BUS ADM 201 UWM EXAM 2 QUESTIONS AND ANSWERS LATEST UPDATE 2025-2026
what is a perpetual inventory system? - Answers -checks accuracy
-determines amount lost due to waste, shoplifting
what is a periodic inventory system? - Answers -determines cogs and inventory at end of period
attributes of specific identification inventory system - Answers -identifies all costs associated
with a specific unit of inventory
-works best for inventory specific to customer specifications
attributes of FIFO inventory system - Answers -first item you purchased will be the first unit you
sell
-cost of most recent goods purchased are used to determine ending inventory
attributes of LIFO inventory system - Answers -last item you purchased will be the first unit you
sell
-cost of oldest inventory purchase are used to determine inventory ending
attributes of average cost inventory system - Answers -allocated cost of goods available for
sale on the basis of weighted-average cost incurred
inventory turnover ratio - Answers cogs/average inventory
days in inventory - Answers 365/inventory turnover ratio
cash equivalents - Answers -short term, highly liquid investments that are readily convertible to
cash
restricted cash - Answers -cash is not available for general use but rather is restricted for a
special purpose
what are internal controls - Answers -methods and measures adopted to safeguard assets,
enhance reliability of accounting records, ensure compliance with regulations
what is a debit memo - Answers -decreases cash
-NSF, bank service charge
what is a credit memo - Answers -increases cash
-collection so notes made by bank, interest earned
what items do you reconcile on the bank statement - Answers + deposits in transit
, - outstanding checks
+/- bank errors
what items do you reconcile on the books - Answers + EFT collections and other deposits
- NSF checks
- service charges and other payments
+/- company errors
attributes of the internal control: establishment of responsibility - Answers -one person
responsible
-limiting access to authorized personnel
attributes of the internal control: segregation of duties - Answers -different individuals
responsible for related activities
-cashier versus accountant
attributes of the internal control: documentation procedures - Answers -verifiability
-all docs accounted for
-prenumbered checks/check authorization
attributes of the internal control: physical controls - Answers -limited access to cash
attributes of the internal control: independent internal verification - Answers -records
periodically verified by an employee who is independent
attributes of the internal control: human resource controls - Answers -background checks
-rotate employees duties
what is the revenue recognition principle - Answers companies recognize revenue when service
is performed
how do you journalize a "write off" - Answers debit: allowance for doubtful accounts
credit: accounts receivables
how do accounts receivables/allowance for doubtful accounts affect the balance sheet -
Answers accounts receivables
less: allowance for doubtful accounts
what is a perpetual inventory system? - Answers -checks accuracy
-determines amount lost due to waste, shoplifting
what is a periodic inventory system? - Answers -determines cogs and inventory at end of period
attributes of specific identification inventory system - Answers -identifies all costs associated
with a specific unit of inventory
-works best for inventory specific to customer specifications
attributes of FIFO inventory system - Answers -first item you purchased will be the first unit you
sell
-cost of most recent goods purchased are used to determine ending inventory
attributes of LIFO inventory system - Answers -last item you purchased will be the first unit you
sell
-cost of oldest inventory purchase are used to determine inventory ending
attributes of average cost inventory system - Answers -allocated cost of goods available for
sale on the basis of weighted-average cost incurred
inventory turnover ratio - Answers cogs/average inventory
days in inventory - Answers 365/inventory turnover ratio
cash equivalents - Answers -short term, highly liquid investments that are readily convertible to
cash
restricted cash - Answers -cash is not available for general use but rather is restricted for a
special purpose
what are internal controls - Answers -methods and measures adopted to safeguard assets,
enhance reliability of accounting records, ensure compliance with regulations
what is a debit memo - Answers -decreases cash
-NSF, bank service charge
what is a credit memo - Answers -increases cash
-collection so notes made by bank, interest earned
what items do you reconcile on the bank statement - Answers + deposits in transit
, - outstanding checks
+/- bank errors
what items do you reconcile on the books - Answers + EFT collections and other deposits
- NSF checks
- service charges and other payments
+/- company errors
attributes of the internal control: establishment of responsibility - Answers -one person
responsible
-limiting access to authorized personnel
attributes of the internal control: segregation of duties - Answers -different individuals
responsible for related activities
-cashier versus accountant
attributes of the internal control: documentation procedures - Answers -verifiability
-all docs accounted for
-prenumbered checks/check authorization
attributes of the internal control: physical controls - Answers -limited access to cash
attributes of the internal control: independent internal verification - Answers -records
periodically verified by an employee who is independent
attributes of the internal control: human resource controls - Answers -background checks
-rotate employees duties
what is the revenue recognition principle - Answers companies recognize revenue when service
is performed
how do you journalize a "write off" - Answers debit: allowance for doubtful accounts
credit: accounts receivables
how do accounts receivables/allowance for doubtful accounts affect the balance sheet -
Answers accounts receivables
less: allowance for doubtful accounts
