Question 1

Purchases differ from delivered cost of purchases by the amount of

Accepted Answer

A)  Purchases Returns and Allowances, Purchases Discounts, and Freight In.
B)  ending merchandise inventory.
C)  the cost of goods available for sale.
D)  the cost of goods sold.
E)  beginning inventory. A

Question 2

An example of Other Income for a firm other than a bank or real estate office is

Accepted Answer

A)  Rent Income.
B)  Interest Income.
C)  Gain on Disposal of Property and Equipment.
D)  all of these.
E)  none of these. D

Question 3

Net Sales is

Accepted Answer

A)  Sales + Sales Returns & Allowances - Sales Discounts
B)  Sales - Sales Returns & Allowances + Sales Discounts
C)  Sales - Sales Returns & Allowances - Sales Discounts
D)  Sales + Sales Returns & Allowances + Sales Discounts C

Question 4

Which of the following are nominal accounts?

Accepted Answer

A)  Merchandise Inventory
B)  Capital
C)  Expenses
D)  Cash

Question 5

Write the skeleton of an income statement from Sales through Net Income.

Accepted Answer

The answer of Write the skeleton of an income statement...

Question 6

Income from Operations

Accepted Answer

A)  = Net Sales - COGS - Operating Expenses
B)  = Net Sales + COGS - Operating Expenses
C)  = Net Sales + COGS + Operating Expenses
D)  None of the above

Question 7

On the income statement, the ending merchandise inventory is deducted from the cost of goods available for sale to yield income from operations.

Accepted Answer

A) True 
 B)False

Question 8

If Ending Merchandise Inventory is $22,000, Purchases are $85,000, Purchases Discounts are $1,800, Freight In is $3,500, and Beginning Merchandise Inventory is $28,000, then Cost of Goods Sold is

Accepted Answer

A)  $80,700.
B)  $90,300.
C)  $79,700.
D)  $92,700.
E)  $107,000.

Question 9

Reversing entries are optional.

Accepted Answer

A) True 
 B)False

Question 10

The profit on merchandise sold before expenses is

Accepted Answer

A)  Gross Sales
B)  Gross Profit
C)  Net Sales
D)  Net Income

Question 11

The ability of an asset to be quickly turned into cash

Accepted Answer

A)  Disposal
B)  Liquidity
C)  Accrual
D)  Profitability

Question 12

A reversing entry for the accrued wages adjusting entry will

Accepted Answer

A)  give the Wages Payable account a zero balance.
B)  give the Wages Expense account a zero balance.
C)  give the Wages Expense account a debit balance.
D)  cause a larger net income than if the reversing entry was not prepared.
E)  cause a smaller net income than if the reversing entry was not prepared.

Question 13

Assuming Net Sales are $164,000, Cost of Goods Sold is $83,000, Selling Expenses are $23,000, and General Expenses are $24,000, then Net Income is

Accepted Answer

A)  $200,000.
B)  $80,000.
C)  $128,000.
D)  $34,000.
E)  $81,000.

Question 14

The profit on merchandise sold after expenses is

Accepted Answer

A)  Gross Sales
B)  Gross Profit
C)  Net Sales
D)  Net Income

Question 15

Match the terms below with the correct definitions.
 
-The ability to convert assets quickly into cash

Accepted Answer

The answer of Match the terms below with the correct...

Question 16

What is a weakness of the current ratio?

Accepted Answer

A)  Hard to calculate.
B)  Hard to obtain the information.
C)  Favors companies with many current assets, but doesn't measure the overall company strength.
D)  Doesn't consider enough financial information to be useful.

Question 17

If Current Assets are $103,000, Property and Equipment is $130,000, Current Liabilities are $61,000, and Long-Term Liabilities are $105,000, the current ratio is

Accepted Answer

A)  1.69 to 1.
B)  .98 to 1.
C)  3.82 to 1.
D)  2.22 to 1.
E)  1.02 to 1.

Question 18

Inventory would appear on a balance sheet as

Accepted Answer

A)  a current asset.
B)  part of property and equipment.
C)  a current liability.
D)  a long-term liability.
E)  either a current asset or a current liability.

Question 19

Net Income or Net Profit

Accepted Answer

A)  Are the same
B)  Net Income is less than Net Profit
C)  Net Profit is the profit before expenses are deducted
D)  None of the above

Question 20

Which of the following statements is true?

Accepted Answer

A)  The columns on the financial statements do not represent DR or CR columns.
B)  The columns on the financial statement are for making computations.
C)  The columns on the financial statement are for listing totals.
D)  All of the above.

Exam 12: Financial Statements, Closing Entries, and Reversing Entries