Committing a fraud because the employee feels “I deserve a pay raise. The company owes this to me” is indicative of which part of the fraud triangle?
A. Perceived opportunity
B. Rationalization
C. Perceived pressure
D. Realization
Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal entry to record this purchase for Meranda under a perpetual inventory system is
A. debit Inventory; credit Accounts Payable—Meranda.
B. debit Accounts Payable-Ashley; credit Inventory.
C. debit Inventory; credit Cash.
D. debit Inventory; credit Accounts Payable—Ashley.
Committing a fraud because the employee feels that it will be easy to do is indicative of which part of the fraud triangle?
A. Perceived opportunity
B. Rationalization
C. Perceived pressure
D. Realization
Bill’s Bikes had sales for the week of $3,569, of which $2,900 was on credit and $659 was in cash sales. The cost of the bikes sold was $1,888. The journal entries would include a
A. debit to Cash for $3,569; credit to Cost of Goods Sold for $3,569.
B. debit to Cost of Goods Sold for $1,888; credit to Inventory for $1,888.
C. debit to Cost of Goods Sold for $1,888; credit to Sales of $1,888.
D. debit to Cash for $3569; credit to Sales for $3,569.
Which of the following is an incorrect statement if ending inventory is overstated?
A. Net income is overstated.
B. Cost of goods sold is overstated.
C. Gross profit is overstated.
D. Income tax is overstated.
A company’s gross profit percentage decreases from 58% to 51%. What does this mean?
A. This means that net income will be higher.
B. This means that there will be a net loss.
C. This means that net income will be lower.
D. We can’t determine anything definite from the information given.
Net sales times the historical gross profit percentage yields the estimated
A. ending inventory.
B. beginning inventory.
C. cost of goods sold.
D. gross profit.
Physical inventory counts must be done
A. when using the perpetual method of inventory.
B. regardless of method inventory.
C. when using the periodic method of inventory.
D. when using bar-code scan technology.
Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; and cost of goods sold is $275,000. The inventory turnover is
A. 9.82.
B. 12.50.
C. 11.46.
D. 8.59.
Under a perpetual inventory system, the account to which transportation charges on incoming merchandise is generally entered is
A. delivery expense.
B. FOB shipping.
C. FOB destination.
D. inventory.
Which of the following would probably not need to be disclosed in a footnote?
A. A material change in estimated shrinkage
B. A change in depreciation method
C. Change of inventory methods
D. A 10% increase in sales
