ACCN 2010 Quiz 5

ACCN 2010 Quiz 5 | Tulane University

Question 1

When using a perpetual inventory system, why are discounts credited to Inventory?

·         The discounts are debited to discount expense and thus the credit has to be made to merchandise inventory.

·         The discounts reduce the cost of the inventory.

·         The discounts are a reduction of business expenses.

·         None of these answers choices are correct.

 

Question 2

Metlock’s Market recorded the following events involving a recent purchase of inventory:

Received goods for $78200, terms 2/9, n/30.

Returned $1700 of the shipment for credit.

Paid $700 freight on the shipment.

Paid the invoice within the discount period.

As a result of these events, the company’s inventory

 

·         increased by $75656.

·         increased by $75670.

·         increased by $74970.

·         increased by $77200.

 

Question 3

Assets purchased for resale are recorded in which of the following accounts?

·         Patents

·         Supplies

·         Equipment

·         Inventory

 

Question 4

Which of the following accounts is classified as a contra revenue account?

·         Sales Returns and Allowances

·         Sales Revenue

·         Purchase Discounts

·         Cost of Goods Sold

 

Question 5

The journal entry to record a credit sale ignoring cost of goods sold is

·         Accounts Receivable

·         Sales Revenue

·         Accounts Receivable

·         Sales Returns and Allowances

·         Cash

·         Service Revenue

·         Cash

·         Sales Revenue

 

Question 6

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

·         debit Cost of Goods Sold and credit Purchases.

·         make no additional entry until the end of the period.

·         debit Inventory and credit Cost of Goods Sold.

·         debit Cost of Goods sold and credit Inventory.

 

Question 7

The entry to record a sale of $2400 with terms of 2/10, n/30 will include a

·         debit to Sales Revenue for $2352.

·         credit to Sales Revenue for $2400.

·         debit to Sales Discounts for $48.

·         credit to Accounts Receivable for $2400.

 

Question 8

The entry to record the receipt of payment within the discount period on a sale of $1100 with terms of 2/15, n/30 will include a

·         debit to Sales Revenue for $1078.

·         credit to Sales Revenue for $1100.

·         credit to Accounts Receivable for $1100.

·         credit to Sales Discounts for $22.

 

Question 9

The credit terms offered to a customer by a business firm were 2/10, n/30, which means

·         two sales returns can be made within 10 days of the invoice date and no returns thereafter.

·         the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.

·         the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date.

·         the customer must pay the bill within 10 days.

 

Question 10

Sheridan Company sells merchandise on account for $1600 to Pronghorn Company with credit terms of 2/12, n/30. Pronghorn Company returns $300 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

·         $1274  

·         $1150

·         $1232

·         $1268

 

Question 11

Pharoah Company sells merchandise on account for $3600 to Morton Company with credit terms of 2/14, n/30. Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Pharoah Company make upon receipt of the check?

 

Cash         2940    (correct)

Sales Returns and Allowances    600        

Sales Discounts 60          

          Accounts Receivable                               3600

 

Cash      3000      

          Accounts Receivable                               3000

 

Cash         2940   

Sales Returns and Allowances    660        

          Accounts Receivable                               3600

 

Cash         3528   

Sales Discounts 72          

          Sales Returns and Allowances                          600

          Accounts Receivable                               3000

 

Question 12

With respect to the income statement

·         sales discounts increase the amount of sales.

·         contra revenue accounts do not appear on the income statement.

·         sales discounts are included in the calculation of gross profit.  

·         contra revenue accounts increase the amount of operating expenses.

 

Question 13

Indicate which one of the following would not appear on both a single-step income statement and a multiple-step income statement.

·         Operating expenses

·         Cost of goods sold

·         Sales revenue

·         Gross profit

 

Question 14

Positive operating income will result if gross profit exceeds

·         cost of goods sold plus operating expenses.

·         salaries and wages expense.

·         operating expenses.

·         costs of goods sold.

 

Question 15

Interest expense would be classified on a multiple-step income statement under the heading

·         Other revenues and gains.

·         Other expenses and losses.

·         Operating expenses.

·         Cost of goods sold.

 

Question 16

Financial information is presented below:

 

Operating expenses                       $ 33000

Sales revenue                   211000

Cost of goods sold                           129000

 

Gross profit would be

·         $178000.

·         $ 49000.

·         $ 33000.

·         $ 82000.

 

Question 17

Financial information is presented below:

 

Operating expenses                       $ 33000

Sales revenue                   211000

Cost of goods sold                           129000

 

Gross profit would be

·         $178000.

·         $ 49000.

·         $ 33000.

·         $ 82000.

 

Question 18

Financial information is presented below:

 

Operating expenses                       $ 26000

Sales revenue                   250000

Cost of goods sold                           171000

 

The gross profit rate would be

·         0.32.  

·         0.68.

·         0.10.

·         0.21.

 

Question 18

At the beginning of the year, Whispering Winds had an inventory of $370000. During the year, the company purchased goods costing $1040000. If Whispering Winds reported ending inventory of $310000 and sales of $1900000, their cost of goods sold and gross profit rate would be

·         $1100000 and 58%.

·         $1100000 and 42.11%.  

·         $730000 and 57.89%

·         $1170000 and 42%.

 

Question 19

Which of the following would not be considered a merchandising operation?

·         Service firm  

·         Retailer

·         Wholesaler

·         Merchandising company

 

Question 20

The operating cycle of a merchandising company is

·         always one year in length.

·         about the same as that of a service company.

·         ordinarily shorter than that of a service company.

·         ordinarily longer than that of a service company.

 

 

 

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