Wala 60 at 71
Wala 60 at 71
Wala 60 at 71
SET A
SCORE; Date:
NAME: SECTION:
a financing expenses.
b. operating expenses.
d. other expenses.
2. * Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.
TRUE * Freight terms of FOB Destination means that the seller pays the freight costs. TRUE
a. Retailer.
b. Wholesaler.
c. broker.
d. service company.
a. gross profit.
b. net profit
c. net income.
d. marginal income.
6. The journal entry to record a return of merchandise purchased on account under a perpetual
inventory system would credit
aAccounts Payable.
cSales Revenue.
DInventory.
7. The Inventory account is used in each of the following except the entry to record
8. *The gross profit section for a merchandising company appears on both the multiple-step and single-
step forms
of an income statement. FALSE *Under a periodic inventory system, the acquisition of inventory is
charged to the Purchases account.
a. asset account.
11. If a customer agrees to retain merchandise that is defective because the seller is willing to reduce
the selling price, this transaction is known as a sales
A.discount
b.return
c.contra asset
D.allowance.
12. The credit terms offered to a customer by a business firm are 2/10, n/30, which means that
b.the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the
invoice date.
c.the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.
d. two sales returns can be made within 10 days of the invoice date and no returns thereafter.
A.Sales Revenue
c.Accumulated Depreciation
d.Sales Discounts
15. * The Sales Returns and Allowances account and the Sales Discount account are both classified as
expense accounts. FALSE * Sales Returns and Allowances and Sales Discounts are both designed to
encourage customers to pay their accounts promptly. FALSE
c. A periodic system requires cost of goods sold be determined after each sale.
d.A perpetual system determines cost of goods sold only at the end of the accounting period.
a. hold off paying the bill until the end of the credit period, while investing the money at 10% annual
interest
c. pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill.
d. recognize that the supplier is desperate for cash and withhold payment until the end of the credit
period while negotiating a lower sales price.
18. The Sales Returns and Allowances account does not provide information to management about
19. Which of the following is not a true statement about a multiple-step income statement?
20. Which one of the following is shown on a multiple-stop but not on a single-stop income statement?
a.Net sales
b.Net income
c. Gross profit
21. Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily
determined
TRUE if a merchandising company sells land at more than its cost, the pain should be reported in the
sales revenue
23. The sales revenue section of an income statement for a retailer would not include
a.Sales discounts.
b. Sales revenue
c.Net sales.
25. Which one of the following transactions is recorded with the same entry in a perpetual and a
periodic inventory system?
26. The journal entry to record a return of merchandise purchased on account under a periodic
inventory system would be
a. Accounts Payable
Accounts Payable
C. Accounts Payable
Inventory
d. Inventory
Accounts Payable
27. *Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.
TRUE
*Sales revenues are earned during the period cash is collected from the buyer, FALSE
28. *A single-step income statement reports all revenues, both operating and other revenues and gains,
at the top of the statement. TRUE *Under a periodic inventory system, freight-in on merchandise
purchases should be charged to the Inventory account. FALSE
29. After gross profit is calculated, operating expenses are deducted to determine
a .gross margin
b. net income.
d. net margin
30. Cost of goods sold is determined only at the end of the accounting period in
32. Detailed records of goods held for resale are not maintained under a
a. on a daily basis.
b. on a monthly basis.
c. on an annual basis.
34. If a company determines cost of goods sold each time a sale occurs, it
a. Inventory account.
b. Purchases account.
c. Supplies account.
36. A buyer would record a payment within the discount period under a perpetual inventory system by
crediting
a Accounts Payable.
b. Inventory
c. Purchase Discounts.
d. Sales Discounts.
37. If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the
38. Freight costs paid by a seller on merchandise sold to customers will cause an increase
39. Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping
point. The freight costs will be paid by the
a.seller
b. buyer
c. transportation company
40. In a perpetual inventory system, the amount of the discount allowed for paying for merchandise
purchased within
a. Inventory
b. Purchase Discounts.
c.Purchase Allowance.
d. Sales Discounts.
41. In a perpetual inventory system, the Cost of Goods Sold account is used
b. an order is received.
a. Cash
Sales Revenue
b. Cash
Service Revenue
c. Accounts Receivable
Service Revenue
d. Accounts Receivable
Sales Revenue
47. When goods are returned that relate to a prior cash sale,
a. the Sales Returns and Allowances account should not be used. b. the cash account will be credited.
49. As an incentive for customers to pay their accounts promptly, a business may offer its customers
a. a sales discount.
b. free delivery.
c. a sales allowance.
d. a sales return,
b. Sales Discounts
c. Sales Revenue
d. Selling Expense
be calculated.
52. When a seller grants credit for returned goods, the account that is credited is
a. Sales Revenue.
c. Inventory
d. Accounts Receivable.
53. The respective normal account balances of Sales Revenue, Sales Returns and Allowances,
are
a. sales revenue.
b. sales allowances.
c.sales discounts.
d. sales returns.
56. In preparing closing entries for a merchandising company, the Income Summary account will be
credited for the balance of
a. sales revenue.
b. inventory.
c.sales discounts.
d. Freight-out.
57. A merchandising company using a perpetual system may record an adjusting entry by
58. The operating expense section of an income statement for a wholesaler would not include
a. freight-out.
b. utilities expense.
d. insurance expense.
a. Gross profit
b. Operating expenses
C Sales revenues
d on the income statement if the periodic inventory system is used because it cannot be calculated.
63. All of the following items would be reported as other expenses and losses except
a freight-out.
b. casualty losses.
c. interest expense.
b. net income.
c. net sales.
d. sales revenue.
a. an intangible asset.
d. a long-term investment.
a. operating expenses.
c.sales discounts.
68. The Inventory account balance appearing in a perpetual inventory worksheet represents the
a. ending inventory.
b. beginning inventory.
c. is a permanent account.
71
72. In a periodic inventory system, a return of devotive merchandise to a supplier is recorded Ivy cream
a.accounts Payable
b laventory
c.Purchases
a Inventory account
c. Purchases account
a. Purchases
c. Freight-ln
d. Purchase Discounts
75. The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are
a. Purchases.
b. Purchase Returns.
c. Purchase Allowance.
d. Inventory.
b. Inventory
c. Sales Revenue
d. Sales Discounts
a. sales discounts.
b. sales returns.
80. *The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10
days of th
next month. FALSE *Net sales appears on both the multiple-step and single-step forms of an income
statement. TRUE