1. Gordon the CPA says, "I am unable to give an opinion about
the validity of this accounting information." What kind of opinion
is this? A. Qualified B. Unqualified C. Disclaimer D. Adverse 2. A
new car lot would probably cost its inventory using the _______
method of inventory costing. A. FIFO B. specific-identification C.
moving average D. LIFO 3. In order to pay the least income tax
possible in periods of constant costs, the company should use which
of the following inventory costing methods? A. LIFO B. FIFO C.
Average cost D. Any method, as there is no effect on net income or
taxes for the period if costs are constant. 4. If the replacement
cost of inventory is less than its historical cost, the company
will write down the inventory by A. increasing inventory for
replacement cost and decreasing inventory for historical cost. B.
increasing cost of goods sold and decreasing inventory. C.
increasing inventory and decreasing cost of goods sold. D. making a
note in the financial statements only. 5. Michelle, a customer of
Regal Company, returned $45 of goods that were purchased on
account. Under the perpetual inventory system, Regal will record a
debit to _______ and a credit to _______ for $45. A. Sales;
Accounts Receivable (Michelle) B. Cost of Goods Sold; Inventory C.
Sales Returns and Allowances; Accounts Receivable (Michelle) D.
Sales; Cost of Goods Sold 6. Give the correct example of a
kickback. A. Marcy understates her company's unearned revenue in
order to make the total revenue look more impressive. B. A customer
buys a DVD player, but Courtney does not record the transaction.
Later, Courtney keeps the money for herself. C. Ben gives his
hardware salesman tickets to the football game. In exchange, the
salesman gives Ben an unfairly low price on hardware. D. Wyatt ate
only cheap sandwiches during his business trip, but he claimed over
$100 in food expenses to his company. 7. Beginning inventory plus
net purchases equals A. gross profit. B. ending inventory. C. cost
of goods available for sale. D. cost of goods sold. 8. _______
occurs if a disgruntled employee convinces another to steal from
the company. A. The control environment B. Monitoring C. A control
activity D. Collusion 9. As it relates to accounting fraud, which
of the following best describes perceived pressure? A. The
opportunity to commit and conceal fraud B. An employee's
justification of his or her actions C. Intentional
misrepresentation of financial statements D. A need to obtain cash
or other assets 10. Olympic Enterprises has the following inventory
data: Assuming FIFO, what is the cost of goods sold for June 14?
Date Quantity Unit Cost June 1 Beginning inventory 5 $52 June 4
Purchase 10 $55 June 7 Sale 12 June 11 Purchase 9 $58 June 14 Sale
8 A. $440 B. $464 C. $455 D. $456 11. If net sales decrease and
cost of goods sold increases, the gross profit percentage A.
decreases. B. increases. C. remains the same. D. will change based
upon the change in total assets. 12. In the United States, GAAP's
overriding principles of accounting are written by the A. IRS. B.
SEC. C. IASB. D. FASB. 13. A company has net sales of $126,000,
cost of goods sold of $72,000, operating expenses of $38,000, and
other expenses of $3,000. The company's net income is A. $51,000.
B. $54,000. C. $16,000. D. $13,000. 14. The major difference in the
statement of retained earnings between a service business and a
merchandising business is A. that the retained earnings statement
of a merchandising business includes Dividends. B. that the
retained earnings statement of a merchandising business shows the
Cost of Goods Sold. C. that the retained earnings statement of a
service business includes Dividends. D. nothing. There are no
differences between the two. 15. Land is an example of a A. current
asset. B. long-term asset. C. current liability. D. long-term
liability. 16. A/An _______ is used to determine the amount of
inventory actually on hand at the end of the accounting period. A.
physical inventory count B. inventory layer C. inventory shrinkage
D. footnote 17. If a misstatement of inventory occurs, the net
income for _______ periods will be misstated. A. 0 B. 2 C. 1 D. 3
End of exam 18. Cash register schemes are a form of A. employee
embezzlement. B. fraudulent financial reporting. C. management
fraud. D. bribery. 19. Which type of audit opinion is also referred
to as a clean opinion? A. Adverse B. Unqualified C. Disclaimer D.
Qualified 20. Which of the following is not part of the fraud
triangle? A. Perceived pressure B. Realization C. Rationalization
D. Perceived opportunity
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