UND Acct 200, Chapter 6 LS

The ______ cycle is a series of activities that the company undertakes the generate sales and ultimately cash

Operating

Under the ______ Inventory system, Inventory records are updated only at the end of the accounting period.

Periodic

In which company would you rather invest?

A company with high gross profit percentage and high sales volume

Purchase transactions affect the ______

Balance sheet and not the income statement

Berkley Company had beginning inventory of $4,000 and purchases of $20,000. If half of its inventory was sold, Berkley's goods available for sale will ______

Be split between cost of goods sold and ending inventory

Breyer Company bought inventory FOB shipping point from Cellar Company for $4,000 cash, including shipping charges. On December 31, the last day of the accounting year, the goods were on a truck owned by Common Carrier Company, and not expected to arrive until January 3. Which company should include these goods in its December 31 inventory?

Breyer Company should include the $4,000 in its inventory

Sales Revenue reports the ______

Sales price times the quantity of goods sold

Which of these will require to the inventory account in a perpetual inventory system?

Selling inventory on account, Selling inventory for cash

What does the sales discount 2/10, n/30 mean?

You can take a 2% discount if you pay within 10 days, or the full amount is due within 30 days

The gross profit percentage measures the percentage of profit earned on each dollar of sales before deducting all expenses other than cost of goods sold. This ratio is used to:

Compare one company with another, make comparisons over time

The Inventory Balance on the balance sheet reports the _____

Cost of Goods available for sale

Inventory is a(n) _______ intended to be ______

Current asset; sold

Using a perpetual inventory system, the journal entry to record a sale on account will include a ______

Debit to Cost of Goods Sold, Debit to Accounts Receivable, Credit to Sales Revenue, Credit to Inventory

Company has Net Sales of $40,000; Beginning Inventory of $5,000; Purchases of $25,000 and Ending Inventory of $7,000. Cost of Goods Sales equals ______

$23,000

Acme Inc, had cost of goods sold for $2,000. If beginning inventory was $2,100 and ending inventory was $500, Acme's purchases must have been ______

$400

True or False: Gross Profit is a stockholders' equity account and is credited when goods are delivered to customers

False

In which of these situations would a merchandiser record revenue?

Goods were delivered FOB shipping point but not yet arrived at the buyer's place of business, The obligation has been fulfilled and control of the goods has been transferred to the customer

Using a perpetual inventory system, the effect on the accounting equation of purchasing merchandise on account includes a(n) ________

Increase in liabilities, increase in assets

In a perpetual system, the ______ account is debited when a company purchases merchandise on account

Inventory

Which line item would be found on a merchandiser's balance sheet and not on a service firm's?

Inventory

______ companies sell goods that they have produced

Manufacturing

Gross profit percentage is calculated as ______

Net sales minus Cost of Goods Sold, then divide by Net Sales, and multiply by 100

Boopsie Agin, the company's bookkeepper, recorded the purchase of merchandise on account with a debit to Cost of goods sold, and a Credit to Cash, as a result, ______

liabilities are understated, assets are understated, stockholders' equity is understated

On May 3, Botit Inc. purchased merchandise on account of $1,000, FOB shipping point, in terms of 1/10,n/30 from Cellar, Inc. On May 6, Botit received the merchandise, along with an invoice of $1,000. In addition, $100 in shipping costs was owed to We Deliver, Inc. On May 12, Botit paid all amounts owed, which amounted to ______

$1,090

Beginning inventory was $5,000. During the month, the company purchased an additional $25,000 of inventory and sold goods that cost $20,000. Ending inventory was ______

$10,000

The Income Statement for ABC Company shows Gross profit of $144,000; Operating expenses of $130,000; and cost of goods sold of $216,000. What is net sales revenue?

$360,000

Company sold merchandise for $5,000, with payment terms of 2/10, n/30. IF the customer pays within the discount period and takes the discount, company will receive...

$4,900

Create an income statement in the proper order from top to bottom

1) Sales Revenue 2) Sales Returns, Allowances and Discounts 3) Net Sales 4) Cost of Goods Sold 5) Gross Profit

ABC Company had beginning inventory of $20,000, purchases of $81,000, and ending inventory of $24,000. Sales revenue was $160,000. What is ABC's gross profit percentage?

52%

Company, which uses a perpetual inventory system, sold $2,000 of merchandise on account with credit terms of 2/10,n/30. The journal entry to record the initial sale gross of any discounts will include _______

A credit to Sales Revenue of $2,000. a debit to Accounts Receivable of $2,000

XYZ's journal entry to record the return of merchandise previously purchased on account by XYZ was recorded by debiting Inventory and crediting Accounts Payable. As a result of this entry, _______

Assets will be overstated, Liabilities will be overstated

Which line item would be found on a merchandiser's income sheet and not on a service firm's?

Cost of Goods Sold, Sales Revenue

Which of the following are reported on the income statement?

Cost of Goods Sold, Sales Revenue, Gross Profit

Using a perpetual system, purchasing merchandise on account includes a ______

Credit to Accounts Payable, Debit to Inventory

In a perpetual system, the entry to record a purchase of merchandise on account includes a ______

Credit to Accounts Payable, Debit to inventory

The journal entry to record the payment for merchandise previously purchased on account includes a ______

Credit to Cash, Debit to accounts Payable

Inventory is reported as an ______

Current asset on the balance sheet

Under the ______ inventory system, the inventory account is updated every time inventory is bought, sold, or returned

Perpetual

Which of the following would be found on the credit side of the Inventory T-Account?

Purchase discounts, Purchase returns

Cost of good sold equals beginning inventory plus ______ minus ending inventory

Purchases

The journal entry to record the payment for merchandise previously purchased on account will cause stockholders' equity to ______

Remain unchanged

Match the type of company with an example

Retailer=Walmart, Costco Manufacturer= Mattel, Goodyear

The operating cycle is a series of activities that the company undertakes to generate ______ and, ultimately, cash

Revenue