in order to ensure that:


A) sales are not lost because desired goods are not in stock.
B) money is not tied up in excessive inventory.
C) the loss of inventory and cash to theft is minimized.
D) all of the above.

E) None of the above
F) B) and C)

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On October 31,2007,the bank's records say that your company has $12,956.73 in its chequing account.You are aware of three outstanding cheques for a total of $2,112.19.During October 2007,the bank rejected two deposited cheques from customers totalling $654.19 because of insufficient funds and charged you $12.00 in service fees.You had not yet received notice about the bad cheques,but you were aware of and have recorded the $12.00 of service fees.Prior to adjustment on October 31,2007,your Cash account would have a balance of:


A) $14,402.73.
B) $15,711.11.
C) $11,498.73.
D) $10,202.35.

E) B) and D)
F) B) and C)

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Which of the following is an activity common to the operations of merchandising,manufacturing,and service companies?


A) Producing product.
B) Incurring operating expenses.
C) Buying goods or raw materials.
D) Selling goods or physical product.

E) B) and C)
F) B) and D)

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An electronics retailer purchases $20,000 of computers for resale.The retailer spends $500 in transportation cost,$2,000 in labour and parts to upgrade the computers,and $300 to advertise them.At this point,what amount should appear in the Inventory account for these computers?


A) $20,000
B) $20,500
C) $22,500
D) $22,800

E) A) and D)
F) A) and C)

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BetterBuy sells a computer from inventory for $599 on credit.BetterBuy originally bought the computer from IBM for $395.What are the journal entries Betterbuy would record?


A) Debit Cash for $599,credit Sales for $599; debit Inventory for $395 and credit Cost of Goods Sold for $395.
B) Debit Accounts Receivable for $599,credit Inventory for $395,and credit Retained Earnings for $204.
C) Debit Accounts Receivable for $599,credit Sales for $599; debit Cost of Goods Sold for $395 and credit Inventory for $395.
D) Debit Inventory for $395,debit Cost of Goods Sold for $204,and credit Accounts Receivable for $599.

E) None of the above
F) All of the above

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Which of the following is a true statement for a company using a perpetual inventory system?


A) Sales discounts is a contra-account to revenue.
B) Purchase discounts is a contra-account to revenue.
C) Purchase discounts is a contra-account to accounts receivable
D) Sales discounts is a contra-account to inventory.

E) A) and D)
F) B) and D)

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The internal control principle related to separating employees' duties so that the work of one person can be used to check the work of another person is called:


A) duplication of responsibility.
B) independent internal verification.
C) segregation of duties.
D) rotation of duties.

E) None of the above
F) B) and D)

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A company has gross profit of $58,300 and a gross profit percentage of 25%.What is the company's net sales?


A) $233,200.
B) $14,575.
C) $72,825.
D) none of the above.

E) B) and D)
F) None of the above

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On June 15,Oakley Inc.sells merchandise on account to Sunglass Hut (SH) for $1,000 terms 2/10,n/30.On June 20,SH returns to Oakley merchandise that SH had purchased for $300.On June 24,SH completely fulfills its obligation to Oakley by making a cash payment.What is the amount of cash paid by SH to Oakley?


A) $680.
B) $686.
C) $700.
D) $1,000.

E) All of the above
F) A) and D)

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When you identify interest received from the bank in performing a bank reconciliation,you must:


A) add the amount of interest to the balance per bank.
B) deduct the amount of interest from the balance per books.
C) add the amount of interest to the balance per books.
D) deduct the amount of interest from the balance per bank.

E) A) and B)
F) A) and C)

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DigDug Corporation had outstanding cheques totalling $5,400 on its June bank reconciliation.In July,DigDug issued cheques totalling $38,900.The July bank statement shows that $26,300 in cheques cleared the bank in July.The amount of outstanding cheques on DigDug's July bank reconciliation should be:


A) $12,600.
B) $18,000.
C) $5,400.
D) $7,200.

E) B) and C)
F) A) and B)

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Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?


A) While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage.
B) Coca-Cola generated a lower gross profit percentage because their sales revenue was lower.
C) PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as shown by their $13.0 billion gross profit.
D) None of the above.

E) A) and B)
F) A) and C)

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