Question

1- When inventory costs are declining,which of the following inventory costing method will result in the lower merchandise inventory ?

a)first-in,first-out

b)last-in,first-out

c)weighted-average

d)specific identification

2-Which of the following will be recorded in the Other Accounts CR column of the cash receipts journal ?

a)receipt of accounts receivable

b)cash sales

c)receipt of interest revenue

d)sales discounts

3-Which of the following is an example of a source document in a computerized accounting information sytem?

a)statement of cash flows

b)balance sheet

c)general ledger

d)bank checks

4-When using a manual accounting information system,which of the following will be recorded in the general journal ?

a)receipt of cash from a debtor

b)depreciation on equipment

c)purchase of merchandise inventory on account

d)payment of accounts payable

5)In the following situation,which internal control procedure needs strengthening ? Santhom Inc. does not have a separate accounting accounting departmeent.Its operating departments are also responsible for recording transactions in the books of accounts of the company apart from their main operations.

a)assigment of responsibilities

b)competent,reliable,and ethical personnel

c)separation of duties

d)documents

Answer 1

1- When inventory costs are declining, which of the following inventory costing method will result in the lower merchandise inventory ?

Answer: B. Last in First Out

Reason: Under Last in First Out the Recently Purchased items are not sold and previously purchased items are sold as a result the old high cost inventory will be over and recently purchased low costs inventory will be remaining resulting in low cost inventory.

2-Which of the following will be recorded in the Other Accounts CR column of the cash receipts journal ?

Answer: C. Receipt of Interest Revenue.

Reason: First Sales Discounts is not a Cash Nature. So, it will not come & Receipt of accounts Receivable means credit sales & cash sales are debited to the cash receipts journal.

3-Which of the following is an example of a source document in a computerized accounting information system?

Answer: D. Bank Checks

Reason: Statement of Cash Flows & Balance sheet are Part of Financial Statements and general ledger is prepared from the source documents only.

4-When using a manual accounting information system,which of the following will be recorded in the general journal ?

Answer: D. Depreciation on Equipment

Reason: Posting to General Ledger are only Transactions which are not posted in any other ledgers.

5)In the following situation,which internal control procedure needs strengthening ? Santhom Inc. does not have a separate accounting accounting departmeent.Its operating departments are also responsible for recording transactions in the books of accounts of the company apart from their main operations?

Answer: C. Separation of Duties