5 Written questions
4 Matching questions
- In a perpetual inventory system, a company determines the cost of goods sold each time a sale occurs.
- There are more steps involved in preparing a worksheet for a merchandising company than for a service company.
- The steps in the accounting cycle for a merchandising company are the same as those in a service company except
A. an additional adjusting journal entry for inventory may be needed in a merchandising company.
B. closing journal entries are not required for a merchandising company.
C. a post-closing trial balance is not required for a merchandising company.
D. a multiple-step income statement is required for a merchandising company.
- In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting
A. Accounts Payable.
D. Purchase Returns and Allowances.
- a A
- b TRUE
- c FALSE
- d D
5 Multiple choice questions
5 True/False questions
A perpetual inventory system would more likely be used by a (n)
A. automobile dealership.
B. hardware store.
D. convenience store. → D
In a worksheet, Inventory is shown in the following columns
A. adjusted trial balance debit and balance sheet debit.
B. income statement debit and balance sheet debit.
C. income statement credit and balance sheet debit.
D. income statement credit and adjusted trial balance debit. → A
Indicate which one of the following would appear on the income statement of both a merchandiser and a service enterprise.
A. Gross profit
B. Operating expenses
C. Sales revenue
D. Cost of goods sold → B
In determining Cost of goods sold
A. Purchase Discounts are deducted from Net Purchases
B. Freight-out is added to Net Purchases.
C. Purchase Returns and Allowances are deducted from Net Purchases.
D. Freight-in is added to Net Purchases. → D
Sales Returns and Allowances is a contra revenue account to Sales and has a normal debit balance.
B. False → A