ACCT test 2

Given the information in the table below, what is the company's gross profit? Sales revenue $350,000 Accounts receivable $280,000 Ending inventory $230,000 Cost of goods sold $180,000 Sales returns $50,000 Sales discount $20,000 Answers: $280,000. $50,000. $100,000. $170,000.

$100,000.

Baker Fine Foods has beginning inventory for the year of $12,000. During the year, Baker purchases inventory for $150,000 and ends the year with $20,000 of inventory. Baker will report cost of goods sold equal to: Answers: $150,000. $158,000. $170,000. $142,000.

$142,000.

At December 31, Tremble Music had account balances in Accounts Receivable of $300,000 and in Allowance for Uncollectible Accounts of $1,000 (debit) before any adjustments. An analysis of Tremble's December 31 accounts receivable suggests that 5% of the account balances are not expected to be collected. The balance of Allowance for Uncollectible Accounts after adjustment will be: Answers: $15,000. $14,000. $16,000. $1,000.

$15,000.

On September 1, 2018, Middleton Corp. lends cash and accepts a $1,000 note receivable that offers 12% interest and is due in six months. How much interest revenue will Middleton Corp. report during 2019? Answers: $30. $60. $20. $40.

$20.

Boynton Jewelers reported the following amounts at the end of the year: total sales = $550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000. What was the company's net revenues for the year? Answers: $499,000. $477,000. $489,000. $485,000.

$477,000.

Given the information below, what is the gross profit? Sales revenue $320,000 Accounts receivable 50,000 Ending inventory 100,000 Cost of goods sold 250,000 Sales Returns 20,000 Answers: $220,000. $50,000. $250,000. $70,000.

$50,000.

At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: Answers: $7,800. $7,140. $7,740. $6,540.

$6,540.

At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (debit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: Answers: $7,740. $7,140. $6,540. $7,800.

$7,740.

Ravens Inc. has net sales of $200,000, cost of goods sold of $120,000, selling expenses of $6,000, and nonoperating expenses of $2,000. What is the company's gross profit? Answers: $76,000. $72,000. $74,000. $80,000.

$80,000.

The following information pertains to Julia & Company: March 1 Beginning inventory = 30 units @ $5 March 3 Purchased 15 units @ $4 March 9 Sold 25 units @ $8 What is the ending inventory balance for Julia & Company assuming that it uses FIFO? Answers: $85. $100. $110. $125.

$85.

Beginning inventory is $40,000. Purchases of inventory during the year are $200,000. Ending inventory is $100,000. What is cost of goods sold? Answers: $140,000. $260,000. $240,000. $340,000.

140,000

Lewis Inc. had the following information taken from various accounts at the end of the year: Sales discounts $41,000 Deferred revenues $32,000 Total sales $459,000 Purchase discounts $15,000 Sales allowances $35,000 Accounts receivable $205,000 What was Lewis Inc.'s net revenues for the year? Answers: $437,000. $383,000. $368,000. $434,000.

383,000

Anthony Corporation reported the following amounts for the year: Net sales $296,000 Cost of goods sold 138,000 Average inventory 50,000 Anthony's gross profit ratio is: Answers: 51.9%. 53.4%. 50.3%. 46.6%.

53.4%.

Sandburg Veterinarian reports the following information for the year: Net credit sales $120,000 Average accounts receivable 20,000 Cash collections on credit sales 100,000 What is Sandburg's receivables turnover ratio? Answers: 5.0. 0.2. 6.0. 1.2.

6.0

When $2,500 of accounts receivable are determined to be uncollectible, which of the following should the company record to write off the accounts using the allowance method? Answers: A debit to Bad Debt Expense and a credit to Accounts Receivable. A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable. A debit to Allowance for Uncollectible Accounts and a credit to Bad Debt Expense. A debit to Bad Debt Expense and a credit to Allowance for Uncollectible Accounts.

A debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable.

The cost of unsold inventory at the end of the year is classified as a(n) ______ in the ______. Answers: Revenue; Income statement Assets; Balance sheet Liability; Balance sheet Expense; Income statement

Assets; Balance sheet

Cost of goods sold equals: Answers: Beginning inventory − net purchases + ending inventory. Beginning inventory + net purchases − ending inventory. Beginning inventory − accounts payable − net purchases. Net purchases + ending inventory − beginning inventory.

Beginning inventory + net purchases − ending inventory.

The account "Allowance for Uncollectible Accounts" is classified as a(n): Answers: Contra revenue to credit sales in the income statement. Contra asset to accounts receivable in the balance sheet. Liability account in the balance sheet. Expense in the income statement.

Contra asset to accounts receivable in the balance sheet.

The cost of the goods that a company sold during a period is shown in its financial statements as ___________ and the cost of the goods that a company still has on hand at the end of the year is shown in the financial statements as ____________. Answers: Goods on hand; inventory expense Sales revenue; cost of goods sold Inventory; cost of goods sold Cost of goods sold; inventory

Cost of goods sold; inventory

At the beginning of 2018, the balance in Jackson Enterprises' Allowance for Uncollectible Accounts was $31,800. During 2018, the company wrote off $38,000 of accounts receivable. Writing off the individual bad debts would include a: Answers: Credit to Accounts Receivable. Debit to Bad Debt Expense. Credit to the Allowance for Uncollectible Accounts. Debit to Bad Debt Expense; credit to the Allowance for Uncollectible Accounts.

Credit to Accounts Receivable.

at the end of 2018, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2018, to record its estimated uncollectible accounts included a: Answers: Debit to Bad Debt Expense of $7,500. Debit to Bad Debt Expense of $7,500; credit to Allowance for Uncollectible Accounts of $7,500. Credit to Allowance for Uncollectible Accounts of $12,000. Credit to Allowance for Uncollectible Accounts of $7,500.

Debit to Bad Debt Expense of $7,500; credit to Allowance for Uncollectible Accounts of $7,500.

The cost of inventory sold during the current year classified as a(n) ______ in the ______. Answers: Assets; Balance sheet Revenue; Income statement Liability; Balance sheet Expense; Income statement

Expense; Income statement

If A sells to B, and B obtains title while goods are in transit, the goods were shipped _______. If C sells to D, and C maintains title until the goods arrive at D's door then the goods were shipped _______. Answers: FOB destination; FOB destination FOB destination; FOB shipping point FOB shipping point; FOB destination FOB shipping point; FOB shipping point

FOB shipping point; FOB destination

One of the major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for: Answers: Inventory. Deferred revenue. Current assets. Selling expenses.

Inventory.

The type of income statement that reports a series of subtotals such as gross profit, operating income, and income before taxes is a ______ income statement. Answers: Multiple-step Classified Single-step Subtotaled

Multiple-step

The formula for the receivables turnover ratio is: Answers: Average accounts receivable divided by average total assets. Net credit sales divided by average total assets. Net credit sales divided by average accounts receivable. Average accounts receivable divided by net credit sales.

Net credit sales divided by average accounts receivable.

The amount of cash that is actually expected to be collected on accounts receivable is referred to as: Answers: Net realizable value. Net income. Net revenue. Allowance for uncollectible accounts.

Net realizable value.

When using an aging method for estimating uncollectible accounts: Answers: Older accounts are considered less likely to be collected. Older accounts are considered more likely to be collected. The number of days the account is past due is not considered. No estimate of uncollectible accounts is made.

Older accounts are considered less likely to be collected.

Sales revenue

Revenue, Income Statement, Credit, Temporary

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting Accounts Receivable and debiting: Answers: Sales Discounts. Sales Allowances. Sales Revenue. Sales Returns.

Sales Allowances.

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit Accounts Receivable and debit: Answers: Sales Returns. Sales Discounts. Sales Revenue. Sales Allowances.

Sales Returns.

Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a: Answers: Sales return. Sales allowance. Sales discount. Sales revenue.

Sales allowance.

Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a: Answers: Sales allowance. Sales discount. Sales return. Sales revenue.

Sales return.

The inventory costing method that matches each unit of inventory with its actual cost is referred to as the _____ method. Answers: Matching unit. Weighted-average. Specific identification. Actual cost.

Specific identification.

The gross profit ratio measures: Answers: The ratio of net income to net sales. How many times during the year a company sells its average inventory balance. The amount by which the sale of inventory exceeds its cost per dollar of sales. How quickly the company receives inventory from its suppliers.

The amount by which the sale of inventory exceeds its cost per dollar of sales.

Which of the following best describes accounts receivable? Answers: The amount of cash not expected to be collected by a company from its customers from the sale of products or services on account (bad debts). The amount of cash owed to a company by its customers from the sale of products or services on account. The amount of cash owed by a company to its vendors for purchases of products or services on account. The amount of cash collected by a company from its customers from the sale of products or services on account.

The amount of cash owed to a company by its customers from the sale of products or services on account

The balance of the Cost of Goods Sold account at the end of the year represents: Answers: Total purchases of inventory for the year. The total sales revenue to customers. The cost of inventory not sold in the current year. The cost of inventory sold in the current year.

The cost of inventory sold in the current year.

Merchandise sold FOB destination indicates that: Answers: The merchandise will not be shipped until payment has been received. The seller holds title until the merchandise is received at the buyer's location. The seller transfers title to the buyer once the merchandise is shipped. The merchandise has not yet been shipped.

The seller holds title until the merchandise is received at the buyer's location.

Merchandise sold FOB shipping point indicates that: Answers: The merchandise will not be shipped until payment has been received. The seller transfers title to the buyer once the merchandise is shipped. The seller holds title until the merchandise is received at the buyer's location. The merchandise has not yet been shipped.

The seller transfers title to the buyer once the merchandise is shipped.

At the beginning of the year, Vici Ventures had accounts receivable of $220,000. At the end of the year, the company had accounts receivable of $340,000. During the year, Vici had total sales of $1,000,000, 70% of which were credit sales. What was Vici's receivables turnover ratio for the year? a.) 2.50. b.) 3.57. c.) 146 days. d.) 2.94.

a.) 2.50

Inventory

asset, debit, balance sheet, permanent

The amount of cash owed to a company by its customers from the sale of products or services on account is commonly referred to as: a.) Revenue. b.) Cash. c.) Accounts receivable. d.) Accounts payable.

c.) accounts receivable

allowance for uncollectible accounts

contra asset, credit, balance sheet, permanent

sales allowances

contra revenue, debit, income statement, temporary

sales discounts

contra revenue, debit, income statement, temporary

sales returns

contra revenue, debit, income statement, temporary

Bad debt expense

expense, debit, income statement, temporary

costs of goods sold

expense, debit, income statement, temporary

In a perpetual inventory system, the purchase of inventory is debited to: Answers: Purchases. Cost of Goods Sold. Inventory. Accounts Payable.

inventory

Which of the following best describes credit sales? Answers: Sales with a high risk that the customer will return the product. Sales to customers using credit cards. Cash sales to customers that are new to the company. Sales to customers on account.

sales to customers on account