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DASTOOR ...... My Most Favourite of HABIB JALIB


The poem was originally written In 1962, when Field Marshal Ayub Khan formulated the new constitution and was playing the flute of his administrative capabilities, Jalib called it faulty. He called it a tool of exploitation and wrote his most memorable poem Dastoor which shattered the manipulated intentions of the government.

english

The light which shines only in palaces
Burns up the joy of the people in the shadows
Derives its strength from others’ weakness
That kind of system,
like dawn without light
I refuse to acknowledge,
I refuse to accept

I am not afraid of execution,
Tell the world that I am the martyr
How can you frighten me with prison walls?
This overhanging doom,
this night of ignorance,
I refuse to acknowledge,
I refuse to accept

“Flowers are budding on branches”, that’s what you say,
“Every cup overflows”, that’s what you say,
“Wounds are healing themselves”, that’s what you say,
These bare-faces lies,
this insult to the intelligence,
I refuse to acknowledge,
I refuse to accept

For centuries you have all stolen our peace of mind
But your power over us is coming to an end
Why do you pretend you can cure pain?
Even if some claim that you’ve healed them,
I refuse to acknowledge,
I refuse to accept

-----------------------------------------------------
ROMAN URDU

Deep jis ka sirf mehellaat hi main jalay,
Chand logon ki khushyon ko lay ker chalay,
Wo jo saye main har maslihat kay palay;
Aisay dastoor ko,
Subh e bay noor ko,
Main naheen maanta,
Main naheen jaanta.

Main bhee kha’if naheen takhta e daar say,
Main bhee Mansoor hoon, keh do aghyaar say,
Kyun daraatay ho zindaan ki divar say,
Zulm ki baat ko,
Jehel ki raat ko,
Main naheen maanta,
Main naheen jaanta.

Phool shaakhon pay khilnay lagay tum kaho,
Jaam rindon ko milnay lagay tum kaho,
Chak seenon kay silnay lagay tum kaho,
Iss khulay jhoot ko,
Zehan ki loot ko,
Main naheen maanta,
Main naheen jaanta.

Tum nay loota hai sadyon hamara sakoon,
Ab na hum per chalay ga tumhara fasoon,
Chara gar main tumhain kiss tara say kahoon?
Tum naheen charaagar,
Koi maanay magar,
Main naheen maanta,
Main naheen jaanta.

-----------------------------------------------------------
URDU (CLICK TO ENLARGE)


WHAT IS PETTY CASH?


Definition:


Petty cash refers to small amounts of cash kept on hand in a business. (The term "petty" comes from "petite," or "small.") There are two reasons to keep petty cash:


* To make change for customers or patients
* To pay for small purchases which require cash, such as food for the office lunch or coffee supplies, or for parking. Most retail businesses keep a cash drawer as do health care practices.

PETTY CASH BOX

Every purchase using petty cash must be documented in the same way as other business income and expenses. Using a petty cash log or petty cash slips will help capture these expenses so they can be used to offset income for business tax purposes.


Keep as much cash as you need in your cash drawer, but not too much, so it isn't a temptation for employees or robbers.
Also Known As: Cash on Hand
Examples: The petty cash drawer was used to make change and pay for incidental business expenses.

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 14

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Which of the following characteristics is considered to be an advantage of the corporate form of organization?

a. Avoidance of double taxation
b. Limited liability of stockholders
c. Low level of regulation
d. The absence of a perpetual existence

HELP ME!

2. Of the following characteristics, which is not generally regarded as a right of common shareholders?

a. Preemptive right
b. Voting rights
c. Preference in liquidation
d. Transferability of shares

HELP ME!

3. The appropriate journal entry to record the issue of 1,000 shares of $1 par-value common stock, which is issued for $4 per share would be:

a. Cash 4,000
Common Stock 4,000

b. Cash 4,000
Common Stock 1,000
Paid-in Capital in Excess of Par 3,000

c. Cash 4,000
Common Stock 1,000
Retained Earnings 3,000

d. Cash 1,000
Paid-in Capital in Excess of Par 3,000
Common Stock 4,000

HELP ME!

4. If 1,000 shares of $10 par-value common stock are issued in exchange for land with a fair market value of $25,000, the land and common stock (along with any additional paid-in capital) should be recorded at:

a. $0
b. $1,000
c. $10,000
d. $25,000

HELP ME!

5. Jackson Corporation has 500,000 shares of common stock outstanding. On April 10, the board of directors declared a $0.60 per share cash dividend, to be paid to stockholders of record on April 25. The dividend was distributed on June 6. The proper journal entry to record on June 6 is:

a. Dividends Expense 300,000
Cash 300,000

b. Dividends Payable 300,000
Cash 300,000

c. Retained Earnings 300,000
Cash 300,000

d. Dividends Payable 300,000
Retained Earnings 300,000

HELP ME!

6. Dividends omitted on preferred shares that must be paid before common shareholders are entitled to be paid are referred to as:

a. Participating
b. Callable
c. Cumulative
d. In arrears

HELP ME!

7. Magic Corporation paid $100,000 in dividends. The corporation had 10,000 shares of common stock outstanding and 5,000 shares of $100 par value 5% preferred stock. The preferred stock was two years in arrears prior to the current year. How much was paid to the common stockholders?

a. $0
b. $25,000
c. $50,000
d. $75,000

HELP ME!

8. In reviewing corporate equity on a balance sheet, what would be included in the description "Total Capital Stock"?

a. Par value of preferred
b. Par value of common
c. Paid-in capital in excess of par value
d. Both (a) and (b)

HELP ME!

9. Which of the following statements about treasury stock is false?

a. Gains are not recorded on treasury stock transactions, but losses are.
b. Acquiring treasury stock causes stockholders' equity to decrease.
c. Treasury stock is reported as a deduction from stockholders' equity.
d. The excess of the sales price of treasury stock over its cost should be credited to Paid-in Capital from Treasury Stock.

HELP ME!

10. Elmer Company has 500,000 shares of common stock authorized. The stock has a par value of $1.50 per share, and 150,000 shares are outstanding. The company declared a 5% stock dividend at a time when the market value was $7 per share. What entry, if any, should Elmer record for the declaration?

a. No entry

b. Retained Earnings 11,250
Common Stock 11,250

c. Retained Earnings 52,500
Stock Dividend Distributable 11,250
Paid-in Capital in Excess of Par 41,250

d. Stock Dividends Payable 11,250
Retained Earnings 41,250
Common Stock 52,500

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 13

MULTIPLE CHOICE QUESTIONS

1. The present value factor at 8% for one period is 0.92593, for two periods is 0.85734, for three periods is 0.79383, for four periods is 0.73503, and for five periods is 0.68058. Given these factors, what amount should be deposited in a bank today to grow to $100 three years from now?

a. $100/0.79383
b. $100/(0.92593/3)
c. ($100/0.92593 + $100/0.85734 + $100/0.79383)
d. $100 X 0.79383

HELP ME!

2. You are thinking of borrowing $250,000 to buy a new house. If you are going to finance this purchase at 12% interest per annum, and make 360 level monthly payments to pay off the loan, how much will your payments be?

a. $250,000/360
b. $250,000/present value factor for lump sum at 360 months and 1% per period
c. $250,000/present value factor for annuity of 360 months at 1% per period
d. $250,000 X present value factor for annuity of 360 months at 1% per period

HELP ME!

3. Assume that Kamchatny Vladimir borrowed $100,000 on January 1 of Year 1, at 5% interest per annum. On December 31, of Year 1, an $8,000 payment is made. On December 31, of year 2, another $8,000 payment is made. Using normal assumptions about interest and principal reduction, how much is the unpaid balance of Vladimir's loan after the second payment?

a. $100,000
b. $94,000
c. $93,850
d. 84,000

HELP ME!

4. Bonds payable should be disclosed on the balance sheet.

a. At their face value minus any unamortized premiums.
b. At their face value plus any unamortized premiums.
c. At their maturity value.
d. At their face value.

HELP ME!

5. When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:

a. The price of the bond will be equal to the future cash flow associated with the bond.
b. The bond will be issued at a premium.
c. The bond will be issued at a discount.
d. The face value of the bond will fluctuate over its life.

HELP ME!

6. On June 1, Surge Corporation issued $100,000 of 9%, 5-year bonds. The bonds are dated June 1, 19X1. The bonds were issued at 96, and pay interest on December 1 and June 1. The entry to record issuance of the bonds is:

a. Cash 100,000
Bonds Payable 100,000

b. Cash 96,000
Discount on Bonds Payable 4,000
Bonds Payable 100,000

c. Cash 104,000
Bond Interest Payable 4,000
Bonds Payable 100,000

d. Cash 96,000
Bond Interest Expense 4,000
Bonds Payable 100,000

HELP ME!

7. On April 1, 20X1, German Corporation issued $100,000 of 7%, 5-year bonds dated April 1, 20X1, at 101. Interest is paid on March 31 and September 30. The proper entries to record bond interest expense for the (entire) year ended 20X1 would include a decrease in interest expense for premium amortization in the amount of (round to the nearest dollar and assume straight-line amortization):

a. $0
b. $117
c. $150
d. $200

HELP ME!

8. Jeske Company issued $1,000,000 of 8% bonds at a time when the market rate of interest was 10%. If the bonds were issued at a $50,000 discount and interest was paid annually, how much was interest expense for the first full year of the bond issue (utilize the effective-interest amortization technique)?

a. $76,000
b. $80,000
c. $95,000
d. $100,000

HELP ME!

9. When interest payment dates on a bond are June 1 and December 1, and the bond is sold on July 1, the amount of cash received at issuance will be:

a. Decreased by accrued interest from July 1 to December 1.
b. Decreased by accrued interest from June 1 to July 1.
c. Increased by accrued interest from July 1 to December 1.
d. Increased by accrued interest from June 1 to July 1.

HELP ME!

10. Billings Corporation retired $1,000,000 face of bonds payable. At the time of the retirement, the bonds had unamortized discount of $20,000, and all interest accruals and payments were current. Under the outstanding covenants, Billings was required to pay the bond holders 103.

a. The transaction caused Billings to recognize a loss of $50,000.
b. The transaction caused Billings to recognize a gain of $50,000.
c. The transaction caused Billings to recognize a loss of $30,000.
d. The transaction caused Billings to recognize a gain of $20,000.

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 12

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Typical current liabilities include:

a. Prepayments by customers.
b. Travel advances to employees.
c. The principal portion of a mortgage note that is due beyond one year or the operating cycle, whichever is longer.
d. Accumulated depreciation.

HELP ME!

2. Contingent liabilities should be recorded in the accounts when:

a. It is probable that the future event will occur.
b. The amount of the liability can be reasonably estimated.
c. Both (a) and (b).
d. Either (a) or (b).

HELP ME!

3. On June 1, Whit Corporation purchased a truck for $30,000. To pay for the truck, Whit issued and recorded a six-month note payable for $31,500. No other entry was recorded for the note until payment on December 1. The journal entry to record payment of the note would include:

a. A debit to Interest Expense for $1,500.
b. A debit to Discount on Notes Payable for $1,500.
c. A debit to Notes Payable for $30,000.
d. A debit to Cash for $31,500.

HELP ME!

4. The Discount on Notes Payable:

a. Is a contra liability account.
b. Is a contingent liability account.
c. Should be reported as an asset because of its debit balance.
d. Is amortized to reduce interest expense over the life of the note payable.

HELP ME!

5. If the journal entry to record an accrued liability were accidentally recorded twice, it would:

a. Understate income for the year.
b. Overstate income for the year.
c. Have no effect on income for the year.
d. Understate accrued liabilities at the end of the year.

HELP ME!

6. Landry paid $5,000 cash for warranty service work. If a Warranty Liability account had been previously established, the proper journal entry to record the service work would be:

a. Sales 5,000
Cash 5,000

b. Warranty Expense 5,000
Warranty Liability 5,000

c. Warranty Expense 5,000
Cash 5,000

d. Warranty Liability 5,000
Cash 5,000

HELP ME!

7. The employee's withholding allowance certificate is popularly referred to as a:

a. W-2.
b. W-4.
c. Form 1040.
d. Payroll register.

HELP ME!

8. The FICA tax is levied on:

a. Employees only.
b. Employers only.
c. Both employees and employers.
d. Earnings in excess of base amounts.

HELP ME!

9. Burgundy Drug Store paid $137,000 in salaries during 20X1. Salary expense for the year was $148,500 and salaries payable at the end of 20X1 amounted to $17,300. What was the amount of salaries payable as of January 1, 20X1?

a. $5,800
b. $11,500
c. $17,300
d. $28,800

HELP ME!

10. The gross payroll for Zurich Corporation was $100,000. Federal income tax withheld from employee paychecks amounted to $24,000, state income tax withheld amounted to $3,000, Social Security amounted to $8,500 (both the employee and employer portion), and Medicare amounted to $3,500 (both the employee and employer portion). Furthermore, employees elected to have $1,000 of insurance and charitable contributions withheld from their paychecks. How much was net pay?

a. $34,000
b. $60,000
c. $66,000
d. $72,000

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 11

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Cross Country Trucking Company recently replaced the oil filter on one of its cross country rigs. How should one account for this cost?

a. As a repair and maintenance expense.
b. As an increase in the cost of the truck.
c. As a reduction in accumulated depreciation associated with the truck.
d. As an intangible asset.

HELP ME!

2. On January 1, 20X2, Lynn Corporation purchased a machine for $100,000. Lynn paid shipping expenses of $1,000 as well as installation costs of $2,400. The machine was estimated to have a useful life of ten years and an estimated salvage value of $6,000. In January 20X3, additions costing $7,200 were made to the machine. These additions significantly improved the quality of output, but did not change the life or salvage value of the machine. If Lynn records depreciation under the straight-line method, depreciation expense for 20X3 is:

a. $9,740
b. $10,340
c. $10,540
d. $11,140

HELP ME!

3. If an asset is impaired, and future cash flows will not allow recovery of the recorded amount, then the firm should reduce the asset in the accounts. In addition,

a. a loss should be recognized.
b. an intangible asset should be recorded.
c. the asset should be discarded.
d. depreciation should cease.

HELP ME!

4. A machine that cost $18,000, with a book value of $4,000, is sold for $3,400. Which of the following is true concerning the journal entry to record the sale?

a. Accumulated Depreciation is debited for $4,000.
b. Machinery is credited for $4,000.
c. Loss on sale of machinery is credited for $600.
d. Accumulated Depreciation is debited for $14,000.

HELP ME!

5. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were:

a. Less than current market value.
b. Greater than cost.
c. Greater than book value.
d. Less than book value.

HELP ME!

6. Equipment costing $3,000 with accumulated depreciation of $2,125 is exchanged for another asset with a fair value of $625. The exchange has commercial substance. How much is the gain or loss on this transaction?

a. A gain of $250 should be recognized.
b. A loss of $250 should be recognized.
c. A loss of $500 should be recognized.
d. No gain or loss should be recognized.

HELP ME!

7. Deep Gold Mining Company recognizes $4 of depletion for each ton of ore mined. This year, 300,000 tons of ore were mined but only 180,000 were sold. The amount of depletion which should be deducted from revenue this year is:

a. $0
b. $480,000
c. $720,000
d. $1,200,000

HELP ME!

8. Which of the following terms best relates to natural resources?

a. Depreciation.
b. Depletion.
c. Amortization.
d. Accrual.

HELP ME!

9. On January 5, 20X1, a corporation was granted a patent on a product. On January 2, 20X9, to protect its patent, the corporation purchased a patent on a competing idea that was originally issued on January 10, 20X5. Because of its unique nature, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be:

a. Amortized over a maximum period of 20 years.
b. Amortized over a maximum period of 13 years.
c. Amortized over a maximum period of 12 years.
d. Expensed in 20X9.

HELP ME!

10. Which of the following statements regarding goodwill is false?

a. The difference between the price paid to purchase a particular company, and the fair value of the underlying identifiable assets received (less liabilities assumed) is goodwill.
b. Goodwill should not be amortized, but should be evaluated for impairment.
c. Goodwill is an intangible asset.
d. Goodwill may be recorded for a company whether it is internally generated or purchased.

HELP ME!m

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 10

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Which of the following items should be expensed as incurred?

a. Broker's fees on the purchase of a long-lived asset.
b. Repair of damage occurring during installation of new equipment.
c. Freight charges on the purchase of equipment.
d. Normal installation fees on the purchase of equipment.

HELP ME!

2. Lancer Corporation purchased a parcel of land as a factory site for $150,000. Construction began immediately on a new building. Costs incurred are as follows:

Architect's fees 25,000
Legal fees for land purchase contract 2,000
Construction costs 250,000

Lancer should record the cost of the new land and building, respectively, at:

a. $150,000 and $275,000
b. $152,000 and $275,000
c. $150,000 and $250,000
d. $152,000 and $250,000

HELP ME!

3. Reno Acquisitions Company recently bought a furnished hotel for a lump-sum purchase price of $15,000,000. Separately, the land was valued at $6,000,000, the building at $12,000,000, and the furniture and equipment at $2,000,000. How much cost should Reno assign to the land?

a. $1,000,000
b. $4,500,000
c. $6,000,000
d. $8,000,000

HELP ME!

4. The appropriate journal entry to record machinery depreciation of $1,000 is:

a. Depreciation Expense 1,000
Accumulated Depreciation 1,000

b. Depreciation Expense 1,000
Machine 1,000

c. Accumulated Depreciation 1,000
Depreciation Expense 1,000

d. Accumulated Depreciation 1,000
Machine 1,000

HELP ME!

5. Omni Corporation purchased a new vehicle on January 1, 20X1. The vehicle cost $100,000, has a five-year life, and a $20,000 residual value. Omni has a December 31 year-end. If Omni depreciates the truck by the double-declining balance method, how much should be recorded as depreciation expense during 20X4?

a. $0
b. $1,600
c. $8,640
d. $40,000

HELP ME!

6. Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year-end. If Realistic Company depreciates the truck by the sum-of-the-years'-digits method, how much should Realistic report as the book value of the truck at the end of 20X3?

a. $1,600
b. $2,000
c. $5,600
d. $14,400

HELP ME!

7. On July 1, 20X1, Clem Company purchased factory equipment for $50,000. Residual value was estimated to be $2,000. The equipment will be depreciated over ten years using the sum-of-the-years'-digits depreciation method. Clem has a December 31 year-end, and during 20X1, one-half of a year's depreciation expense was recorded. How much depreciation expense should be recorded for 20X2? (round computations to the nearest dollar)

a. $7,855
b. $8,291
c. $8,636
d. $8,727

HELP ME!

8. A graph is set up with "depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the lines for straight-line and sum-of-the-years'-digits depreciation expense, respectively, be drawn on this graph?

a. Vertically and sloping down to the right.
b. Vertically and sloping up to the right.
c. Horizontally and sloping down to the right.
d. Horizontally and sloping up to the right.

HELP ME!

9. On July 1, 20X1, Robinson Company purchased a new machine for $200,000. The machine is estimated to have a service-life of 10 years with an estimated residual value of $5,000. Robinson uses straight-line depreciation. During 20X5, it became apparent that the machine would not be efficient to operate after December 31, 20X7. Furthermore, the machine would have no scrap value. How much should be charged to depreciation expense in 20X5 under generally accepted accounting principles? (round computations to the nearest dollar)

a. $19,500
b. $42,250
c. $43,917
d. $65,000

HELP ME!

10. Assume that the modified accelerated cost recovery system is used to account for a depreciable asset for tax purposes. In general, which of the following observations is correct?

a. Depreciation amounts will be the same for financial reporting purposes.
b. In the early years of an asset's life, depreciation will be greater for tax than for financial reporting purposes.
c. In the early years of an asset's life, depreciation will be less for tax than for financial reporting purposes.
d. The tax life will exceed the financial reporting life.

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 9

MULTIPLE CHOICE QUESTIONS

1. Which of the following categories/methods would be used to account for an investment, where the intent of the investment was primarily for short-term profits?

a. Trading securities
b. Available for sale securities
c. Held to maturity securities
d. Equity method

HELP ME!

2. Ace Corporation has a long-term investment in the common stock of another entity. This investment is accounted for as an available-for-sale security. A journal entry to record a $10,000 decline in market value below cost would necessarily involve:

a. a debit to Unrealized Gain/Loss -- OCI
b. a credit to Unrealized Gain/Loss -- OCI
c. a debit to Available for Sale Securities.
d. a debit to Investment Revenue.

HELP ME!

3. Investment in Bonds should be disclosed on the balance sheet.

a. At their face value minus any unamortized premiums.
b. At their face value plus any unamortized premiums.
c. At their maturity value.
d. At their face value.

HELP ME!

4. When the contract interest rate for a bond exceeds the effective interest rate of the bond, then:

a. The price of the bond will be equal to the future cash flow associated with the bond.
b. The bond will be issued at a premium.
c. The bond will be issued at a discount.
d. The face value of the bond will fluctuate over its life.

HELP ME!

5. On June 1, Pennell Corporation purchased $100,000 of 9%, 5-year bonds. The bonds are dated June 1, 20X1. The bonds were issued at 96, and pay interest on December 1 and June 1. The entry to record the investment in bonds is:

a. Investment in Bonds 100,000
Cash 100,000

b. Investment in Bonds 96,000
Cash 96,000

c. Investment in Bonds 104,000
Cash 104,000

d. Investment in Bonds 96,000
Interest Income 4,000
Cash 100,000

HELP ME!

6. On April 1, 20X1, Collinge Corporation purchased $100,000 of 7%, 5-year bonds dated April 1, 20X1, at 101. Interest is paid on March 31 and September 30. Assuming use of the straight-line amortization method, the proper amount of income to record on September 30, 20X1 is:

a. $7,000
b. $3,400
c. $3,500
d. $3,600

HELP ME!

7. On January 1, 20X2, Miller Corporation purchased $100,000 of 5%, 10-year bonds dated January 1, 20X2, at 98. Interest is paid on June 30 and December 31 of each year. Assuming use of the straight-line amortization method, the proper amount to report for Investment in Bonds at December 31, 20X3 is:

a. $98,000
b. $98,400
c. $100,000
d. $101,600

HELP ME!

8. Investor Corporation owns 30% of Investee Corporation. Investee had net earnings of $100,000 during the year and paid dividends of $30,000. Investor's Investment in Investee account contained a $70,000 balance at the beginning of the year. What would be the correct balance of this account at the end of the year?

a. $70,000
b. $91,000
c. $100,000
d. $140,000

HELP ME!

9. Investor Corporation owns 30% of Investee Corporation. Investee had net earnings of $100,000 during the year and paid dividends of $30,000. Investor's Investment in Investee account contained a $70,000 balance at the beginning of the year. How much dividend income will Investor record?

a. $0
b. $9,000
c. $30,000
d. $39,000

HELP ME!

10. Mega Corporation owns 100% of Wolf Corporation's stock. Mega paid $1,000,000 for its investment. At the time of the initial investment, Wolf had total stockholders' equity of $600,000. All of Wolf's assets and liabilities were carried at amounts that equaled their fair value, except for a building that was undervalued by $100,000. How much goodwill would you anticipate finding in the consolidated balance sheet?

a. $0
b. $100,000
c. $300,000
d. $400,000

HELP ME!

(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 8

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Inventory accounts should be classified in which section of a balance sheet?

a. Current assets
b. Investments
c. Property, plant, and equipment
d. Intangible assets

HELP ME!

2. Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz's accounting year-end, Ritz was aware that the goods had been shipped and would be received any day.

a. Ritz should include the goods in its inventory calculated on December 31.
b. Ritz should include the goods in its inventory calculated on December 31, but should not record the obligation to pay for them.
c. Ritz should not include the goods in its inventory calculated on December 31, but should include the related payable on its balance sheet at December 31.
d. Ritz should not include the goods in its inventory calculated on December 31, and should not include the related payable on its balance sheet at December 31.

HELP ME!

3. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2 Beginning Inventory 500 units at $3.00
April 7 Purchased 1,100 units at $3.20
June 30 Purchased 400 units at $4.00
December 7 Purchased 1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the first-in, first-out method, ending inventory would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

HELP ME!

4. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2 Beginning Inventory 500 units at $3.00
April 7 Purchased 1,100 units at $3.20
June 30 Purchased 400 units at $4.00
December 7 Purchased 1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:

a. $2,780
b. $3,960
c. $9,700
d. $10,880

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5. Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

January 2 Beginning Inventory 500 units at $3.00
April 7 Purchased 1,100 units at $3.20
June 30 Purchased 400 units at $4.00
December 7 Purchased 1,600 units at $4.40

Sales during the year were 2,700 units at $5.00. If Hefty used the weighted-average method, gross profit would be:

a. $3,255
b. $3,415
c. $10,245
d. $13,500

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6. Which of the following inventory methods will always produce the same results under both a periodic and perpetual system?

a. FIFO
b. LIFO
c. Average
d. All of these

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7. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is:

a. FIFO
b. LIFO
c. Retail
d. Weighted-average

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8. Bernstein Corporation recently experienced a fire which destroyed all of its inventory. The following data have been reconstructed from partial accounting information, and pertain to the year up to the date of the fire.

Beginning inventory $20,000
Net purchases $45,000
Sales $80,000
Gross profit rate 40%

Using the gross profit method, estimate the dollar amount of inventory which was destroyed in the fire.

a. $17,000
b. $33,000
c. $48,000
d. $65,000

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9. Gerber Department Store utilizes the retail inventory method. Gerber's beginning inventory cost $140,000 and retailed for $280,000. Purchases for the period amounted to $390,000 and were priced to sell at twice that amount. Sales for the period, all at normal retail, were $600,000. How much is the cost of Gerber's estimated ending inventory?

a. $115,000
b. $150,000
c. $230,000
d. $300,000

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10. Wonder Corporation failed to record the purchase of merchandise on account. The merchandise and related accounts payable should have been recorded but were not. What is the effect of these errors on assets, liabilities, retained earnings, and net income, respectively?

a. Understated, understated, no effect, no effect
b. Understated, understated, understated, understated
c. Understated, overstated, overstated, understated
d. Overstated, overstated, understated, overstated

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(ACCOUNTING ) MULTIPLE CHOICE QUESTION Chapter 7

MULTIPLE CHOICE QUESTIONS

Select the appropriate response.

1. Trade accounts receivable:

a. arise from the sale of a company's products or services.
b. are reported in the noncurrent asset section of the balance sheet.
c. include deposits with utilities.
d. generally comprise the minority of the total receivables balance.

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2. Lundstrom Company began making sales on credit during 20X1. The company used the direct write-off method for uncollectible accounts. A material amount of uncollectible accounts resulting from sales made during 20X1 were written off during 20X2. What was the effect of this write-off on net income for 20X1 and 20X2?

20X1 20X2

a. Overstate Overstate
b. Overstate Understate
c. Understate Overstate
d. Understate Understate

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3. Taylor Company uses the direct write-off method of recording uncollectible accounts receivable. Recently, a customer informed Taylor that he would be unable to pay $300 owed to Taylor. Taylor's proper journal entry to reflect this event would be:

a. Uncollectible Accounts Expense 300
Allow. for Uncollectible Accounts 300

b. Allow. for Uncollectible Accounts 300
Accounts Receivable 300

c. Uncollectible Accounts Expense 300
Accounts Receivable 300

d. Sales 300
Accounts Receivable 300

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4. Malcom's financial statements revealed uncollectible accounts expense of $8,000, accounts receivable of $140,000, and allowance for uncollectible accounts of $12,000. The net realizable value of Malcom's accounts receivable is:

a. $128,000
b. $132,000
c. $136,000
d. $152,000

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5. Branz Company had credit sales during the current year which amounted to $700,000. Historically, 3% of credit sales are uncollectible. If Branz uses the allowance method of recording uncollectible accounts, a proper journal entry for the year would be:

a. Accounts Receivable 21,000
Allow. for Uncollectible Accounts 21,000

b. Uncollectible Accounts Expense 21,000
Accounts Receivable 21,000

c. Uncollectible Accounts Expense 21,000
Allow. for Uncollectible Accounts 21,000

d. Allow. for Uncollectible Accounts 21,000
Accounts Receivable 21,000

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6. Lindy Company uses an allowance method to account for bad debts. Lindy estimates that 5% of the outstanding accounts receivable will be uncollectible. At the end of the year, Lindy has outstanding accounts receivable of $750,000, and a debit balance in the Allowance for Uncollectible Accounts of $9,000. Lindy should record uncollectible accounts expense of:

a. $28,500
b. $37,500
c. $46,500
d. $55,500

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7. Flynn Company uses an allowance method for recording uncollectibles. Flynn determined that $4,000 due from Mitchell will not be collected. The entry Flynn should record to write off the Mitchell account is:

a. Uncollectible Accounts Expense 4,000
Accounts Receivable 4,000

b. Sales 4,000
Accounts Receivable 4,000

c. Uncollectible Accounts Expense 4,000
Allowance for Uncollectible Accounts 4,000

d. Allowance for Uncollectible Accounts 4,000
Accounts Receivable 4,000

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8. John Company uses an allowance method for recording uncollectible receivables. John was notified by Paul that payment on a $1,000 receivable would be forthcoming. John had previously written off the receivable from Paul. The proper journal entry for John to record to reinstate the receivable into the accounts is:

a. Accounts Receivable 1,000
Allow. for Uncollectible Accounts 1,000

b. Allow. for Uncollectible Accounts 1,000
Sales 1,000

c. Accounts Receivable 1,000
Sales 1,000

d. Accounts Receivable 1,000
Uncollectible Accounts Expense 1,000

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9. Interest on a loan may be computed by which of the following formulas?

a. (principal x rate)/time
b. (principal x rate x time)
c. (principal x time)/rate
d. (principal x time)/time

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10. Vivian Howell is the payee of $10,000, 180-day, 8% note. At maturity, the maker failed to pay. How much interest income should Vivian recognize on the dishonored note?

a. $0
b. $400
c. $800
d. $10,800

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