Question Details

ACCT/257 ACCT257 ACCT 257 CHAP 05 MULTIPLE CHOICE QUESTIONS PART 5

MULTIPLE CHOICE QUESTIONS


133.	If a company has sales of $420,000, net sales of $400,000, and cost of goods sold of $260,000, the gross profit rate is
a.	67%.
b.	65%
c.	35%.
d.	33%.

134.	Ingrid- Fashions sold merchandise for $38,000 cash during the month of July.  Returns that month totaled $800.  If the company- gross profit rate is 40%, Ingrid- will report monthly net sales revenue and cost of goods sold of
a.	$38,000 and $22,800.
b.	$37,200 and $14,880.
c.	$37,200 and $22,320.
d.	$38,000 and $22,320.

Use the following information for questions 135-138.

	During August, 2008, Sal- Supply Store generated revenues of $30,000. The company- expenses were as follows: cost of goods sold of $12,000 and operating expenses of $2,000. The company also had rent revenue of $500 and a gain on the sale of a delivery truck of $1,000.

135.	Sal- gross profit for August, 2008 is
a.	$30,000.
b.	$19,000.
c.	$18,000.
d.	$16,000.


	136.	Sal- nonoperating income (loss) for the month of August, 2008 is
a.	$0.
b.	$500.
c.	$1,000.
d.	$1,500.

	137.	Sal- operating income for the month of August, 2008 is
a.	$30,000.
b.	$19,500.
c.	$18,500.
d.	$16,000.

138.	Sal- net income for August, 2008 is
a.	$18,000.
b.	$17,500.
c.	$16,500.
d.	$16,000.

139.	At the beginning of September, 2008, RFI Company reported Merchandise Inventory of $4,000. During the month, the company made  purchases of $7,800. At September 31, 2008, a physical count of inventory reported $3,200 on hand. Cost of goods sold for the month is
a.	$600.
b.	$7,800.
c.	$8,600.
d.	$11,800.

140.	At the beginning of the year, Midtown Athletic had an inventory of $400,000. During the year, the company purchased goods costing $1,600,000. If Midtown Athletic reported ending inventory of $600,000 and sales of $2,000,000, the company- cost of goods sold and gross profit rate must be
a.	$1,000,000 and 50%.
b.	$1,400,000 and 30%.
c.	$1,000,000 and 30%.
d.	$1,400,000 and 70%.

141.	During the year, Darla- Pet Shop- merchandise inventory decreased by $20,000. If the company- cost of goods sold for the year was $300,000, purchases must have been
a.	$320,000.
b.	$280,000.
c.	$260,000.
d.	Unable to determine.

	142.	Cost of goods available for sale is computed by adding
a.	beginning inventory to net purchases.
b.	beginning inventory to the cost of goods purchased.
c.	net purchases and freight-in.
d.	purchases to beginning inventory.

	143.	The Freight-in account
a.	increases the cost of merchandise purchased.
b.	is contra to the Purchases account.
c.	is a permanent account.
d.	has a normal credit balance.

	144.	Net purchases plus freight-in determines
a.	cost of goods sold.
b.	cost of goods available for sale.
c.	cost of goods purchased.
d.	total goods available for sale.

	145.	West Company has the following account balances:
Purchases	$48,000
Sales Returns and Allowances	6,400
Purchase Discounts	4,000
Freight-in	3,000
Delivery Expense	4,000
The cost of goods purchased for the period is
a.	$52,000.
b.	$47,000.
c.	$51,000.
d.	$44,600.

	146.	Baden Shoe Store has a beginning merchandise inventory of $30,000. During the period, purchases were $140,000; purchase returns, $4,000; and freight-in $10,000. A physical count of inventory at the end of the period revealed that $20,000 was still on hand. The cost of goods available for sale was
a.	$164,000.
b.	$156,000.
c.	$176,000.
d.	$184,000.

	147.	In a perpetual inventory system, a return of defective merchandise by a cash customer is recorded by crediting
a.	Accounts Payable and Cash.
b.	Merchandise Inventory and Cost of Goods Sold
c.	Purchases Returns and Allowances and Merchandise Inventory.
d.	.Cash and Cost of Goods Sold.

148.	A physical count of inventory is taken at the end of an accounting period under a perpetual system in order to 
a.	verify the accuracy of the accounting records.
b.	determine cost of goods sold for the period.
c.	determine the amount of inventory purchased during the period.
d.	calculate property taxes.

149.	The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would include
a.	Accounts Payable
		Sales Returns and Allowances
b.	Purchase Returns and Allowances
		Accounts Payable
c.	Accounts Payable
		Inventory
d.	Merchandise Inventory
		Cost of Goods Sold
	150.	Under a perpetual inventory system, acquisition of merchandise is debited to the
a.	Merchandise Inventory account.
b.	Cost of Goods Sold account.
c.	Purchases account.
d.	Accounts Payable account.

	151.	Which of the following accounts has a normal debit balance?
a.	Merchandise Inventory
b.	Sales Returns and Allowances
c.	Cost of goods sold
d.	Sales

	152.	Gross profit is calculated by subtracting ________ from _________, 
		a.	operating expenses, net income
b.	sales discounts from sales revenue
c.	cost of goods sold, net sales revenue
d.	merchandise inventory, cost of goods sold

153.	A physical count of inventory is taken at the end of an accounting period under a periodic system in order to 
a.	verify the accuracy of the accounting records.
b.	determine cost of goods sold for the period.
c.	determine the amount of inventory purchased during the period.
d.	calculate property taxes.


154.	When a periodic inventory system is used, cost of goods sold is calculated as follows:
a.	Ending inventory plus purchases less beginning inventory.
b.	Beginning inventory plus purchases less ending inventory
c.	Cost of merchandise purchased less ending inventory.
d.	Cost of merchandise sold plus beginning inventory.


Additional Multiple Choice Questions
	155.	Cole Company has sales revenue of $39,000, cost of goods sold of $24,000 and operating expenses of $9,000 for the year ended December 31. Cole's gross profit is
a.	$30,000.
b.	$15,000.
c.	$6,000.
d.	$0.

	156.	Logan Company made a purchase of merchandise on credit from Claude Corporation on August 3, for $6,000, terms 2/10, n/45. On August 10, Logan makes the appropriate payment to Claude. Logan uses a perpetual inventory system.  The entry on August 10 for Logan Company is
a.	Accounts Payable		6,000
		Cash			6,000
b.	Accounts Payable		5,880
		Cash			5,880
c.	Accounts Payable		6,000
		Purchase Returns and Allowances			120
		Cash			5,880
d.	Accounts Payable		6,000
		Merchandise Inventory			120
		Cash			5,880

	157.	Cartier Company purchased inventory from Pissaro Company. The shipping costs were $400 and the terms of the shipment were FOB shipping point. Cartier uses a perpetual inventory system.  Cartier would have the following entry regarding the shipping charges:
a.	There is no entry on Cartier's books for this transaction.
b.	Freight Expense		400
		Cash			400
c.	Freight-out		400
		Cash			400
d.	Merchandise Inventory		400
		Cash			400

158.	In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting
a.	Purchases.
b.	Purchase Returns.
c.	Purchase Allowance.
d.	Merchandise Inventory.

	159.	On October 4, 2008, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a
a.	debit of $2,800 to Merchandise Inventory.
b.	credit of $2,800 to Sales.
c.	debit of $1,900 to Merchandise Inventory.
d.	credit of $1,900 to Cost of Goods Sold.

160.	Which of the following accounts is not closed to Income Summary?
a.	Cost of Goods Sold
b.	Merchandise Inventory
c.	Sales
d.	Sales Discounts
 
	161.	In the Clark Company, sales were $480,000, sales returns and allowances were $30,000, and cost of goods sold was $288,000. The gross profit rate was
a.	64%.
b.	36%.
c.	40%.
d.	60%.

162.	Net sales is sales less
a.	sales discounts.
b.	sales returns.
c.	sales returns and allowances.
d.	sales discounts and sales returns and allowances.

	163.	In the balance sheet, ending merchandise inventory is reported
a.	in current assets immediately following accounts receivable.
b.	in current assets immediately following prepaid expenses.
c.	in current assets immediately following cash.
d.	under property, plant, and equipment.

164.	Cost of goods available for sale is computed by adding
a.	freight-in to net purchases.
b.	beginning inventory to net purchases.
c.	beginning inventory to purchases and freight-in.
d.	beginning inventory to cost of goods purchased.