Question

Novak Corporation sells coffee beans, which are sensitive to price fluctuations. The following inventory information is available for this product at December 31, 2018: Coffee Bean Units Unit Cost Net Realizable Value Coffea arabica 11,700 bags $5.60 $5.55 Coffea robusta 5,700 bags 3.40 3.50

Inventory at the lower of cost and net realizable value $ 84315

Prepare any journal entry required to record the LCNRV, assuming that Novak uses a perpetual inventory system. (Round answer to the nearest whole dollar, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

Which of the following statements about internal controls is correct?

The custodian of an asset is the best person to accurately keep and maintain the record of that asset.

Segregation of duties involves physically segregating employees so that they are better able to focus on their accounting functions.

Independent checks of performance can only be performed by the external auditors of a company.

Control is most effective when only one person is responsible for a given task.

Which of the following statements is not true? Good internal control systems include

an assessment of risk.

a control environment.

monitoring.

procedures to minimize the company’s income tax payable.

Control activities over cash payments are least effective when payments are made by:

Cheque

Electronic funds transfer

Credit card

Cash

Which of the following statements is true?

Control activities are most effective when several people are responsible for a given task.

A good system of internal control does not require monitoring.

Risk assessment is one component of a good system of internal control.

When one individual is responsible for all related activities, the potential for errors and irregularities is decreased.

Which of the following statements is true in terms of an internal control system?

A good internal control system will help a company achieve reliable financial reporting, effective and efficient operations, and compliance with laws and regulations.

The extent of internal control activities adopted by a company must not be evaluated in terms of cost-benefit.

An internal control system cannot be considered effective until the possibility of human error has been completely eliminated.

Only large companies need to be concerned with a system of internal control.

Which of the following is not a limitation of internal control?

cost of establishing control procedures

use of a bank account

the size of the company

the human element

An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

assignment of responsibility

review and reconciliation

documentation

segregation of duties

Physical controls are not designed to safeguard assets from

unauthorized use.

robbery.

natural disasters.

employee theft.

When two or more people get together for the purpose of circumventing prescribed controls, it is called

collusion.

assignment of responsibilities.

a division of duties.

fraud prevention.

Answer 1

Cost of inventory = 11700 x $5.60 + 5700 x $3.40 = $84900
LCNRV = $84315

Account Titles	Debit	Credit
Cost of Goods Sold	$             585		=84900-84315
Inventory		$             585

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