ACCT 2001 Chapter : Exam 2 Concept Chart Complete

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azuremammoth471

15 Mar 2019

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Fob destination seller pays freight, ownership passes to buyer when buyer receives goods. Discount amount is subtracted from inventory if you are the buyer discount is applied to ap balance (need to subtract out any purchase returns/allowance) Single step subtract total expenses from total revenues, illustration 5-7. Multi-step 3 important line items are gross profit, income from operations, and net income, illustration 5-8. Fob shipping buyer pays freight, ownership passes to buyer when public carrier receives goods. 2 ways to present: add-on to income statement or as a separate statement; illustration. Record a sale (seller pov): 2 entries: record revenue. Sales rev xxx: record decrease in invt. Sales returns and allowances: 2 entries: record ret/allowance. Presents items that are not included in the determination of net income. Items include: certain adjustments to pension plan assets, gains and losses on foreign currency translation, and unrealized gains and losses on certain types of investments.

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. Wild's Flowers sells $400 of flowers for a wedding and thecustomer pays with a bank credit card (e.g., VISA). Wild's Flowersmust pay 3% to the credit card company for credit cardtransactions. Which one of the following statement is correct(true) with respect to the recording of this sale on the books ofWild's Flowers?

a) Sales is debited $400
b) Sales is credited $388.
c) Credit Card Discounts is debited $12.
d) Sales Discounts is debited $12.

2. Which one of the following is correct (true) with respect toinventory?

a) inventory is normally reported on the 3rd line, after A/R, inthe current asset section of a classified balance sheet
b) a manufacturing firm has only one type of inventory, which isfinished goods
c) if a company sells goods and agrees to pay the freight cost,this freight cost would be included in the COGS section of thecompany's income statement
d) goods in-transit at the end of the period, which were sold underterms FOB destination, should be included in the inventory of thebuyer (and not the seller)

coralyak631

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

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ACCT 2001 Chapter : Exam 2 Concept Chart Complete

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