Question 1

Match the terms with the definitions.
-Cash received in advance of delivering a product or performing a service.

Accepted Answer

A) contra-cost accounts 
B) contra-revenue accounts 
C) physical inventory 
D) unearned revenue

Question 2

After journalizing adjusting entries, the amounts must be posted to the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following accounts would NOT be found under the heading of "Cost of Goods Sold" in a chart of accounts?

Accepted Answer

A)  Purchases 
B)  Purchases Returns and Allowances 
C)  Freight-In 
D)  Supplies

Question 4

Both the debit and credit amounts in the merchandise inventory account at the end of an accounting period are used to calculate the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 5

Only the debit amount for the income summary account must be extended in the work sheet.

Accepted Answer

A) True 
 B)False

Question 6

The income summary account, after adjusting entries are posted, reflects the

Accepted Answer

A)  beginning inventory amount. 
B)  ending inventory amount. 
C)  beginning and ending inventory amounts. 
D)  cash income from business transactions.

Question 7

Under the perpetual inventory method, when inventory is purchased, Merchandise Inventory

Accepted Answer

A)  is debited and Cash or Accounts Payable is credited. 
B)  is credited and Cash or Accounts Payable is debited. 
C)  and Accounts Payable are credited and Cash is debited. 
D)  and Accounts Payable are debited and Cash is credited.

Question 8

In journalizing adjusting entries, Merchandise Inventory is credited for the amount of ending inventory.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following accounts is never debited or credited during the accounting period?

Accepted Answer

A)  Owner's Capital 
B)  Purchases Returns and Allowances 
C)  Merchandise Inventory 
D)  Interest Income

Question 10

Two adjustments are made to the merchandise inventory account on the work sheet.

Accepted Answer

A) True 
 B)False

Question 11

Purchases Returns and Allowances is a contra-revenue account.

Accepted Answer

A) True 
 B)False

Question 12

An increase in a revenue account may reflect a decrease in a liability account.

Accepted Answer

A) True 
 B)False

Question 13

Match the terms with the definitions.
-Accounts that are deducted from the Purchases account when computing cost of goods sold (i.e., Purchases Returns and Allowances, Purchases Discounts).

Accepted Answer

A) contra-cost accounts 
B) contra-revenue accounts 
C) physical inventory 
D) unearned revenue

Question 14

Match the terms with the definitions.
-A physical count of goods on hand.

Accepted Answer

A) contra-cost accounts 
B) contra-revenue accounts 
C) physical inventory 
D) unearned revenue

Question 15

Sports, Inc., plans to sell season football tickets for the 10 games played from September through November. These tickets sell for $5 each at the gate or for $45 per season package purchased before April 30. On April 30, the office reports that it has sold 200 season ticket packages and has only 50 left. The correct entry to record the sale of the season tickets is

Accepted Answer

A)  debit Cash and credit Unearned Revenue for $9,000. 
B)  debit Cash and credit Revenue for $11,250. 
C)  debit Unearned Revenue and credit Revenue for $9,000. 
D)  to determine cost of goods sold.

Question 16

Journalize the necessary adjusting entries for the following (partial) trial balance. Based on a physical count, the ending merchandise inventory is $67,000. Unearned revenue at year-end was $4,230.

Accepted Answer

The answer of Journalize the necessary adjusting entries for the...

Question 17

If beginning inventory is $80,000 and ending inventory is $10,000, the balance of the merchandise inventory account after adjustments will be $70,000.

Accepted Answer

A) True 
 B)False

Question 18

The amount of inventory on hand is determined by physically counting the goods on hand and determining the cost of those goods.

Accepted Answer

A) True 
 B)False

Question 19

Cash received prior to delivering a product or performing a service is called a(n)

Accepted Answer

A)  unearned asset. 
B)  unearned revenue. 
C)  unearned expense. 
D)  unearned contra-asset.

Question 20

Merchandise Inventory is listed as a(n)

Accepted Answer

A)  current asset. 
B)  current liability. 
C)  expense. 
D)  revenue.

Exam 14: Adjustments and the Work Sheet for a Merchandising Business

Match the terms with the definitions. -Cash received in advance of delivering a product or performing a service.

After journalizing adjusting entries, the amounts must be posted to the accounts in the general ledger.

Which of the following accounts would NOT be found under the heading of "Cost of Goods Sold" in a chart of accounts?

Both the debit and credit amounts in the merchandise inventory account at the end of an accounting period are used to calculate the cost of goods sold.

Only the debit amount for the income summary account must be extended in the work sheet.

The income summary account, after adjusting entries are posted, reflects the

Under the perpetual inventory method, when inventory is purchased, Merchandise Inventory

In journalizing adjusting entries, Merchandise Inventory is credited for the amount of ending inventory.

Which of the following accounts is never debited or credited during the accounting period?

Two adjustments are made to the merchandise inventory account on the work sheet.

Purchases Returns and Allowances is a contra-revenue account.

An increase in a revenue account may reflect a decrease in a liability account.

Match the terms with the definitions. -Accounts that are deducted from the Purchases account when computing cost of goods sold (i.e., Purchases Returns and Allowances, Purchases Discounts) .

Match the terms with the definitions. -A physical count of goods on hand.

Journalize the necessary adjusting entries for the following (partial) trial balance. Based on a physical count, the ending merchandise inventory is $67,000. Unearned revenue at year-end was $4,230.

If beginning inventory is $80,000 and ending inventory is $10,000, the balance of the merchandise inventory account after adjustments will be $70,000.

The amount of inventory on hand is determined by physically counting the goods on hand and determining the cost of those goods.

Cash received prior to delivering a product or performing a service is called a(n)

Merchandise Inventory is listed as a(n)