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Study Resources (Accounting)

21) Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be ________. A) Cost of Goods Sold 5,500        Accounts Receivable 5,500 B).
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41) WAXS-D, merchandisers of musical instruments, has provided the following details: Mar.5 Inventory purchased $800,000 Mar.8 Freight in 40,000 Mar.13 Purchase returns 60,000 Mar.14 Allowances by vendor 15,000 Mar.20 Payment made to vendor for purchases on March 5 ? Credit terms are: 3/20, n/45, FOB shipping. Calculate the net cost of inventory purchased assuming that there are no other inventory related transactions during the month. A) $785,000 B).
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Learning Objective 3-7 1) Avalon Event Planning Services Inc. records prepaid expenses and unearned revenues using the alternative treatments. It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year. On October 1, it paid $3,600 for insurance.
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11) An entity that buys goods and sells them to customers at a markup is a ________. A) merchandiser B) service provider C) manufacturer D) producer 12) Gross profit is calculated as the difference between net sales revenue and ________. A) purchases B) cost of goods sold C) cost of merchandise inventory D) selling and administrative expenses 13) Best Value.
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11) Which of the following accounts will be included in a post-closing trial balance? A) Dividends B) Salaries Expense C) Common Stock D) Office Supplies Expense 12) The adjusted trial balance of Michael's Shutterbug Photography at December 31, 2015 is as follows: AccountsDebitCredit Cash$ 15,000 Accounts Receivable30,000 Prepaid Insurance7,500 Supplies3,200 Building160,000 Accumulated Depreciation—Building$ 12,000 Equipment75,000 Accumulated Depreciation—Equipment8,500 Land40,000 Accounts Payable12,000 Salaries Payable2,000 Unearned Service Revenue25,000 Mortgage Payable100,000 Common Stock21,290 Dividends23,000 Service Revenue289,000 Salaries.
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21) Harris Inc. had the following balances and transactions during 2015: Beginning Merchandise Inventory as of January 1, 2015 100 units at $80 March 10 Sold 50 units June 10 Purchased 200 units at $82 October 30 Sold 150 units What would the Cost of Goods Sold be as reported on the income statement for the year ending December.
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Learning Objective 6-5 1) An overstatement of ending merchandise inventory in the current period results in an understatement of net income in the current period. 2) An overstatement of ending merchandise inventory in the current period results in an overstatement of net income in the current period. 3) An overstatement of ending merchandise.
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11) The Office Supplies account is a temporary account. 12) The Office Supplies Expense account is a temporary account. 13) The Accounts Payable account is a temporary account. 14) The Salaries Payable account is a permanent account. 15) The Common Stock account is a temporary account. 16) The Accumulated Depreciation account is a permanent account. 17).
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Learning Objective 4-3 1) The adjusting process zeroes out all revenue accounts and all expense accounts. 2) The closing process helps in measuring each period's net income separately from all other periods. 3) Permanent accounts are not closed at the end of the accounting period. 4) As a part of the closing process, revenues.
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Learning Objective 5-6 1) The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold. 2) A small increase in the gross profit percentage may indicate an important rise in income. 3) Which of the following is the correct formula for calculating gross profit percentage? A) Net profit.
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11) An adjusted trial balance is given below. Debit Credit Cash $12,600 Accounts Receivable 2,400 Prepaid Rent 800 Merchandise Inventory 28,000 Accounts Payable $4,200 Salaries Payable 1,000 Notes Payable 800 Common Stock 10,000 Retained Earnings 3,800 Dividends 1,000 Sales Revenue 96,000 Sales Returns and Allowances 1,600 Sales Discounts 400 Cost of Goods Sold 25,000 Salaries Expense 21,000 Rent Expense 14,000 Selling Expense 8,500 Supplies Expense 500 ________ Total $115,800 $115,800 What will be the final balance in the corporation's Retained Earnings account after recording the closing entries? A) $27,800 B) $2,700 C) $14,000 D) $26,800 12) The sales.
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Learning Objective 4-4 1) GAAP requires publicly traded companies to prepare a post-closing trial balance and publish it in their annual report. 2) The post-closing trial balance shows the updated Retained Earnings balance. 3) The post-closing trial balance shows the net income for the period just ended. 4) Only permanent accounts appear on the.
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Learning Objective 5-4 1) The loss of inventory that occurs because of theft, damage, and errors is referred to as inventory shrinkage. 2) When a company uses the perpetual inventory system, there is no need to conduct a physical count of inventory. 3) The entry to close Sales Discounts will include a debit.
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Learning Objective 6-4 1) If the historical cost of inventory is less than its current replacement cost, the business must write down the inventory cost. 2) If the current replacement cost of inventory is less than its historical cost, the business must adjust the inventory value. 3) For inventories, market value generally means.
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31) A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $7,000 and paid $750 for the freight-in. The company sold the whole lot to a supermarket chain for $13,000 on account. The company uses the specific-identification method of inventory costing. Which of the following.
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Learning Objective 5-1 1) A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer. 2) G-mart, a small-scale grocer, wants to introduce an inventory system to track its inventory. G-mart does not currently use optical scanning registers and computer systems. The perpetual inventory system.
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Learning Objective 4-6 1) The current ratio is calculated using the values from the income statement. 2) The current ratio shows the profitability of a firm. 3) The smaller the current ratio, the higher is the ability of a firm to repay its current debts. 4) A current ratio that has increased from the.
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Learning Objective 3-6 1) A worksheet is an external document that forms a part of the financial statements. 2) The worksheet is NOT a journal, a ledger, or a financial statement. 3) GAAP requires a public company to prepare a worksheet for financial reporting purposes. 4) An internal document that helps summarize data for.
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21) Under which of the following categories would Accounts Payable appear? A) long-term assets B) current assets C) long-term liabilities D) current liabilities 22) Which of the following is a plant asset? A) equipment B) patents C) trademark D) Accounts Receivable 23) Notes Payable due within two years are classified as ________. A) current liabilities B) current assets C) long-term liabilities D) long-term assets 24).
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Learning Objective 6-8 1) The estimated ending merchandise inventory can be computed by subtracting cost of goods sold from the cost of goods available for sale. 2) Gross profit is calculated by dividing sales revenue by cost of goods sold. 3) The gross profit method is a way to estimate ending inventory on.
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Learning Objective 5-3 1) An amount that a merchandiser earns by selling its inventory is known as Sales Revenue or Sales. 2) When a customer returns goods to the seller, the seller records it as purchase returns. 3) When a merchandiser records sales returns, the Accounts Receivable account is credited. The seller uses.
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Learning Objective 4-5 1) The steps of the accounting cycle are followed throughout the accounting period. 2) The operating cycle is the process by which companies produce their financial statements for a specific period. 3) In an accounting cycle, an analysis of transactions is performed at the end of each accounting period. 4) The.
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11) Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser. 12) Under the perpetual inventory system, when a purchaser makes payment within the discount period, the amount of discount will be credited to the Merchandise Inventory account. 13) Under the terms FOB.
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Learning Objective 6-7 1) Using the first-in, first-out (FIFO) method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory. 2) Using the last-in, first-out (LIFO) method of inventory valuation will always produce the same results whether a company uses perpetual or periodic inventory. 3) Under.
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Learning Objective 5-5 1) Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement. 2) The net income calculated using both the single and multi-step formats of income statement is always the same. 3) Operating income is gross profit minus operating expenses. 4) A single-step income statement.
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Learning Objective 6-1 1) The consistency principle states that a business should use the same accounting methods from period to period. 2) The lower-of-cost-or-market rule demonstrates accounting conservatism in action. 3) A company reports in its financial statements that it uses the FIFO method of inventory costing. This is an example of the.
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11) An income statement includes ________. A) Land and Salaries Payable B) Common Stock, Retained Earnings, and Dividends C) Furniture and Cash D) Service Revenue and Utilities Expense 12) Property, plant, and equipment are categorized as ________. A) current assets B) fixed assets C) long-term investments D) short-term investments 13) Patents, copyrights, and trademarks are examples of ________. A) short-term investments B).
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11) Under which of the following inventory costing methods is the ending inventory valued on the cost of the most recent purchases? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out 12) Which of the following methods of inventory valuation requires the calculation of a new average cost after each purchase? A) specific identification B).
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11) The current ratio measures a company's ________. A) overall ability to pay liabilities B) ability to pay current liabilities with current assets C) proportion of assets that are financed by debt D) rate of cash flow 12) The following contains information from the records of the Wellborn Engineers and Architects. Wellborn Engineers and Architects Selected Financial.
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Learning Objective 5-7 1) Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur. 2) If a merchandiser uses the periodic inventory system, it is necessary to conduct a physical count of inventory to determine the quantity.
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Learning Objective 6-6 1) Inventory turnover measures the number of times a company sells its average level of merchandise inventory during a period. 2) The days' sales in inventory ratio is calculated by dividing cost of goods sold by the average merchandise inventory. 3) A high rate of inventory turnover indicates difficulty in.
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31) Which of the following account's balance is carried forward to the next accounting period? A) Accumulated Depreciation B) Depreciation Expense C) Dividends D) Sales Revenue 32) Which of the following is a permanent account? A) Wages Expense B) Salary Payable C) Service Revenue D) Utilities Expense 33) Which of the following accounts will be closed by debiting the Income.
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21) The Dividends account is a permanent account. 22) The Common Stock account is a permanent account. 23) The beginning balance in the Common Stock account of a company was $10,000. The revenues and expenses were $200,000 and $120,000, respectively. During the year, the company declared and paid dividends for $4,000. The.
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Learning Objective 4-1 1) In a balance sheet, assets are classified as either current or long-term depending on their liquidity. 2) Prepaid Rent is always classified as a long-term asset. 3) The operating cycle is the time span required for a business to repay its long-term liabilities. 4) A balance sheet prepared in the.
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11) On a multi-step income statement, the operating expenses are subtracted from ________ to arrive at operating income. A) net sales B) cost of goods sold C) net profit D) gross profit 12) Merchandise Inventory and Cost of Goods Sold appear ________. A) on the balance sheet and statement of retained earnings, respectively B) on the statement.
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Learning Objective 4-7 1) Generally Accepted Accounting Principles (GAAP) require every organization to prepare reversing entries. 2) Reversing entries ease the burden of accounting for transactions in a later period. 3) Reversing entries are dated on the first day of the new accounting period. 4) A reversing entry is ________. A) a journal entry used.
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Learning Objective 6-2 1) Ending inventory is calculated by multiplying the number of units on hand with the unit cost. 2) Ending inventory equals the cost of goods available for sale less beginning inventory. 3) Under the last-in, first-out (LIFO) method, the cost of goods sold is based on the oldest purchases. 4) When.
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11) Which of the following adjusted balances would appear in the balance sheet credit column of a worksheet? A) Rent Revenue B) Insurance Expense C) Salaries Payable D) Equipment 12) Where does Net Income appear on a worksheet? A) Net income appears only in the income statement debit column. B) Net income appears in the balance sheet.
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11) Which of the following inventory costing methods yields the highest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in, first-out D) first-in, first-out 12) Which of the following inventory costing methods yields the lowest net income during a period of rising inventory costs? A) specific identification B) weighted-average C) last-in,.
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Learning Objective 4-2 1) The last two columns generally found on the right side of the worksheet are the income statement columns. 2) Net income is entered as the balancing amount on the debit side of the income statement columns and the credit side of the balance sheet columns of the worksheet. 3).
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