ACCT207 Study Guide - Midterm Guide: Perpetual Inventory, Income Statement, Current Liability

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harlequinraven529

6 Jan 2018

School

University of Delaware

Department

Accounting

Course

ACCT207

Professor

Tsakumis George

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Document Summary

Periodic inventory system: cgs determined by mandatory count at end of period. Perpetual inventory system: records of cost of inventory purchase/sale: continuously show inventory on hand, determine cgs each time sale occurs. Sales discounts and sales returns and allowances: contra asset normal debit balance. 2/10, n/30: 2 = discount percentage, 10 = days to qualify for discount, n/30 = if full amount is not paid within 10 days, no discount, net amount due w/in 30 days. Gross pro t = net sales cost of goods sold. Fob shipping cost: buyer pays shipping cost. Single step income statement: total expenses total revenues. Multiple step income statement: gross pro t, cgs, sales section. Gross pro t rate = (gross pro t) / (net sales) First in first out (fifo): parallels physical ow of merchandise: fifo cost of goods sold is the same under periodic and perpetual inventory system (lifo cgs is not the same under both)

Related Questions

MATCHING

Inventory system that updates the merchandise inventory account only at the end of the accounting period based on a physical count of merchandise on hand.

Statement where net income is determined by deducting all expenses from all revenues.

Inventory system that updates the merchandise inventory account for every purchase and sale transaction.

Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier.

Statement that includes subtotals for net sales, gross profit, and net operating income in determining net income.

Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

FOB destination
Periodic inventory system

Credit terms
FOB shipping point

Multiple-step income statement
Inventory shrinkage

Perpetual inventory system

Single-step income statement

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

lemonpug879

1.) X sold Y merchandise on account FOB shipping point, 3/10,net 30, for $10,000. X prepaid the $200 shipping charge. Using theperpetual inventory method, which of the following entries will Ymake if Y pays within the discount period?

	Accounts Payable-X, debit $9,900; Cash, credit $9,900
	Accounts Payable-X, debit $10,000; Transportation In, credit$200; Cash, credit $9,800

	Accounts Payable-X, debit $9,700; Merchandise Inventory, debit$200; Cash, credit $9,900
	Accounts Payable-X, debit $9,700; Transportation In, debit $200;Cash, credit $9,900

2.) Merchandise with an invoice price of $4,000 is purchasedsubject to terms of 2/10, n/30, FOB destination. Transportationcosts paid by the seller totaled $150. What is the cost of themerchandise, assuming the discount is taken?

	$4,070
	$3,920

	$4,067
	$4,150

3.) A sales invoice included the following information:merchandise price, $1,000; transportation, $200; terms 1/10, n/eom,FOB shipping point. Assuming that a credit for merchandise returnedof $300 is granted prior to payment, that the transportation isprepaid by the seller, and that the invoice is paid within thediscount period, what is the amount of cash received by theseller?

	$693
	$893

	$990
	$700

4.) X sold Y merchandise on account FOB shipping point, 2/10,net 30, for $10,000. X prepaid the $200 shipping charge. Which ofthe following entries does X make to record this sale?

	Accounts Receivable debit $9,800; Sales credit $9,800; AccountsReceivable debit $200; Cash credit $200
	Accounts Receivable debit $10,400; Sales credit $10,400

	Accounts Receivable debit $10,000; Sales credit $10,000
	Accounts Receivable debit $10,000; Sales credit $10,000;Transportation Out debit $200; Cash credit $200

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ACCT207 Study Guide - Midterm Guide: Perpetual Inventory, Income Statement, Current Liability

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