accounting quiz 5

if merchandise is sold on account to a customer for 1,000 terms fob shipping point 1/10, n/30, and the seller prepays $50 in freight, the amount of the discount for early payment would be

$10.00

The following financial statement data are for the year ending December 31 for Agency Company: Sales $200,000 Total assets: Beginning of year 170,000 End of year 150,000

$200,000/[($170,000 + $150,000)/2] = 1.25

Determine sales for the month using the following information. At month-end, cost of goods sold is $191,350 and gross profit is $167,990.

$359,340

The following financial statement data are for the year ending December 31 for Aero Company: Sales $600,000 Total assets: Beginning of year 380,000 End of year 420,000

$600,000/[($380,000 + $420,000)/2] = 1.50

Determine net income using the following amounts: rent revenue is $1,560; interest expense is $2,970; and income from operations is $75,120.

$73710 $75,120 + $1,560 − $2,970 = $73,710.

Garden Company purchased merchandise on account from Parker Company for $88,000 with terms 1/15, net 45. Garden Company returned $12,000 of the merchandise and received full credit from Parker Company. If Garden Company pays within the discount period, what is the amount of cash required for payment?

$88,000

When using the asset turnover ratio

1. the asset turnover ratio measures how effectively a business is using its assets to generate sales. 2.A high ratio indicates an effective use of assets. 3. The assets used in computing this ratio may be the average of monthly assets.

During the month, merchandise is sold for $23,500 cash and for $34,000 on account. The cost of goods sold is $41,500. What is the amount of gross profit?

16,000

During the month, merchandise is sold for $80,500 cash and for $119,000 on account. The cost of goods sold is $101,500. What is the amount of gross profit?

98,000

Global Company purchased merchandise on account from Planet Company for $56,000 with terms 1/15, net 45. Global Company returned $6,000 of the merchandise and received full credit from Planet Company. Which of the following will be included in the journal entry for the payment (assume that the amount due was paid within the discount period)?

Credit to Cash, $49,500

Geo Company sold merchandise on account for $35,000 with terms 2/10, n/30. The cost of goods sold was $27,600. Which of the following journal entries will be recorded for the sale of merchandise?

Debit to Accounts Receivable, $34,300; credit to Sales, $34,300

Global Company sold merchandise to Montana Industries for cash, $3,450. The cost of goods sold was $1,850. Global Company refunded Montana Industries $900 for returned merchandise. The cost of goods sold was $600. Which of the following will be recorded by Global Company in the journal entry for the refund from the sale?

Debit to Customer Refunds Payable, $900 credit cash $900

In a perpetual inventory system

In a perpetual inventory system

After the first two closing entries have been posted, Income Summary has a debit of $153,690 and a credit of $98,475. Which of the following is true?

Net loss equals $55,215.

The asset turnover ratio is computed as

Sales/Average Total Assets.

The inventory records of Global Company indicate that $76,800 of merchandise should be on hand at the end of the month. The physical inventory indicates that $74,900 is actually on hand. The journal entry to adjust for inventory shrinkage will include

a debit to Cost of Goods Sold for $1,900. a credit to inventory $1,900 76,800-74,900=1,900

A change in the asset turnover ratio from 1.3 to 1.6 would indicate

a favorable trend in using assets to generate sales.

Cost of goods sold is reported as a(n)

an expense

The difference between the income statements of a service company and a merchandising company is that the merchandising company's income statement includes

cost of goods sold.

if merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing a

debit memo

The records of Garden Company indicate sales of $900,000, cost of goods sold of $500,000, an ending inventory balance of $100,000, and estimated returns of 1% of sales. The adjusting journal entries to record estimated returns will include a

debit to Sales for $9,000. The entry should reduce Sales (1% × $900,000).

on a multiple step income statement the excess of net sales over the cost of goods sold is called

gross profit

which expenses would normally be classified as other expense on a multiple step income statement?

interest expense

The third closing entry

is to transfer the net income or loss to the retained earnings account.

Gross profit is sales

less cost of goods sold

After the second closing entry is posted, Income Summary is equal to

net income or loss

The operating cycle of a business is comprised of

operating, sales, and collection activity

In the multiple-step income statement, cost of goods sold is subtracted from

sales

The first closing entry for a merchandising business will include which of the following?

sales

the income statement in which the total of all expenses is deducted from the total of all revenues is termed the

single step form

Credit terms are terms for

when the payments for merchandise are to made.