5 Written questions
4 Matching questions
- A merchandiser using a perpetual system will require one additional adjusting entry to make the records agree with the actual inventory on hand.
- All of the following items would be reported as Other revenues and gains except
A. Gain on Sale of Equipment.
B. Interest Revenue.
C. Rent Revenue.
D. Sales Revenue.
- A company that maintains a perpetual inventory system has an inventory account balance of $50,000. The physical count of goods on hand totals $49,600. Which of the following adjusting entries is correct?
A. debit Purchases and credit Inventory.
B. debit Cost of Goods Sold and credit Inventory.
C. debit Inventory and credit Purchases.
D. debit Sales Discounts and credit Inventory.
- Under a perpetual inventory system, when goods are purchased for resale by a company
A. purchases on account are debited to Inventory.
B. purchases on account are debited to Purchases.
C. purchase returns are debited to Purchase Returns and Allowances.
D. freight costs are debited to Freight-out.
- a B
- b A
- c TRUE
- d D
5 Multiple choice questions
5 True/False questions
Sales Returns and Allowances is a contra revenue account to Sales and has a normal debit balance.
B. False → TRUE
With respect to the income statement,
A. contra-revenue accounts do not appear on the income statement.
B. sales discounts increase the amount of sales.
C. contra-revenue accounts increase the amount of operating expenses.
D. sales discounts are included in the calculation of gross profit. → D
In a perpetual inventory system, a company determines the cost of goods sold each time a sale occurs.
B. False → D
In a perpetual inventory system, the Cost of Goods Sold account is used
A. only when a cash sale of merchandise occurs.
B. only when a credit sale of merchandise occurs.
C. only when a sale of merchandise occurs.
D. whenever there is a sale of merchandise or a return of merchandise sold. → B
Which of the following expressions is incorrect?
A. Gross profit less Operating expenses equals Net income.
B. Sales less Cost of goods sold less Operating expenses equals Net income.
C. Net income plus Operating expenses equals Gross profit.
D. Operating expenses less Cost of goods sold equals Gross profit. → A