Question : 51. Cumberland, Inc. has applied to its bank for a loan. : 1229748

51. Cumberland, Inc. has applied to its bank for a loan. The bank asks Cumberland’s controller about the total amount of the company’s accounts receivable. Assuming that all accounting records are up-to-date, the controller can best answer this question by referring to: 
A. The Income Statement.
B. The Accounts Receivable controlling account.
C. The Accounts Receivable subsidiary ledger.
D. Last year’s Balance Sheet.

52. In a perpetual inventory system: 
A. Merchandising transactions are recorded as they occur.
B. No effort is made to record the Cost of Goods Sold until year-end.
C. Entries are made in the Cost of Goods Sold account whenever merchandise is purchased or sold.
D. The need for ever taking physical inventory is eliminated.

53. Net sales is calculated by: 
A. Subtracting cost of sales from sales.
B. Subtracting sales returns and sales discounts from sales.
C. Subtracting sales returns, cost of sales, and sales discounts from sales.
D. Subtracting gross profit from sales.

54. In a perpetual inventory system, two entries usually are made to record each sales transaction. The purposes of these entries are best described as follows: 
A. One entry recognizes the sales revenue, and the other recognizes the cost of goods sold.
B. One entry records the purchase of the merchandise, and the other records the sale.
C. One entry records the cost of goods sold, and the other reduces the balance in the Inventory account.
D. One entry updates the general ledger, and the other updates the subsidiary ledgers.

55. In a periodic inventory system, which of the following accounts may be closed by debiting Cost of Goods Sold? 
A. Sales, Inventory (beginning), and Gross Profit.
B. Inventory (beginning) and Purchases.
C. Purchases and Inventory (ending).
D. Sales, Inventory (beginning), and Cost of Goods Available for Sale.

56. In comparing a perpetual inventory system with a periodic inventory system, which of the following statements is not correct? 
A. Most large companies use perpetual inventory systems.
B. A periodic system does not include an inventory subsidiary ledger.
C. The perpetual method is easier to apply in a manual accounting system.
D. Regardless of the system in use, most businesses take a physical inventory at least once a year.

57. Hicksville’s Department Store uses a perpetual inventory system. At year-end, the balance in the Inventory controlling account is $1,200,000. Assuming that the inventory records have been maintained properly, a year-end physical inventory: 
A. Is unnecessary.
B. Is needed to establish the ending inventory, as the $1,200,000 balance in the Inventory controlling account represents the beginning inventory.
C. Probably will indicate more than $1,200,000 in merchandise on hand.
D. Probably will indicate less than $1,200,000 in merchandise on hand.

58. Jayson Products uses a perpetual inventory system. At year-end, the Inventory account had a balance of $280,000, but a complete year-end physical inventory indicated goods on hand costing only $273,000. Jayson should: 
A. Reduce its cost of goods sold by $7,000.
B. Record a $7,000 current liability.
C. Reduce the balance in its Inventory controlling account and inventory subsidiary ledger by $7,000.
D. Reduce the balance in the Inventory controlling account and record a current liability, both in the amount of $7,000.

59. The cost of delivering merchandise to the customer is: 
A. Part of cost of goods sold.
B. Used in the calculation of net sales.
C. An operating expense.
D. A reduction of gross profit.

60. In a periodic inventory system, the cost of goods sold is: 
A. Recorded as sales transactions occur.
B. Determined by a computation which is performed at year-end, after the taking of a complete physical inventory.
C. Equal to the beginning inventory, plus purchases made during the period, less sales revenue for the period.
D. Determined by subtracting the balance in the Gross Profit account from the amount of net sales.