🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Accounting
1
answer
0
watching
209
views

Choose the best definition for each item.

A cash (also called sales) discount

Answer 1
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

The gross profit percentage

Answer 2
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

A perpetual inventory system

Answer 3
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

Net sales

Answer 4
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

When a sale of merchandise is made

Answer 5
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

The operating cycle of a merchadiser

Answer 6
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

Goods purchased FOB shipping point

Answer 7
Choose...
can reduce the price of items purchased
is updated with each transaction
requires the buyer to pay shipping costs
is complete when cash is received for goods sold.
is equal to Sales Revenue - Sales Returns and Allowances - SalesDiscounts
Cost of goods sold is debited and inventory is credited
helps a seller analyze its pricing

Watch
1
answer
0
watching
209
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Collen Von
Collen VonLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

1. Inventory is classified on the balance sheet as a

a.current liability

b.long-term asset

c.current asset

d.long-term liability

 

2. What is the term applied to the excess of sales over the cost of goods sold?

a.net income

b.gross profit

c.operations

d.gross sales

 

3. The inventory system employing accounting records that continuously disclose the amount of inventory is called

a.periodic

b.retail

c.perpetual

d.physical

 

4. Calculate the gross profit for Jefferson Company based on the following:

Sales                          $764,000

Selling Expenses         $42,500

Cost of Goods Sold      $538,000

a.$183,500

b.$721,500

c.$495,500

d.$226,000

 

5. Calculate income from operations for Jonas Company based on the following data:

Sales                          $764,000

Selling Expenses         $52,500

Cost of Goods Sold      $538,000

a.$226,000

b.$711,500

c.$485,500

d.$173,500

 

6. The primary difference between the periodic and perpetual inventory systems is that a

a.periodic system keeps a record showing the inventory on hand at all times

b.periodic system determines the inventory on hand only at the end of the accounting period

c.periodic system records the cost of the sale on the date the sale is made

d.periodic system provides an easy means to determine inventory shrinkage

 

7. In credit terms of 3/15, n/45, the "3" represents the

a.percent of the cash discount

b.full amount of the invoice

c.number of days when the entire amount is due

d.number of days in the discount period

 

8. Which of the following accounts has a normal credit balance?

a.Inventory

b.Accounts Receivable

c.Sales

d.Delivery Expense

 

9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a

a.debit to Inventory

b.debit to Accounts Payable

c.credit to Sales

d.credit to Inventory

 

10. Which of the following accounts usually has a debit balance?

a.Sales

b.Inventory

c.Accounts Payable

d.Sales Tax Payable

 

11. If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

a.n/30

b.consigned

c.FOB shipping point

d.FOB destination

 

12. When goods are shipped FOB destination and the seller pays the freight charges, the buyer

a.does not take a discount

b.journalizes a reduction for the cost of the merchandise

c.makes no journal entry for the freight

d.journalizes a reimbursement to the seller

 

13. When the perpetual inventory system is used, the inventory sold is debited to

a.Supplies Expense

b.Cost of Goods Sold

c.Sales

d.Inventory

 

14. Generally, the revenue account for a merchandising business is entitled

a.Gross Sales

b.Sales

c.Gross Profit

d.Fees Earned

Travis Company has just completed a physical inventory count at year-end, December 31 of the current year. Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $66,500. During the audit, the independent CPA developed the following additional information: Goods costing $910 were being used by a customer on a trial basis and were excluded from the inventory count at December 31 of the current year. Goods in transit on December 31 of the current year, from a supplier, with terms FOB destination (explained in the “Required” section), cost $1,400. Because these goods had not yet arrived, they were excluded from the physical inventory count. On December 31 of the current year, goods in transit to customers, with terms FOB shipping point, amounted to $1,800 (expected delivery date January 10 of next year). Because the goods had been shipped, they were excluded from the physical inventory count. On December 28 of the current year, a customer purchased goods for cash amounting to $3,050 and left them “for pickup on January 3 of next year.” Travis Company had paid $1,720 for the goods and, because they were on hand, included the latter amount in the physical inventory count. On the date of the inventory count, the company received notice from a supplier that goods ordered earlier at a cost of $4,000 had been delivered to the transportation company on December 27 of the current year; the terms were FOB shipping point. Because the shipment had not arrived by December 31 of the current year, it was excluded from the physical inventory count. On December 31 current year, the company shipped $1,700 worth of goods to a customer, FOB destination. The goods are expected to arrive at their destination no earlier than January 8 of next year. Because the goods were not on hand, they were not included in the physical inventory count. One of the items sold by the company has such a low volume that management planned to drop it last year. To induce Travis Company to continue carrying the item, the manufacturer-supplier provided the item on a “consignment basis.” This means that the manufacturer-supplier retains ownership of the item, and Travis Company (the consignee) has no responsibility to pay for the items until they are sold to a customer. Each month, Travis Company sends a report to the manufacturer on the number sold and remits cash for the cost. At the end of December of the current year, Travis Company had seven of these items on hand; therefore, they were included in the physical inventory count at $780 each. Required: Assume that Travis’s accounting policy requires including in inventory all goods for which it has title. Note that the point where title (ownership) changes hands is determined by the shipping terms in the sales contract. When goods are shipped “FOB shipping point,” title changes hands at shipment and the buyer normally pays for shipping. When they are shipped “FOB destination,” title changes hands on delivery, and the seller normally pays for shipping. Begin with the $66,500 inventory amount and compute the correct amount for the ending inventory. (Deductible amounts should be entered with a minus sign. If no adjustment is necessary, enter a 0 in the cell.)

1.

Unearned income is a liability.

A) True
B) False

2.

Prepaid expenses are assets.

A) True
B) False

3.

A business with no cash is insolvent.

A) True
B) False

4.

Assets must always equal liabilities plus capital.

A) True
B) False

5.

Assets normally have credit balances.

A) True
B) False

6.

Balance sheets report profitability.

A) True
B) False

7.

All payables are liabilites.

A) True
B) False

8.

FOB destination means buyer pays freight.

A) True
B) False

9.

Accrued revenue, by defintion, is unearned.

A) True
B) False

10.

Inventory is a current asset.

A) True
B) False

11.

Debits reduce liabilites.

A) True
B) False

12.

Sales returns are debited to inventory at cost.

A) True
B) False

13.

Sales minus sales returns, allowances, and discounts equals costof sales.

A) True
B) False

14.

Withdrawals reduce net income.

A) True
B) False

15.

A business with more debt than equity is insolvent.

A) True
B) False

16.

A business with more equity than debt is profitable.

A) True
B) False

17.

Net losses reduce capital.

A) True
B) False

18.

FIFO leaves the most recent costs in inventory.

A) True
B) False

19.

When creditors are paid, cash is always credited.

A) True
B) False

20.

There are two types of journal entires, simple and complex.

A) True
B) False

21.

Trade discounts reduce transportation costs.

A) True
B) False

22.

Cash discounts taken are credited to inventory.

A) True
B) False

23.

Cash discounts given are subtracted from sales.

A) True
B) False

24.

Recording unearned income requires a credit to cash.

A) True
B) False

25.

Journal entries must always contain both debits and credits.

A) True
B) False

26.

All adjusting entries always contain both income statement andbalance sheet accounts.

A) True
B) False

27.

Equity and capital are the same.

A) True
B) False

28.

Balance sheet accounts are either assets or liabilites.

A) True
B) False

29.

Debits reduce assets.

A) True
B) False

30.

when recording income, a revenue account must always becredited.

A) True
B) False

31.

All expense accounts, even prepaid expenses, normally have debitbalances.

A) True
B) False

32.

Accounts payable would be debited to record an expense owed.

A) True
B) False

33.

A seller would record freight costs paid FOB shipping as acredit.

A) True
B) False

34.

When receivables are collected, cash is always debited.

A) True
B) False

35.

When buyers return inventory, sellers credit cost of sales.

A) True
B) False

36.

Copyrights are amortized.

A) True
B) False

37.

Inventory is depleted.

A) True
B) False

38.

Land depreciates.

A) True
B) False

39.

A petty cash shortage would be recorded as a debit to cash shortand over.

A) True
B) False

40.

When notes are collected, cash is debited for their maturityvalue.

A) True
B) False

41.

When reconciling cash, deposits in transit are added to thedepositor's book balance.

A) True
B) False

42.

Trade discounts are recorded on worksheets.

A) True
B) False

43.

Accuumlated depreciation is a contra-asset.

A) True
B) False

44.

Depreciation is an expense that reflects the cost ofuncollectible receivables.

A) True
B) False

45.

Revenue would appear on a post closing trial balance as acredit.

A) True
B) False

46.

Income summary is closed to capital.

A) True
B) False

47.

Adjustments are recorded on worksheets.

A) True
B) False

48.

Journalizing follows posting.

A) True
B) False

49.

All general ledger accounts are adjusted and closed at the endof the accounting cycle.

A) True
B) False

50.

Supplies are assets.

A) True
B) False

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in