Accounting Exam Review #2

A company purchased 400 units $30 each on january 31. It purchased 135 units for $40 each on feburary 28. It sold 200 units 455 each from march 1 through december 31. If the company uses the last in first out inventory costing method, what is the amount of cost of goods sold on the income statement for the year ending december 31 (assume that the company uses a perpetual inventory system)

7350

Forever Jewelers uses the perpetual inventory system. On April 2, forever sold merchandise with a cost of 7000 to a customer on account with the terms of 2/15, n/30. Which of the following journal entries correctly records the sales revenue.

A

Which of the following accounts will be closed by crediting the income summary account

Service revenue

Which of the folllowing inventory valuating methods should be used for unique items

Specific identification

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisioins about the company

Disclosure princple

Which of the following is not a balance sheet account?

Dividends

Which of the following is not an inventory costing method

Lower of cost or market

Which of the following states that a company must perform strictly proper accounting only for items that are significant to the business's financial statements

Materiality concept

Gross profit is calculated as

Net sales revenue less cost of goods sold

Reguarding a classified balance sheet, which of the following statements is correct

Assets are listed in the order of their liquidity

A general ledger shows a balance of 66600 in the merchendise Inventory account at the end of the period. The physical inventory count shows inventory of 63,400.( Assume a perpetual inventory system). The adjusting entry includes a ________.

C- Debit to cost of goods sold and a credit to merchendise inventory for 3200.

A company sold merchandise with a cost of 213 for 440 on account. The seller uses the perpetual inventory system. The entry to record the cost of merchandise sold would include _________.

C-A debit to Cost of Goods Sold and a credit to merchandise inventory for 213.

Which of the following entries would be made to record the purchase of inventory on account, if a company uses the perpetual inventory system.

C-A debit to Merchandise Inventory and a credit to Accounts Payable.

Gross Profit is calculated as the difference between net sales revenue and ___________.

C-Cost of goods sold

Which of the following line items will appear on the income statement of a merchandiser but not of a service company

C-Cost of goods sold

Which of the following statement is not correct?

C-In a periodic inventory system, merchandise inventory and purchasing systems are integrated with the records for Accounts Recievable and Sales Revenue

Which of the following is the most liquid asset

Cash

The entries that transfer the revenue, expense, and dividends balance to the retained earning account to prepare the companys books for the next period are called ___ entries

Closing

Changing the method of valuing inventory ignores the principle of

Consistency

The time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash, is called the

Operating cycle

Which of the following remains the same reguardless of the inventory costing method used by a company? Assume the cost of inventory is rising

Purchases

Which of the following is an application of convservatism

Reporting inventory at the lower of cost or market

To which of the following accounts should the balance in the income summary account be closed

Retained earnings

What is the net result if the amount of the net income for the year is less than the amount of the dividends

Retained earnings decreases

Which of the following are not including in a post closing trial balance

Revenues and expenses

Which of the following are temporary accounts that are closed at the end of the year

Revenues, expenses, and dividends

Which of the following accounts will be closed by debiting the income summary account

Salaries expense

Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year, are called

Current

A company that uses the perpetual inventory system purchased inventory for 970000 on account with the terms of 3/7, n/20. Which of the following correctly records the payment made 15 days after the date of invoice?

D

Which of the following inventory costing methods requires the calculation of a new average cost after each purchase

Weighted average

A company purchased 300 units for $20 each on janurary 31. It purchased 200 units for $40 each on feburary 28. It sold a total of 250 for $110 each from march 1 through december 31. If the company uses the last in first out inventory costing method, calulate the cost of ending inventory on december 31

$5000

Which of the following amounts would be reported a merhandise inventory on the balance sheet of a company if the cost of an item $110 and the current replacement cost is $70

$70

A company purchased 500 units for $30 each on january 31. It purchased 550 units for $33 each on feburary 28. It sold a total of 650 units for $45 each from march 1 through december 31. What is the cost of ending inventory on december 31 if the company uses the first in, first out inventory costing method? (Assume that the company uses a perpetual inventory system.)

13200

A company purchased 400 units for $50 each on janurary 31. It purchased 200 units for $35 on feburary 28. It sold a total of 250 units for $50 each from march 1 through december 31. If the company uses the weighted average inventory costing method, calculate the cost of ending inventory on december 31. (Assume that the company uses a perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

15750

A company made net sales revenue of $500,000 and cost of goods sold totaled 300,000 calculate gross profit percentage

40%

A company purchased 90 units for $20 each on janurary 31. It purchased 180 units for $25 each on feburary 28. It sold 180 units for $60 each from March 1 through December 31. if the company uses the first in, first out inventory costing method, what is the amount of cost of goods sold on the income statement for the year ending december 31? (Assume that the company uses a perpetual inventory system)

4050

A company purchased 130 units for $20 each on january 31. It purchased 190 units for 425 each on feburary 28. It sold 190 units for $60 each from march 1 through decemeber 31. If the company uses the weighted average inventory costing method, calculate the amount of cost of goods sold on the income statement for the year ending december 31. (Assume the company uses the perpetual inventory system. Round any intermediate calculations two decimal places, and your final answer to the nearest dollar.)

4364

Property, plant, and equipment are

Also called fixed or plant assets

A modern perpetual inventory system ___________.

B- Achieves better control over inventory.

Woods inc earned revenues of 11000 and incurred expense of 4000. The company declared and paid cash dividends of 3000. What is the balance in the income summary account after closing net income or loss to the retained earning account

Balance of $0

Which financial statement is prepared last?

Balance sheet

A company that uses perceptual inventory system purchases inventory for $62000 on account, with terms of 2/10, n/30. Which of the following is the journal entry to record the payment made within 10 days.

D- A debit to Accounts Payable for 60760, a debit to Merchandise Inventory for 1240, and a credit to Cash for 62000.

What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?

D-A discount of 2 percent will be allowed if the invoice is payed withing 10 days of the invoice date.

If goods are sold on terms FOB shipping point, the _______.

D-Buyer normally pays the transportartion costs.

Operating Expenses include _________.

D-Expenses that occur that occur in an entitys major line of business.

The sales discounts forfeited account.

D-Represents the discount lost when a customer does not pay within the discount period.

When a company uses the perpetual inventory method, which of the following would be the entry to adjust inventory to lower of cost or market

Debit cost of goods sold and credit merchandise inventory

Which of the following entries will be necessary to close the insurance expense account at the end of the year

Debit income summary and credit insurance expense

Which of the following statements reguarding lifo is incorrect

Ending inventory comes from the most recent purchases

Which of the folllowing inventory costing methods yields the highest net income during a period of rising inventory costs

First in first out

Which of the following inventory costing methods uses the cost of the oldest purchases to compute the cost of goods sold

First in first out

On a multi step income statement, the operating expenses are subtracted from ___ to arrive at operating income

Gross profit

Which of the following statements is true of the accounting cycle

It is a process by which financial statements for a period are produced

Which of the following would be considered a long term asset

Land

Which of the following is a measure of how quickly an item can be converted to cash

Liquidity