ACG 2021 Chapter 5 Quiz

Assume that sales revenue are $450,000, sales discounts are $10,000, net income is $35,000, and cost of goods sold is $320,000. How much are gross profit and operating expenses, respectively? $120,000 and $95,000 $120,000 and $85,000 $130,000 and $95,000 $130,000 and $85,000 $70,000 and $45,000

$120,000 and $85,000

Sales revenue total $15,000. Sales returns and allowances are $750 and sales discounts are $1,000. How much is net sales? $14,250 $14,750 $14,000 $15,000 $13,250

$13,250

If sales revenues totals $450,000, cost of goods sold is $320,000, operating expenses are $90,000, and nonoperating expenses are $20,000, how much is the gross profit? $130,000 $360,000 $40,000 $270,000 $450,000

$130,000

Beginning inventory is $12,000; purchases are $34,000; sales revenue are $60,000; and cost of goods sold is $31,000. How much is ending inventory? $14,000 $46,000 $15,000 $35,000 $31,000

$15,000

A credit sale of $750 is made on June 13, terms 2/10, n/30. It is followed by a return of $50 on June 16. If payment is made on June 23, how much cash is received? $735 $686 $650 $685 $700

$686

Ending inventory is $12,000, cost of goods sold is $33,000, and the cost of goods purchased is $22,000. How much is beginning inventory? $43,000 $33,000 $23,000 $13,000 $45,000

$23,000

If sales revenues totals $420,000, gross profits are $150,000, and operating expenses are $80,000, non-operating expenses are $30,000, how much is cost of goods sold? $70,000 $340,000 $190,000 $270,000 $90,000

$270,000

If beginning inventory is $60,000, cost of goods purchased is $380,000, sales revenue is $800,000 and ending inventory is $50,000, how much is cost of goods sold under a periodic system? $410,000 $390,000 $440,000 $420,000 $470,000

$390,000

Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 11, Martin must pay? $3,780. $3,864. $4,520. $4,074. $4,200.

$4,074.

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold? $15,000 $35,000 $40,000 $60,000 $55,000

$40,000

If beginning inventory is $80,000, cost of goods purchased is $400,000, sales revenue is $900,000 and ending inventory is $60,000, how much is cost of goods sold under a periodic system? $420,000 $390,000 $470,000 $410,000 $440,000

$420,000

If beginning inventory is $100,000, cost of goods purchased is $500,000, sales revenue is $1,000,000 and ending inventory is $130,000, how much is cost of goods sold under a periodic system? $390,000 $370,000 $630,000 $470,000 $600,000

$470,000

Arbol Corporation reports the following: Sales revenue $181,000; ending inventory $12,600; beginning inventory $15,000; purchases $65,600; purchases discounts $2,500; purchase returns and allowances $1,500; freight-in $600; freight-out $800. Calculate the cost of goods sold. $64,600 $59,800 $79,600 $77,700 $76,900

$64,600

Steve Company purchases $7,400 of merchandise on April 11, with credit terms of 2/15, n/30. If Steve pays on April 27, what is the cost of this purchase? $7,252 $6,526.80 $7,528. $7,400 $6,660

$7,400

Assume that sales revenue are $400,000, sales discounts are $20,000, net income is $25,000, and cost of goods sold is $310,000. How much are gross profit and operating expenses, respectively? $90,000 and $45,000 $90,000 and $65,000 $120,000 and $85,000 $70,000 and $65,000 $70,000 and $45,000

$70,000 and $45,000

Arbor Corporation reports the following: Sales revenue $182,000; ending inventory $11,600; beginning inventory $21,700; purchases $64,000; purchases discounts $2,000; purchase returns and allowances $2,100; freight-in $900; freight-out $600. Calculate the company's cost of goods sold? $82,500 $70,300 $50,700 $69,400 $70,900

$70,900

In a perpetual inventory system, which accounts will the seller credit when a customer returns merchandise after purchasing it on account? (i) Sales Returns and Allowances and (ii) Inventory (i) Sales Returns and Allowances and (ii) Accounts Receivable (i) Accounts Receivable and (ii) Cost of Goods Sold (i) Inventory and (ii) Cost of Goods Sold (i) Revenue and (ii) Accounts Receivable

(i) Accounts Receivable and (ii) Cost of Goods Sold

A retailer makes a $100 sale with terms of 2/10, n/30 on the first of the month. The customer returns $20 of merchandise for credit on account. What journal entry will the retailer record when payment is received within the discount period under a perpetual inventory system? -$100 debit to Cash and a $100 credit to Accounts Receivable -$78.40 debit to Cash, $1.60 debit to Sales Discounts, and $80.00 credit to Accounts Receivable -$78.40 deb it to Cash, $1.60 debit to Purchase Discounts, and $80.00 credit to Accounts Payable -$98.00 debit to Cash, $2.00 debit to Sales Discounts, and $100.00 credit to Accounts Receivable -$78.40 debit to Cash, $1.60 debit to Sales Discounts, and $80.00 credit to Accounts Payable

-$78.40 debit to Cash, $1.60 debit to Sales Discounts, and $80.00 credit to Accounts Receivable

Helix Company purchased merchandise with an invoice price of $2,000 and credit terms of 3/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms? -36% -6% -54% -18% -3%

-54%

Which of the following statements is correct about the periodic inventory system? -A company that uses the periodic inventory system does not have an inventory account. -None of These -A company which uses a periodic inventory system debits Cost of Goods Sold and credits Inventory each time it sells merchandise. -A company which uses a periodic inventory system needs only one journal entry when it sells merchandise. -A company which uses a periodic inventory system needs exactly two journal entries when it sells merchandise.

-A company which uses a periodic inventory system needs only one journal entry when it sells merchandise.

Which one of the following statements is correct? -None of the answer choices are correct. -A company which uses a perpetual inventory system needs only one journal entry when it sells merchandise. -A company which uses a perpetual inventory system does not record any journal entries when it sells merchandise. -A company which uses a perpetual inventory system needs two journal entries when it sells merchandise. -A company which uses a perpetual inventory system debits inventory and credits cost of goods sold when it sells merchandise.

-A company which uses a perpetual inventory system needs two journal entries when it sells merchandise.

Jackson Company uses a perpetual inventory system. On November 30, it purchased $10,000 of merchandise and it must pay the $200 shipping charges. The credit terms for the merchandise were 2/10, n/30. The company paid for both the merchandise and the shipping charges nine days after their invoice dates. Which of the following is part of the required journal entry when Jackson pays the shipping charges of $200? -A credit to Accounts Payable for $200 -A debit to Cash for $200 -A debit to Inventory for $200 -A debit to Freight-in for $200 -A debit to Freight-out for $200

-A debit to Inventory for $200

Which of the following is classified in an income statement as an operating expense? -Cost of goods sold -Income tax expense -Dividend revenue from investments -Advertising expense -Interest expense

-Advertising expense

Which of the following will be shown on the income statement for a merchandising company? -Revenue -All of these -Gross profit -Cost of goods sold -None of these

-All of these

In a periodic inventory system, when is the cost of the merchandise sold determined? -Periodically during the period -At the time of the sale -Either at time of sale, end of period, or periodically during the period. -At the end of the period -Daily

-At the end of the period

A company has the following accounts balances: Sales revenue $90,000; Sales Returns and Allowances $25,000; Sales Discounts $10,000; and Cost of Goods Sold $20,000. How much is the gross profit rate? 46.7% 75.0% 26.7% 20.0% 63.6%

63.6%

Which of the following is not a component or step of the operating cycle for a service company? -Record an increase to accounts receivable when services are performed for customers on account -Buy inventory to be resold to customers -All of these are steps of the operating cycle of a service company -Perform services for customers -Receive cash payments from customers

-Buy inventory to be resold to customers

Which of the following statements about a periodic inventory system is true? -Companies determine cost of goods sold only at the end of the accounting period. -None of these are true. -The increased use of computerized systems has increased the use of the periodic system. -The periodic system provides better control over inventories than a perpetual system. -Companies continuously maintain detailed records of the cost of each inventory purchase and sale.

-Companies determine cost of goods sold only at the end of the accounting period.

Indicate which one of the following would likely appear on both a multi-step income statement and a single-step income statement. -Cost of goods sold -All of these would appear on both types of income statement -None of these would appear on both types of income statement -Income from operations -Gross profit

-Cost of goods sold

Which of the following will result in negative gross profits? -Cost of goods sold exceeding operating expense -Net sales revenue exceeding cost of goods sold -Cost of goods sold exceeding operating expenses -Net sales revenue exceeding both cost of goods sold and operating expenses -Cost of goods sold exceeding sales revenue

-Cost of goods sold exceeding sales revenue

Starlight Corporation uses a perpetual inventory system. It purchased $3,000 of merchandise on August 2 on account. Credit terms were 1/10, n/30. It returned $250 of the merchandise on August 4. On August 12, it pays the supplier. Which of the following is part of the journal entry Starlight records when it pays the supplier? -Credit Inventory for $27.50 -Credit to Accounts Payable for $2,722.50 -Debit to Accounts Payable for $3,000 -Credit to Cash for $2,750 -Debit to inventory for $3,000

-Credit Inventory for $27.50

On what amount is a sales discount based? -Invoice less discount -Invoice price plus freight-out -Invoice price plus returns and allowances. -Invoice price less returns and allowances -Invoice price plus freight-in

-Invoice price less returns and allowances

Which is true about a wholesaler? -It is a company that sells directly to consumers. -It sells only to manufacturing companies. -It sells to another business that will sell to the customer rather than sell directly to the consumer. -It is the same as a retailer. -It conducts small sales for consumers on a nonrecurring basis

-It sells to another business that will sell to the customer rather than sell directly to the consumer.

Which of the following is true about a merchandiser? -It does not have a cost of goods sold account. -It sells its goods and services only to manufacturing companies. -Its revenue primarily comes from the sale of merchandise. -It has no inventory. -Its revenue primarily comes from the performance of services.

-Its revenue primarily comes from the sale of merchandise.

Which of the following describes how to compute the gross profit rate? -Cost of goods sold divided by net sales -Gross margin divided by net income -Sales minus cost of goods sold, divided by cost of goods sold -Net income divided by net sales -Net sales minus cost of goods sold, divided by net sales

-Net sales minus cost of goods sold, divided by net sales

Which of the following items does not result in an entry to the Inventory account under a perpetual system? -Payment of freight costs for goods shipped to a customer -A purchase of merchandise -A return of Inventory to the supplier -All of these result in an entry to the inventory account under a perpetual system. -Payment of freight costs for goods received from a supplier

-Payment of freight costs for goods shipped to a customer

Under what inventory system is cost of goods sold determined after each sale? -No inventory systems -Single entry inventory system -Periodic inventory system -Perpetual inventory system -Double entry inventory system

-Perpetual inventory system

How is gross profit measured? -Sales revenue minus sales discounts and sales returns and allowances -Sales revenue minus cost of goods sold -Operating expenses minus cost of goods sold -Sales revenue minus operating expenses -Operating expenses minus net income

-Sales revenue minus cost of goods sold

Which one of the following equals cost of goods sold? -Operating expenses minus cost of goods sold -Gross profit minus operating expense -Sales revenue minus net income -Operating expenses minus net income -Sales revenue minus gross profit

-Sales revenue minus gross profit

A company's gross profit rate is lower this year compared to the prior year. Which of the following would not be a possible cause for this decline in the gross profit rate? -The company began paying higher prices to suppliers without passing these costs on to customers. -All of the above would explain the decline in Bolton's gross profit rate. -The company offered more sales discounts to customers in order to sell as many units of inventory as the prior year. -The company began selling products with a higher markup. -The company's average margin between selling price and inventory cost decreased.

-The company began selling products with a higher markup.

Which statement is true when recording the sale of goods for cash in a perpetual inventory system? -Two journal entries are necessary: one to record the payment of cash and reduction of inventory, and one to record the accounts receivable and sales revenue. -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 to reduce inventory. -Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory. -Only one journal entry is necessary. It will record the receipt of cash and sales revenue.

-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 to reduce inventory.

Wilma's Foods recorded the following events involving a recent purchase of inventory: Received goods for $45,000, terms 1/10, n/30. Returned $1,000 of the shipment for credit. Paid $250 freight on the shipment. Paid the invoice within the discount period. The company uses the perpetual inventory system. As a result of these events, the company's inventory? -increased by $43,560. -increased by $45,000. -increased by $43,810. -increased by $43,807.50. -increased by $43,916

-increased by $43,810.

A decline in a company's gross profit could be caused by all of the following except? -increasing competition resulting in a lower selling price. -clearance of discontinued inventory. -selling products with a lower markup. -paying lower prices to its suppliers. -all of these could cause a decline in gross profit.

-paying lower prices to its suppliers.

If a company is using aggressive accounting techniques in order to accelerate income recognition then its quality of earnings ratio is? -significantly more than 1. -significantly less than 1. -equal to zero. -below zero. -significantly more than 100.

-significantly less than 1.

Given the following quality of earnings ratios, which suggests the company may be using the most conservative accounting techniques? 1.8 0.6 1.6 0.2 1.0

1.8

A company has the following balances: Sales revenue $312,000; Sales Returns and Allowances $2,000; Sales Discounts $4,000; Cost of Goods Sold $184,000; Operating Expenses $84,000. How much is the profit margin? 16.0% 12.4% 41.0% 20% 34.6%

12.4%

Helix Company purchased merchandise with an invoice price of $1,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms? 54% 1% 36% 2% 18%

18%

A company has the following: Sales revenue $95,000; Sales Returns and Allowances $15,000; Sales Discounts $5,000; Cost of Goods Sold $35,000; Operating Expenses $25,000. How much is the profit margin? 20% 34.6% 12.4% 16% 75%

20%

A company has the following accounts balances: Sales revenue $2,000,000; Sales Returns and Allowances $250,000; Sales Discounts $50,000; and Cost of Goods Sold $1,275,000. How much is the gross profit rate? 25% 64% 36% 46.7% 51%

25%

A company has the following accounts balances: Sales revenue $100,000; Sales Returns and Allowances $20,000; Sales Discounts $5,000; and Cost of Goods Sold $40,000. How much is the gross profit rate? 20.0% 25% 46.7% 75.0% 26.7%

46.7%

Arbor Corporation reports the following: Sales revenue $184,000; ending inventory $16,600; beginning inventory $17,200; purchases $60,400; purchases discounts $3,000; purchase returns and allowances $1,100; freight-in $600; freight-out $900. Calculate the company's cost of goods sold.? $56,400 $56,900 $57,500 $56,600 $56,900

57,500

Jackson Company uses a perpetual inventory system. On May 1, it purchased $10,000 of merchandise and it must pay the $250 shipping charges. The credit terms for the merchandise were 2/10, n/30. The company paid for both the merchandise and the shipping charges nine days after their invoice dates. Which of the following is part of the required journal entry when Jackson pays the shipping charges of $250? A debit to Cash for $250 A credit to Accounts Payable for $250 A debit to Freight-in for $250 A debit to Inventory for $250 A debit to Freight-out for $250

A debit to Inventory for $250

Which of the following would affect the gross profit rate if sales remain constant? All of these A decrease in depreciation expense A decrease in insurance expense An increase in cost of goods sold An increase in advertising expense

An increase in cost of goods sold

What type of account is Sales Returns and Allowances? Contra expense account Expense account Contra revenue account Contra asset account Book value account

Contra revenue account

The operating cycle of a merchandising company has an extra expense account compared to a service company. What is that extra expense account? Accounts Receivable Income Summary Cost of Goods Sold Operating Expense Revenue

Cost of Goods Sold

Which of the following would appear on both a single-step and a multiple step income statement? Gross profit Cost of goods sold All of These Other expenses and losses. Income from operations

Cost of goods sold

Cosmos Corporation uses the perpetual inventory system. It purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. On July 21, it pays the supplier. Which of the following is part of the journal entry Cosmos records when it pays the supplier? Credit to Accounts Payable for $1,600 Credit to Cash for $1,600 Debit to Accounts Payable for $2,000 Debit to inventory for $2,000 Debit to Cash for $1,600

Credit to Cash for $1,600 The discount terms are 2/10, n/30 which indicates a 2% discount if paid within 10 days, but the full amount is due without a discount thereafter and payment is considered overdue 30 days after the invoice date. Since the bill is paid after the 10-day discount period, the full invoice amount minus the price of the returned goods is due (i.e., $2,000 - 400 = $1,600). The entry to record the payment includes a debit Accounts Payable for $1,600 and credit Cash for $1,600.

Which of the following is classified in an income statement as a non-operating activity? Freight-out Advertising expense Salaries and wages expense Interest expense Cost of goods sold

Interest expense

Which of the following is classified in an income statement as a non-operating activity? Depreciation expense Advertising expense Interest revenue Cost of goods sold Sales returns and allowances

Interest revenue

Which inventory system will likely be used by a company with merchandise that has a high per unit value? Single entry inventory system Perpetual inventory system Double entry inventory system Cash basis system Periodic inventory system

Perpetual inventory system

Wilma's Foods recorded the following events involving a recent purchase of inventory: Received goods for $25,000, terms 2/10, n/30. Returned $800 of the shipment for credit. Paid $200 freight on the shipment. Paid the invoice within the discount period. The company uses the perpetual inventory system. As a result of these events, the company's inventory? increased by $23,916. increased by $25,000. increased by $25,206. increased by $24,116. increased by $24,500.

increased by $23,916.