Exam 6: Internal Control and Financial Reporting for Cash and Merchandising Operations

If merchandise costing $500 that was sold cash at a price of $620 is returned by the customer,how would this transaction recorded when using a perpetual inventory system?

Which of the following is the most common wording for a measure of the company's income from regular operating activities,before considering the effects of interest,income taxes,and any nonrecurring items?

A company buys footwear and clothing from manufacturers,which it resells to discount stores in a large urban area.This company is an example of a:

BetterBuy sells $50,000 of TVs to a customer.The credit terms state a 2% discount if paid in 7 days and a 1% discount if paid in 8-14 days.The customer pays in 12 days.How would BetterBuy record the customer's payment?

Sales Discounts is a ______ account with a normal ______ balance.

Acme Enterprises,which uses a perpetual inventory system,recorded a debit to Sales Returns & Allowances and a credit to Accounts Receivable.(No other accounts were affected.)What business event must have taken place?

Which one of the following statements regarding sales discounts is correct?

Inventory costing $3,000 is sold for $4,000 on terms 2/10,n/30.If the buyer pays within the discount period,what amount will be reported on the income statement as net sales?

Inventory was sold on credit for $3,000,terms 1/10,n/30.How should the seller record the cash collection?

Goods available for sale can:

On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use the perpetual inventory system.Dee Company pays the invoice on July 8 and takes the appropriate discount.What journal entry will be recorded by Dee Company on July 8?

A company's trial balance included the following account balances at year-end: The amount of net sales reported on the income statement would be:

Ace Electronics had cost of goods sold of $20,000.If purchases were $23,000 and ending inventory was $6,000,Ace's beginning inventory must have been:

Which of the following would generally be considered an operating revenue or expense?

Generally,a physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

What are the differences between the periodic and the perpetual inventory systems? (Do not address or list the actual journal entries made in each system.)

A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.If there is no shrinkage,how many computers were sold?

Explain whether the following items should be included in the inventory of Simpson Company. Item a.Goods sold FOB shipping point by Simpson are in transit to its customer. Item b.Goods sold FOB destination by Simpson are in transit to its customer. 195.Indicate whether the Inventory account is debited (Dr),credited (Cr),or neither (N)when using a perpetual inventory system to record each of the following transactions: 1._____ The company purchases $3,000 of goods intending to sell them to customers. 2._____ The company returns $200 of damaged goods to the supplier. 3._____ The company pays a shipping firm $685 to ship an order of goods from the supplier to the company. 4._____ The company receives a purchase discount for prompt payment to a supplier. 5._____ Customers return $550 of goods in excellent condition to the company. 6._____ The company sells $4,600 of goods to consumers. 7._____ The company purchases $1,600 of supplies intending to use them internally. 9._____ The company does a physical count and finds three items missing due to shrinkage.

Which of the following statements regarding gross profit percentage is not correct?

A company has gross profit of $58,300 and a gross profit percentage of 25%.What were the company's net sales?