Question 1

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

Accepted Answer

A) Overhead expenses 
B) Sales discounts and Sales returns and allowances 
C) Cost of goods available for sale 
D) Cost of sales 
A) Overhead expenses 
B) Sales discounts and Sales returns and allowances 
C) Cost of goods available for sale 
D) Cost of sales

Question 2

A company purchased inventory for $2000 from a vendor on credit,FOB shipping point,with terms of2/10,n/30.The company paid the shipper $100 cash for freight in.The company then returned damaged goods worth $200.The invoice has been paid 8 days after the sale.Assuming that there was no beginning inventory balance,the cost of inventory would be: (Assume a perpetual inventory system. )

Accepted Answer

A) $1864. 
B) $1900. 
C) $1960. 
D) $1764. 
A) $1864. 
B) $1900. 
C) $1960. 
D) $1764.

Question 3

Gilbert Ltd generated sales revenues of $1,400,000 in the year 2017.Its cost of sales amounted to $ 560,000 . Calculate Gilbert's gross profit percentage.(Round your answer to the nearest whole percentage. )

Accepted Answer

A) 250% 
B) 167% 
C) 60% 
D) 40% 
A) 250% 
B) 167% 
C) 60% 
D) 40%

Question 4

Michelin Jewellers completed the following transactions.Michelin Jewellers uses the perpetual inventory system.On 2 April,Michelin sold $9 900 of inventory,including GST,to a customer on credit with terms of 3/15,n/30.Michelin's cost of the inventory sold was $5 000,net of GST.Which of the following journal entries correctly records the Cost of sales?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Inventory } & 5000 & \
\hline \text { Cost of sales } & & 5000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales revenue } & 5000 & \
\hline \text { Cost of sales } & & 5000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of sales } & 5000 & \
\hline \text { Accounts receivable } & & 5000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of sales } & 5000 & \
\hline \text { Inventory } & & 5000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Inventory } & 5000 & \
\hline \text { Cost of sales } & & 5000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales revenue } & 5000 & \
\hline \text { Cost of sales } & & 5000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of sales } & 5000 & \
\hline \text { Accounts receivable } & & 5000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of sales } & 5000 & \
\hline \text { Inventory } & & 5000 \
\hline
\end{array}$$

Question 5

Which of the following means that the shipment is free on board at the point of shipment and the buyer pays all transportation costs?

Accepted Answer

A) 4/10 eom 
B) FOB shipping point 
C) FOB destination 
D) COD 
A) 4/10 eom 
B) FOB shipping point 
C) FOB destination 
D) COD

Question 6

Freight in should be added to the inventory account if the firm uses the perpetual inventory method.

Accepted Answer

A) True 
 B)False

Question 7

A small increase in the gross profit percentage could indicate:

Accepted Answer

A) a decrease in profit. 
B) a significant rise in profit. 
C) lower inventory turnover. 
D) a decrease in overhead expenses. 
A) a decrease in profit. 
B) a significant rise in profit. 
C) lower inventory turnover. 
D) a decrease in overhead expenses.

Question 8

In a periodic system,inventory balances and the cost of sales for the current period are determined:

Accepted Answer

A) at the time of sale. 
B) when a physical inventory count is taken. 
C) on a frequent basis. 
D) on the first day of each year. 
A) at the time of sale. 
B) when a physical inventory count is taken. 
C) on a frequent basis. 
D) on the first day of each year.

Question 9

If a physical count of inventory indicates that the Inventory account is overstated,an additional adjusting entry is required.

Accepted Answer

A) True 
 B)False

Question 10

Thomas Company provided the following particulars for year 2017: $$\begin{array} { | l | l | } 
\hline \text { Cost of sales } & \$ 1,100,000 \
\hline \text { Beginning inventory } & 340,000 \
\hline \text { Ending inventory } & 350,000 \
\hline
\end{array}$$ Calculate Thomas's rate of inventory turnover for the year.(Round your answer to two decimal places. )

Accepted Answer

A) 3.14 times per year 
B) 3.19 times per year 
C) 1.59 times per year 
D) 3.24 times per year 
A) 3.14 times per year 
B) 3.19 times per year 
C) 1.59 times per year 
D) 3.24 times per year

Question 11

Which of the following correctly describes the rate of inventory turnover?

Accepted Answer

A) It is how many days it takes the inventory to travel between the seller's warehouse and the buyer's warehouse. 
B) It is how many days it takes from the time an order is received to the day it is shipped. 
C) It is how quickly inventory is received from the supplier after the order is placed. 
D) It is how rapidly inventory is sold. 
A) It is how many days it takes the inventory to travel between the seller's warehouse and the buyer's warehouse. 
B) It is how many days it takes from the time an order is received to the day it is shipped. 
C) It is how quickly inventory is received from the supplier after the order is placed. 
D) It is how rapidly inventory is sold.

Question 12

Which of the following accounts is used ONLY at the end of the accounting period?

Accepted Answer

A) Sales revenue 
B) Cost of sales 
C) Net sales revenue 
D) Income summary 
A) Sales revenue 
B) Cost of sales 
C) Net sales revenue 
D) Income summary

Question 13

An adjusted trial balance is given below. $\begin{array}{|l|l|l|}
\hline \text { Accounts } & {\text { Debit }}&\text { Credit } \
\hline \text { Cash } & \$ 13,000 \
\hline \text { Accounts receivable } & 4000 \
\hline \text { Prepaid rent } & 300 \
\hline \text { Inventory } & 26,000 \\hline \text { Accounts payable } && \$ 4000 \
\hline \text { Salaries payable }& & 500 \
\hline \text { Loan payable } & &600 \
\hline \text { Smith, capital } && 12,700 \\hline \text { Drawings } & 2000 & \
\hline \text { Sales revenue } & & 92,800 \\hline \text { Sales returns and } & \
\text { allowances } & 1300 \
\hline \text { Sales discounts } & 500 \\hline \text { Cost of sales } & 21,000 \
\hline \text { Salaries expense } & 21,000 \
\hline \text { Rent expense } & 12,000 \
\hline \text { Selling expense } & 3200 \
\hline \text { Supplies expense } & 300 \\hline \text { Total } & \$ 110,600 & \$ 110,600\
\hline
\end{array}$ What will be the final balance in the Smith,capital account after recording the closing entries?

Accepted Answer

A) $38,700 
B) $26,000 
C) $1700 
D) $40,700 
A) $38,700 
B) $26,000 
C) $1700 
D) $40,700

Question 14

The entry to close Cost of sales results in a debit to Income summary.

Accepted Answer

A) True 
 B)False

Question 15

Freight out is an addition to the Inventory account if the firm uses the perpetual inventory method.

Accepted Answer

A) True 
 B)False

Question 16

A sales return is recorded with a credit to Inventory.

Accepted Answer

A) True 
 B)False

Question 17

GST is a flat percentage charge levied on the supply of goods and services.

Accepted Answer

A) True 
 B)False

Question 18

The trial balance of a retailer is as follows.A physical count of inventory at the end of the accounting year reveals $27 000 of inventory on hand.(Assume a perpetual inventory system. ) $\begin{array}{lr}&\text { Debit } &\text { Credit } \
\text { Cash } & \$ 12600 \
\text { Accounts receivable } & 2400 \
\text { Prepaid rent } & 800\\text { Inventory }\quad\quad\quad 29000 \
\text { Accounts payable }\quad\quad \$ 4200 \
\text { Salaries payable } \quad 1000 & \
\text { Loan payable } \quad 800 & \
\text { Smith, Capital } \quad 13800 &\\text { Drawings } \quad 1000 \
\text { Sales revenue }\quad\quad95,000 \
\text { Sales returns and allowances } \quad 16000\
\text {Sales discounts} \quad 400\
\text {Cost of sales} \quad 23000\
\text {Salaries expense} \quad21000\
\text {Rent expense } \quad14000\
\text {Depreciation expense} \quad 8500\
\text {Supplies expense  } \quad\quad 500\
\end{array}$
$\text { Total } \$ \$ 114800 \quad \$ 114800$
What is the journal entry to record the inventory shortfall?

Accepted Answer

A)  $$\begin{array} { | c | l | l | } 
\hline \text { Cost of sales } & 27000 & \
\hline \text { Inventory } & & 27000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Inventory } & 27000 & \
\hline \text { Cost of sales } & & 27000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Cost of sales } & 2000 & \
\hline \text { Inventory } & & 2000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Inventory } & 2000 & \
\hline \text { Cost of sales } & & 2000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | l | l | } 
\hline \text { Cost of sales } & 27000 & \
\hline \text { Inventory } & & 27000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | l | l | } 
\hline \text { Inventory } & 27000 & \
\hline \text { Cost of sales } & & 27000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | l | l | } 
\hline \text { Cost of sales } & 2000 & \
\hline \text { Inventory } & & 2000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | l | l | } 
\hline \text { Inventory } & 2000 & \
\hline \text { Cost of sales } & & 2000 \
\hline
\end{array}$$

Question 19

A firm uses the perpetual inventory method.To record a sale of inventory on credit will require an entry to record revenue and an entry to record cost of sales.

Accepted Answer

A) True 
 B)False

Question 20

In a perpetual inventory system,goods returned by the customer for a refund is called a:

Accepted Answer

A) sales discount. 
B) sales allowance. 
C) sales return. 
D) sales adjustment. 
A) sales discount. 
B) sales allowance. 
C) sales return. 
D) sales adjustment.

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

Gilbert Ltd generated sales revenues of $1,400,000 in the year 2017.Its cost of sales amounted to $ 560,000 . Calculate Gilbert's gross profit percentage.(Round your answer to the nearest whole percentage. )

Which of the following means that the shipment is free on board at the point of shipment and the buyer pays all transportation costs?

Freight in should be added to the inventory account if the firm uses the perpetual inventory method.

A small increase in the gross profit percentage could indicate:

In a periodic system,inventory balances and the cost of sales for the current period are determined:

If a physical count of inventory indicates that the Inventory account is overstated,an additional adjusting entry is required.

Thomas Company provided the following particulars for year 2017: Cost of sales \ 1,100,000 Beginning inventory 340,000 Ending inventory 350,000 Calculate Thomas's rate of inventory turnover for the year.(Round your answer to two decimal places. )

Which of the following correctly describes the rate of inventory turnover?

Which of the following accounts is used ONLY at the end of the accounting period?

The entry to close Cost of sales results in a debit to Income summary.

Freight out is an addition to the Inventory account if the firm uses the perpetual inventory method.

A sales return is recorded with a credit to Inventory.

GST is a flat percentage charge levied on the supply of goods and services.

A firm uses the perpetual inventory method.To record a sale of inventory on credit will require an entry to record revenue and an entry to record cost of sales.

In a perpetual inventory system,goods returned by the customer for a refund is called a:

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters

Exam 5: Retailing Operations

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

Gilbert Ltd generated sales revenues of $1,400,000 in the year 2017.Its cost of sales amounted to $ 560,000 . Calculate Gilbert's gross profit percentage.(Round your answer to the nearest whole percentage. )

Which of the following means that the shipment is free on board at the point of shipment and the buyer pays all transportation costs?

Freight in should be added to the inventory account if the firm uses the perpetual inventory method.

A small increase in the gross profit percentage could indicate:

In a periodic system,inventory balances and the cost of sales for the current period are determined:

If a physical count of inventory indicates that the Inventory account is overstated,an additional adjusting entry is required.

Thomas Company provided the following particulars for year 2017: Cost of sales \ 1,100,000 Beginning inventory 340,000 Ending inventory 350,000 Calculate Thomas's rate of inventory turnover for the year.(Round your answer to two decimal places. )

Which of the following correctly describes the rate of inventory turnover?

Which of the following accounts is used ONLY at the end of the accounting period?

The entry to close Cost of sales results in a debit to Income summary.

Freight out is an addition to the Inventory account if the firm uses the perpetual inventory method.

A sales return is recorded with a credit to Inventory.

GST is a flat percentage charge levied on the supply of goods and services.

A firm uses the perpetual inventory method.To record a sale of inventory on credit will require an entry to record revenue and an entry to record cost of sales.

In a perpetual inventory system,goods returned by the customer for a refund is called a:

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters