Fluent Essays

Question 1 Under a perpetual inventory system, the following entry would be made to record the purchase of inventory on account:xxx xxx xxx xxx Question 2 Which of the following is NOT a true statement about a multiple-step income statement? A. There may be a section for operating assets. B. There is a section for cost of goods sold. C. There may be a section for non-operating activities. D. Operating expenses may be classified as selling and administrative expenses. .Question 3 If a purchaser returns goods purchased on account to the supplier under a perpetual inventory system, the purchaser would debit A. Accounts Payable. B. Purchase Returns. C. Cost of Goods Sold. D. Merchandise Inventory. .Question 4 Tidnish Company sells merchandise on account for $2,400 to Upper Cape Company. Upper Cape Company returns $800 (cost $500) of merchandise that was damaged, along with a cheque to settle the account. What entry does Tidnish Company make upon receipt of the cheque?2,400 500 2,400 1,600 800 1,600 .Question 5 Which of the following statements is correct? A. A service company does have a Cost of Goods Sold account because it sells a service. B. A service company does not have Cost of Goods Sold account because it does not sell goods. C. A merchandising company does not have a Cost of Goods Sold account because it does not sell goods. D. A merchandising company does not have a Cost of Goods Sold account because it only sells a service. .Question 6 The Purchase Discounts account is classified as A. an expense account. B. a contra asset account. C. an asset account. D. a contra expense account. .Question 7 When goods are returned that relate to a prior cash sale, A. Accounts Receivable will be credited. B. the Sales Returns and Allowances account should not be used. C. Sales Returns and Allowances will be credited. D. the Cash account will be credited. .Question 8 A company makes a purchase for $250 on December 1, terms 2/10 n/30. How much will the discount be if the amount is paid on December 16? A. $0 B. $5 C. $10 D. $25 .Question 9 A company shows the following balances:Sales $1,000,000 Sales returns and allowances 250,000 Cost of goods sold 600,000 Operating expenses 75,000 Reference: Ref 5-1What is the companys profit margin? A. 7.5\% B. 30\% C. 10\% D. 15\% .Question 10 The journal entry to record a shortage of inventory at the end of the accounting period is A. a B. b C. c D. d .Question 11 Harvest Company has an offer to purchase 100 seeds for $100, 200 seeds for $150 or 300 seeds for $175. This offer is called a(n) A. special merchandise terms. B. purchase return. C. quantity discount. D. purchase discount. .Question 12 In a perpetual inventory system, a separate account is maintained for each separate inventory item. These separate accounts are referred to as A. subsidiary accounts. B. contra accounts. C. control accounts. D. purchase accounts. .Question 13 If a customer agrees to keep merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales A. return. B. contra asset. C. discount. D. allowance. .Question 14 Taking a physical inventory count involves all of the following EXCEPT A. counting the units on hand. B. applying unit costs to the total inventory on hand for each item of inventory. C. totalling the cost of each item of inventory to determine the total cost of goods on hand. D. evaluating whether inventory needs to be written off as obsolete. .Question 15 Yatsu Limited has the following information in its accounting records as at December 31, 2014:Purchases $129,860 Freight in 4,500 Purchase returns and allowances 12,550 Beginning inventory 57,000 A physical inventory count revealed that there was $68,000 in ending inventory.Reference: Ref 5-2Net purchases are A. $121,810. B. $117,310. C. $129,860. D. $134,360. .Question 16 Freight costs incurred by the seller on outgoing merchandise is shown on the Income Statement as part of A. Sales Revenue. B. Cost of Goods Sold. C. Operating Expenses. D. Liabilities. .Question 17 Westcock Company recently made a $20,000 purchase from a major supplier. Shipping costs were $400, terms FOB destination point. To record this purchase, Westcock Company will need to debit the A. Cost of Goods Sold account for $400. B. Merchandise Inventory account for $20,000. C. Merchandise Inventory account for $20,400. D. Cost of Goods Sold account for $20,400. .Question 18 In a profitable company, the gross profit margin will always be _________ the profit margin. A. higher than B. lower than C. The gross profit margin and the profit margin can never be the same. D. equal to .Question 19 In a perpetual inventory system, a merchandiser will record the purchase of individual inventory items in a (an) ____________ account. A. general ledger B. control C. subsidiary D. expense .Question 20 The detailed individual data from the inventory subsidiary ledger are summarized in the A. cost of goods sold. B. gross profit. C. accounts payable control account. D. merchandise inventory control account. Question 22 Purchased 500 necklaces at $120 each from Lindal Gold Fashions on account, terms net 30. Returned 30 of the necklaces purchased from Lindal because they were defective. Paid the balance due on the Lindal account payable. Sold 600 necklaces for $250 each, terms n/30, FOB destination. Freight $250 on the Dec 12 sale paid by the appropriate party. Purchased 150 necklaces from Green wholesale Jewelers for $120, terms n/30. Sold 30 of the necklaces for cash, $325 each. Customer returned 2 of the necklaces purchased on Dec 17. Provided a cash refund. The necklaces were returned to inventory. InstructionsUsing the perpetual inventory system, prepare the journal entries to record the transactions.Question 23 Hernandez Clothing Store employs the perpetual inventory system and prepares monthly financial statements. All accounts have been adjusted except for merchandise inventory. A physical count of merchandise inventory on November 30, 2014, indicates that $21,000 was on hand. A partial listing of account balances follows:Accounts Receivable $ 9,000 Merchandise Inventory 23,000 Commissions Expense 600 Sales Returns and Allowances 1,800 Freight Out 1,200 Cost of Goods Sold 31,000 Sales 55,000 Instructionsa. Prepare a partial income statement for the Hernandez Clothing Store for the month ended November 30, 2014. The income statement should show items through the gross profit category.b. Calculate Hernandezs gross profit margin for November, 2014.