Reference no: EM132729612

Problem 1: The agreed cost of an item to be purchased by a business on credit is $4,000. The applicable cost will be debited to advertising expense. The item is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST). When this transaction is recorded, what amount will be debited to advertising expense?

1) $4,000

2) $4,200

3) $4,280

4) $4,480

5) None of these answers are correct.

Problem 2: Generally accepted accounting principles require that the inventory of a company be reported at:

1) Net realizable value

2) Historical cost

3) Lower of cost and net realizable value

4) Replacement cost

5) Purchase price

Problem 3: Internal control procedures for cash receipts require

1) Separation of custody of cash receipts from their recordkeeping

2) In-store cash sales be recorded on a cash register at the time of each sale

3) All cheques to be numbered in sequence

4) Separation of custody of cash receipts from its recordkeeping and in-store cash sales be recorded on a cash register at the time of each sale

5) All of the above