Question 1

FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Accepted Answer

A) True 
 B)False

Question 2

Morey Company starts the period with 1,000 units in inventory,purchases 13,000 additional units,returns 100 units to suppliers,and has 950 in inventory at the end of the period.
Required:
If there is no shrinkage,how many units were sold?

Accepted Answer

Units sold = Beginning invento

Question 3

A perpetual inventory system will always give updated balances for:

Accepted Answer

A)  Inventory and Cost of Goods Sold. 
B)  Inventory and Sales Revenue. 
C)  Goods Available for Sale and Sales Revenue. 
D)  Accounts Receivable and Inventory. 
A)  Inventory and Cost of Goods Sold. 
B)  Inventory and Sales Revenue. 
C)  Goods Available for Sale and Sales Revenue. 
D)  Accounts Receivable and Inventory.

Question 4

Which of the following statements regarding shrinkage is not correct?

Accepted Answer

A)  Perpetual inventory systems can help managers detect shrinkage. 
B)  Shrinkage is another term for inventory loss due to theft, error, or fraud. 
C)  Shrinkage is detected by comparing the balance in the inventory ledger account and the results of the physical inventory count. 
D)  It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system. 
A)  Perpetual inventory systems can help managers detect shrinkage. 
B)  Shrinkage is another term for inventory loss due to theft, error, or fraud. 
C)  Shrinkage is detected by comparing the balance in the inventory ledger account and the results of the physical inventory count. 
D)  It is easier to detect shrinkage in a periodic inventory system than in a perpetual inventory system.

Question 5

Steve's Skateboards uses the periodic inventory system and had the following sales transactions during April:
-April 2 - Sold inventory to Happy Hobby Shop on credit for $4,800,terms 1/15,n/60.The items sold had a cost of $2,700.
-April 4 - Happy Hobby Shop returned inventory that had a selling price of $200.The cost of the inventory returned was $110.
-April 13 - Happy Hobby Shop paid for the inventory sold on April 2,taking any appropriate discount earned
Required:
Prepare the journal entries to record these transactions on the books of Steven's Skateboards.

Accepted Answer

The answer of Steve's Skateboards uses the periodic inventory system...

Question 6

On October 1,Robertson Company sold inventory in the amount of $5,800 to Alberta,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Robertson uses the periodic inventory system.On October 4,Alberta returns some of the inventory.The selling price of the inventory is $500 and the cost of the inventory returned is $350.What journal entry (entries)will be recorded by Robertson October 4?

Accepted Answer

A)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500; debit Inventory and credit Cost of Goods Sold for $350 
B)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500 
C)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500 
D)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500; debit Cost of Goods Sold and credit Inventory for $350 
A)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500; debit Inventory and credit Cost of Goods Sold for $350 
B)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500 
C)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500 
D)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500; debit Cost of Goods Sold and credit Inventory for $350

Question 7

A firm's beginning inventory is $35,000,goods purchased during the period cost $120,000,and the cost of goods sold for the period is $140,000.What is the amount of its ending inventory?

Accepted Answer

A)  $45,000 
B)  $20,000 
C)  $25,000 
D)  $15,000 
A)  $45,000 
B)  $20,000 
C)  $25,000 
D)  $15,000

Question 8

When a perpetual system is in used and transportation cost is incurred to obtain inventory,the transportation cost is:

Accepted Answer

A)  added to Inventory. 
B)  reported as Selling, General & Administrative Expense on the income statement. 
C)  reported as a contra-account that is subtracted from sales revenue when determining net sales. 
D)  deducted from the Cost of Goods Sold when determining gross profit. 
A)  added to Inventory. 
B)  reported as Selling, General & Administrative Expense on the income statement. 
C)  reported as a contra-account that is subtracted from sales revenue when determining net sales. 
D)  deducted from the Cost of Goods Sold when determining gross profit.

Question 9

FAD Company uses a periodic inventory system and its inventory records for the period contain the following information:
  
-Use the information above to answer the following question.The journal entry necessary at the end of the period to transfer beginning inventory and net purchases to cost of goods sold will include which of the following?

Accepted Answer

A)  Credit Inventory for $6,250 
B)  Debit Purchases for $11,250 
C)  Debit Inventory for $6,250 
D)  Debit Cost of Goods Sold for $11,250 
A)  Credit Inventory for $6,250 
B)  Debit Purchases for $11,250 
C)  Debit Inventory for $6,250 
D)  Debit Cost of Goods Sold for $11,250

Question 10

Use the information above to answer the following question.What journal entry (entries)will Darin Company make on October 4 to record the sales return?

Accepted Answer

A)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500; debit Inventory and credit Cost of Goods Sold for $200 
B)  Debit Sales Returns & Allowances for $200 and credit Accounts Receivable for $200 
C)  Debit Sales for $500 and credit Inventory for $500 
D)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500; debit Cost of Goods Sold and credit Inventory for $200 
A)  Debit Sales Returns & Allowances and credit Accounts Receivable for $500; debit Inventory and credit Cost of Goods Sold for $200 
B)  Debit Sales Returns & Allowances for $200 and credit Accounts Receivable for $200 
C)  Debit Sales for $500 and credit Inventory for $500 
D)  Debit Accounts Receivable and credit Sales Returns & Allowances for $500; debit Cost of Goods Sold and credit Inventory for $200

Question 11

Which inventory system updates the inventory account only at the end of the accounting period?

Accepted Answer

A)  LIFO 
B)  Perpetual 
C)  FIFO 
D)  Periodic 
A)  LIFO 
B)  Perpetual 
C)  FIFO 
D)  Periodic

Question 12

Assume that a perpetual inventory system is in use.Which of the following statements regarding the journal entries prepared is correct?

Accepted Answer

A)  "Freight-out" or delivery costs associated with sales should be included in Cost of Goods Sold. 
B)  When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited. 
C)  When a company grants an allowance to a customer, Inventory is credited when using a perpetual inventory system. 
D)  When a customer returns inventory, the seller debits Sales Returns & Allowances under a perpetual inventory system. 
A)  "Freight-out" or delivery costs associated with sales should be included in Cost of Goods Sold. 
B)  When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited. 
C)  When a company grants an allowance to a customer, Inventory is credited when using a perpetual inventory system. 
D)  When a customer returns inventory, the seller debits Sales Returns & Allowances under a perpetual inventory system.

Question 13

On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use a periodic inventory system.What journal entry will be recorded by Dee Company on July 1?

Accepted Answer

A)  Debit Purchases and credit Accounts Payable for $6,000 
B)  Debit Inventory and credit Accounts Receivable for $6,000 
C)  Debit Inventory and credit Accounts Payable for $6,000 
D)  Debit Cost of Goods Sold and credit Inventory for $4,500 
A)  Debit Purchases and credit Accounts Payable for $6,000 
B)  Debit Inventory and credit Accounts Receivable for $6,000 
C)  Debit Inventory and credit Accounts Payable for $6,000 
D)  Debit Cost of Goods Sold and credit Inventory for $4,500

Question 14

Which of the following statements about a multistep income statement is correct?

Accepted Answer

A)  It groups all revenues together. 
B)  It reports a different amount of net income than a single-step income statement. 
C)  It includes expenses that would not appear on a single-step income statement. 
D)  A key measure available on a multistep income statement is the amount of profit earned over the cost of goods sold. 
A)  It groups all revenues together. 
B)  It reports a different amount of net income than a single-step income statement. 
C)  It includes expenses that would not appear on a single-step income statement. 
D)  A key measure available on a multistep income statement is the amount of profit earned over the cost of goods sold.

Question 15

Which of the following line items below is present in both the multistep and an income statement in which expenses are simply subtracted from revenues to arrive at net income?

Accepted Answer

A)  Income before income tax expense 
B)  Income from operations 
C)  Net income 
D)  Gross profit 
A)  Income before income tax expense 
B)  Income from operations 
C)  Net income 
D)  Gross profit

Question 16

Flynn Company uses a perpetual inventory system and had the following transactions during November:
-November 6 - Purchased $5,800 of inventory on account, terms 2/10, n/30.
-November 8 - Returned $800 of defective units and received full credit.
-November 15 - Paid the amount due.
-Use the information above to answer the following question.What journal entry will be recorded by Flynn Company on November 8?

Accepted Answer

A)  Debit Inventory and credit Cost of Goods Sold for $800 
B)  Debit Accounts Payable and credit Inventory for $800 
C)  Debit Inventory and credit Accounts Payable for $800 
D)  Debit Accounts Payable and credit Purchase Returns for $800 
A)  Debit Inventory and credit Cost of Goods Sold for $800 
B)  Debit Accounts Payable and credit Inventory for $800 
C)  Debit Inventory and credit Accounts Payable for $800 
D)  Debit Accounts Payable and credit Purchase Returns for $800

Question 17

Sales Revenue reports the:

Accepted Answer

A)  cost of merchandise available to sell 
B)  cost of merchandise purchased 
C)  cost times the quantity of goods sold 
D)  selling price times the quantity of goods sold 
A)  cost of merchandise available to sell 
B)  cost of merchandise purchased 
C)  cost times the quantity of goods sold 
D)  selling price times the quantity of goods sold

Question 18

Contra-revenue accounts:

Accepted Answer

A)  are balance sheet accounts. 
B)  increase net income. 
C)  are increased with a debit. 
D)  increase net sales. 
A)  are balance sheet accounts. 
B)  increase net income. 
C)  are increased with a debit. 
D)  increase net sales.

Question 19

Sales discounts should appear in the financial statements as a(n):

Accepted Answer

A)  addition to inventory 
B)  addition to sales 
C)  operating expense 
D)  deduction from sales 
A)  addition to inventory 
B)  addition to sales 
C)  operating expense 
D)  deduction from sales

Question 20

The Tuck Shop began the current month with inventory costing $10,000,then purchased inventory at a cost of $35,000.The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000.If an inventory count shows that inventory costing $14,500 is actually on hand at month-end,what amount of shrinkage occurred during the month?

Accepted Answer

A)  $500 
B)  $5,000 
C)  $14,495 
D)  $15,000 
A)  $500 
B)  $5,000 
C)  $14,495 
D)  $15,000

FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Morey Company starts the period with 1,000 units in inventory,purchases 13,000 additional units,returns 100 units to suppliers,and has 950 in inventory at the end of the period. Required: If there is no shrinkage,how many units were sold?

A perpetual inventory system will always give updated balances for:

Which of the following statements regarding shrinkage is not correct?

A firm's beginning inventory is $35,000,goods purchased during the period cost $120,000,and the cost of goods sold for the period is $140,000.What is the amount of its ending inventory?

When a perpetual system is in used and transportation cost is incurred to obtain inventory,the transportation cost is:

Use the information above to answer the following question.What journal entry (entries)will Darin Company make on October 4 to record the sales return?

Which inventory system updates the inventory account only at the end of the accounting period?

Assume that a perpetual inventory system is in use.Which of the following statements regarding the journal entries prepared is correct?

On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use a periodic inventory system.What journal entry will be recorded by Dee Company on July 1?

Which of the following statements about a multistep income statement is correct?

Which of the following line items below is present in both the multistep and an income statement in which expenses are simply subtracted from revenues to arrive at net income?

Sales Revenue reports the:

Contra-revenue accounts:

Sales discounts should appear in the financial statements as a(n):

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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

FOB shipping point means that ownership of goods passes to the buyer when the goods reach the buyer.

Morey Company starts the period with 1,000 units in inventory,purchases 13,000 additional units,returns 100 units to suppliers,and has 950 in inventory at the end of the period. Required: If there is no shrinkage,how many units were sold?

A perpetual inventory system will always give updated balances for:

Which of the following statements regarding shrinkage is not correct?

A firm's beginning inventory is $35,000,goods purchased during the period cost $120,000,and the cost of goods sold for the period is $140,000.What is the amount of its ending inventory?

When a perpetual system is in used and transportation cost is incurred to obtain inventory,the transportation cost is:

Use the information above to answer the following question.What journal entry (entries)will Darin Company make on October 4 to record the sales return?

Which inventory system updates the inventory account only at the end of the accounting period?

Assume that a perpetual inventory system is in use.Which of the following statements regarding the journal entries prepared is correct?

On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use a periodic inventory system.What journal entry will be recorded by Dee Company on July 1?

Which of the following statements about a multistep income statement is correct?

Which of the following line items below is present in both the multistep and an income statement in which expenses are simply subtracted from revenues to arrive at net income?

Sales Revenue reports the:

Contra-revenue accounts:

Sales discounts should appear in the financial statements as a(n):

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters