accounting exam #2

Casin Company sells $700 of merchandise on account to Delta Exploration with credit terms of 2/10, n/30. If Delta Exploration remits a check taking advantage of the discount offered, what is the amount of Delta Exploration's check?

$686

Unearned revenue is classified as a

liability

Aber Company sells merchandise on account for $1,800 to Borth Company with credit terms of 2/10, n/30. Borth Company returns $300 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

$1,470

A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $290 and used FIFO costing, the gross profit for the period would be

$115.

Fehr Company sells merchandise on account for $5,000 to Kelly Company with credit terms of 2/10, n/30. Kelly Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

$3,920

On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is

$30,000.

Hoover Company had beginning inventory of $15,000 at March 1, 2014. During the month, the company made purchases of $55,000. The inventory at the end of the month is $17,300. What is cost of goods sold for the month of March?

$52,700

Anderson Inc. sells $900 of merchandise on account to Baltic Company with credit terms of 2/10, n/30. If Baltic Company remits a check taking advantage of the discount offered, what is the amount of Baltic Company's check?

$882

When a seller records a return of goods, the account that is credited is

Accounts Receivable.

Which sales accounts normally have a debit balance?

Both Sales Discounts and Sales Returns and Allowances have debit balances.

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

FIFO method.

Which of the following accounts has a normal credit balance?

Sales Revenue

Which of the following would not be classified as a contra account?

Sales Revenue

If beginning inventory is understated by $10,000, the effect of this error in the current period is Cost of Goods Sold Net Income

Understated Overstated

The collection of a $600 account beyond the 2 percent discount period will result in a

credit to Accounts Receivable for $700

A company purchased office supplies costing $3,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $900 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

debit Supplies Expense, $2,100; credit Supplies, $2,100

Greese Company purchased office supplies costing $4,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

debit Supplies Expense, $2,500; credit Supplies, $2,500

Boyce Company purchased office supplies costing $5,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,800 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

debit Supplies Expense, $3,200; credit Supplies, $3,200.

The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

debit Supplies Expense, $5,500; credit Supplies, $5,500.

An adjusting entry can include a

debit to a liability and a credit to a revenue.

A sales discount does not

increase an operating expense account.

Adjusting entries affect at least

one income statement account and one balance sheet account.

A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

revenues to be understated.

An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause

revenues to be understated.

With respect to the income statement

sales discounts are included in the calculation of gross profit.

The credit terms offered to a customer by a business firm were 2/10, n/30, which means

the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.