ACC 211- Chapter 6
Which of the following statements regarding reporting sales related transactions are true?
-Companies track sales returns, allowance, and discount information internally to inform management decisions - Most externally reported income statements begin with sales revenue, net
In a perpetual inventory system, which of the following accounts appear on the income statement of merchandisers?
-Cost of goods sold - Sales Revenue
Carryon Company sells a product and a 12-month service package for that for a combined price of $800. Separately the product and the service sell for $450 and $550, respectively. How much of the combined price should be allocated to the product?
Allocated price to the product: $360
What is the equation for cost of goods available for sale?
Beginning inventory plus purchases
Lambert Company, a wholesale merchandiser, would record a sale when the goods leave Lambert's shipping department only if which of the following possible times for transfer of controls is specified in the sales agreement?
FOB shipping point
Which of the following is not reported on a multistep income statement?
Inventory
Which of the following statements regarding operating cycles are true?
- A company must complete its operating cycle efficiently to be successful - The activities in the operating cycle ultimately lead to cash. - The operating cycle is a series of activities that a company undertakes to generate revenues.
Which of the following statements regarding sales of bundled items are true?
- Many businesses package several items into a "bundle" and sell the bundle at a single price -The transaction price must be allocated to the various performance obligations bases on the stand-alone selling prices of the products and services - When a bundle includes only products, the seller fulfills its performance obligations at the delivery of the product bundle
Which of the following statements regarding the perpetual and periodic inventory systems are true?
- The perpetual inventory system allows managers to determine how much inventory needs to be purchased to replenish what has been sold - The perpetual inventory system is superior to the periodic inventory system because it provides the most up- to- date record of purchasing and selling inventory
Which of the following is included in the operating cycle of merchandising company?
-Buy inventory -Collect Cash -Pay operating expenses
In a perpetual inventory system which of the following accounts are used by merchandisers to record sales of merchandise?
-Cash or Accounts Receivable -Cost of Goods Sold -Inventory -Sales Revenue
Which of the following accounts are included in the month-end adjustment for expected additional returns?
-Cost of goods Sold -Inventory: estimated Returns - Refund Liability -Sales Revenue
Which of the following statements regarding inventory are true?
-Costs included in the inventory account include the amounts paid to acquire the asset and prepare it for sale. -Inventory is reported as a current asset on the balance sheet -As inventory is sold the cost of the inventory is expensed as cost of goods sold on the income statement
Which of the following statements regarding sales discounts are true?
-If Geneva Company sells office supplies on account to a local business for $2,000 with payment terms of 2/30, n/60 the company's Sales Revenue of $2,000 will be reduced by a $40 Sales Discounts if the discount is taken -Merchandisers can entice their customers to pay promptly for sales on account by offering a sales discount
What are the two systems used to record inventory transactions?
-Periodic -Perpetual
Which of the following statements regarding purchase discounts are true?
-Terms of "2/10, n/30" mean that if the purchaser pays by the 10th day of taking ownership of the goods, a 2% purchase discount can be deducted form the amount owed - Companies can choose between the "gross method" and the "net method" -Regardless of the method used, inventory ultimately is recorded at its cots after subtracting any purchase discounts taken
Gresham Foods inc. reported net sales of $300,000 and cost of goods sold $225,000. What is its gross profit percentage?
25%
Kylah Enterprises began the current month with inventory costing $10,000, then purchased inventory at a cost of $35,000. The perpetual inventory system indicates that inventory costing $30,000 was sold during the month for $40,000. If an inventory count shows that inventory costing $14,500 is actually on hand at the month-end, what amount of shrinkage occurred during the month?
Amount of Shrinkage: $500
Which of the following statements regarding cost of goods sold is true?
Cost of goods sold is an expense account reported on the income statement
Jackson Co. began the year with $20,000 in inventory. During the year, the company purchases $80,000 worth of inventory. At the end of the year, $30,000 of inventory remained. What is the cost of goods sold for the year?
Cost of goods sold: $70,000
On April 10, Tyler Industries paid $200 cash to a trucker who delivered the $22,000 of merchandise
Inventory: Debit-200 Cash: Credit-200
On April 10, Tyler Industries purchased $22,000 of merchandise on credit. The invoice included payment terms of 2/10, n/30 Prepare a journal entry
Inventory: Debit-22,000 Accounts Payable: Credit- 22,000
A customer purchases bench from Harrington Stores for $1,250. The bench had originally cost Harrington $450. When the bench was delivered, the customer notes that the color was unsatisfactory in that it did not match that of the model in the store. The customer asked for an allowance and kept the bench, while Harrington gave the customer $150 cash. Prepare journal entry for Harrington this Allowance
Sales Revenue: Debit-150 Cash: Credit-150
