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ch5-6

Terms in this set (17)

A sales discount is recorded by the seller as an:

a. expense
b. contra asset
c. contra revenue
d. liability
contra revenue
On January 18, a company provides services to a customer for $500 and offers the customers terms 2/10, n/30. Which of the following would be recorded when the customer remits payment on January 25?

a. Debit cash for $500
b. Credit Accounts receivable for $490
c. Credit service revenues for $500
d. Debit sales discount for $10
debit sales discount for $10
On August 4, Sanders provides services to Frederickson for $5000, terms 3/10, n/30. Frederickson pays for the service on August 12. What amount would Sanders record as revenue on August 4?

a. $4.850
b. $5,000
c. $ 5,150
d. $ 5,300
$5,000
The entry to record the estimate for uncollectible accounts includes:

a. A debit to allowance for uncollectible accounts
b. A credit to accounts receivable
c. A debit to sales revenue
d. A debit to bad debt expense
A debit to bad debt expense
At the end of its first year of operations, a company establishes an allowance for future uncollectible accounts for $5,600. At what amount would be bad debt expense be reported in the current year's income statement?

a. $800
b. $4,800
c. $5,600
d. $6,400
$5,600
On December 31, the accounts' receiveable ending balance is $80,000. Assume that the unadjusted balance of allowance for uncollectible accounts is a debit of $500 and that the company estimates 7% of the accounts receivable will not be collected. The amount of bad debt expense recorded on December 31 will be:

a. $5,000
b. $5,100
c. $ 5,600
d. $6,100
$6,100
A company has the following account balances at the end of the year:
-Credit sales = $400,000
-Accounts receivable = $80,000
-Allowance for uncollectible accounts = $400 credit

The company estimates future uncollectible accounts to be 4% of accounts receivable. At what amount would Bad Debt expense be reported in the current year's income statement.

a. $400
b. $2,800
c. $ 3,200
d. $3,600
$ 2,800
Inventory is defined as:

a. Items a company intends for sales to customers
b. Any assets of the company that can be sold.
c. The amount of cash received from the sale of goods to customers during the year.
d. the cost of goods sold to customers during the year
Items a company intends for sales to customers
Which of the following best describe a merchandising company?

a. A company whose revenues exceeds expenses
b. A company that produced products from raw materials, labor, and overhead
c. A company that provides services to its customers
d. A company that purchases products that are primarily in finished form for resale to customers.
A company that purchases products that are primarily in finished form for resale to customers.
Gross profit is defined as:

a. All revenues minus all expenses
b. Sales revenue minus cost of goods sold
c. Sales revenue minus operating expenses
d. Income before income tax expense
Sales revenue minus cost of goods sold
Operating income is defined as:

a. All revenues minus all expenses
b. Sales revenue minus cost of good sold
c. Gross profit minus operating expense
d. Income before income tax expense
Gross profit minus operating expense
Which of the following levels of profitability in a multiple-step income statement represents all revenues less all expenses?

a. Gross profit
b. Operating income
c. Income before income taxes
d. Net income
Net income
Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory cost?

a. LIFO
b. FIFO
c. Weighted-average
d. Income will be the same under each assumption
FIFO
Which inventory cost flow assumption generally results in the lowest reported amount for inventory when inventory cost are rising?

a. Specific identification
b. First in, first-out (FIFO)
c. Last in, first out (LIFO)
d. Average cost
Last in, first out (LIFO)
Fan company sells inventory on account. The entry or entries to record this sales using a perpetual inventory system would include a:

a. Debit to account receivable
b. Credit to sales revenue
c. Debut to cost of goods sold
d. All of these are included to record the sale
All of these are included to record the sale
For the year, Sealy incorporated report net sales $50,000, cost of goods sold of $40,000, and an average inventory balance if $5,000. What is Sealy's gross profit ratio?

a. 20%
b. 10%
c. 25%
d 30%
20%
A company's inventory turnover ratio measures:

a. The profitability on sales of inventory during the year
b. The number of time the company sells its average inventory balance during the year
c. The average cost at which inventory was purchased during the year
d. The quantity of inventory remaining at the end of the year.
The number of time the company sells its average inventory balance during the year
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