5
Which of the following is not part of the journal entries made when merchandise is sold on credit?
Credit the Cost of Goods Sold account.
In a worksheet, Inventory is shown in the
adj balance debit and b/s debit columns
In determining cost of goods sold
freight-in is added to net purchases.
Which of the following accounts is not closed to Income Summary? Entry field with incorrect answer Cost of Goods Sold. Sales Discounts. Inventory. Sales Revenue.
inventory
Which of the following is shown on both a multiple-step and a single-step income statement?
net sales
A company determines the cost of goods sold each time a sale occurs in
perpetual system only
A single-step income statement
reports sales revenues and other revenues and gains in the revenues section of the income statement.
Gross profit will result if
sales revenue is greater than cost of goods sold.
A merchandiser using a perpetual system may find that one additional adjusting entry is necessary to make the records agree with the actual inventory on hand.
t
If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is
$390,000
Company A purchases $1,200 of merchandise from Company B on July 1 with credit terms 2/10, n/30. Company A returns $200 of the merchandise on July 5. On July 11, Company B received full payment from Company A. The amount of the payment on July 11 is
980
Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
COGS
Which of the following appears on both a single-step and a multiple-step income statement?
COGS
The following amounts relate to Amato Company for the current year: beginning Inventory, $20,000; ending inventory, $28,000; purchases, $166,000; purchase returns, $4,800; and freight-out, $6,000. The amount of cost of goods sold for the period is
Cost of goods sold = beginning inventory ($20,000) + purchases ($166,000) - purchase returns and allowances ($4,800) + freight-in ($0) - ending inventory ($28,000)
A perpetual inventory system would more likely be used by a(n)
auto mobile shop
FOB destination means that the seller places the goods free on board the common carrier and the buyer pays the freight costs.
f
there are more steps involved in preparing a worksheet for a merchandising company than for a service company.
f
in a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting
inventory
Which of the following is shown on the income statement of both merchandising and service companies?
operating costs
In a periodic inventory system the entry to record the credit sale of merchandise affects which of the following accounts?
sales revenue
Villa Sales Company had the following amounts related to its business: Beginning inventory, $12,000; Purchases, $42,000; Net sales, $50,000; and Gross profit, $15,000. The amount of the ending inventory is
Ending inventory = beginning inventory ($12,000) + cost of goods purchased ($42,000) - cost of goods sold ($35,000) = $19,000.
Which of the following would not be included in the definition of inventory under IFRS?
Office computer used by the accounting department of a company. (not for sale)
All of the following items would be reported as other revenues and gains for a merchandiser except
Sales revenue.
Income from operations appears on
a multiple-step income statement only.
The steps in the accounting cycle for a merchandising company are the same as those in a service company except
an additional adjusting journal entry for inventory may be needed in a merchandising company.
In a perpetual inventory system, which account would be debited when goods are purchased with the intent of being resold?
inventory
Net income is gross profit less
operating expenses
The contra revenue account that normally has a debit balance is
sales r and a
A multiple-step income statement distinguishes between operating and non-operating activities.
t
Correct! Sales revenue less cost of goods sold equals gross profit.
t
Gross profit less operating expenses equals net income.
t
Net income plus operating expenses equals gross profit.
t
Sales Returns and Allowances is a contra account to the Sales Revenue account and has a normal debit balance.
t
Sales revenue less cost of goods sold less operating expenses equals net income.
t
Under IFRS, companies must classify expenses by either nature or function.
t
Under a periodic system, the company uses separate accounts to record freight-in costs, purchase returns, and purchase discounts.
t
Under both GAAP and IFRS, a company can choose to use either a perpetual or periodic inventory system.
t
To record the sale of goods for cash in a perpetual inventory system
two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.