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Ashford ACC205 QUIZ 4

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1. Michelin Jewelers completed the following transactions. Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold $9,000 of merchandise to a customer on account with terms of 3/15, n/30. Michelin’s cost of the merchandise sold was $5,500. On April 4, the customer reported damaged goods and Michelin granted a $1,000 sales allowance. On April 10, Michelin received payment from the customer. How much cash was received from the customer? (Points : 1)

       $8,000
       $8,730
       $7,760 
       $2,260
       None of these is correct

2. The following data is available:

Net sales, first month
$13,000
Normal gross profit
45%
Beginning inventory
8,000
Net purchases
7,000

Using the gross profit method, the Estimated ending inventory balance would be: (Points : 1)
       $15,000.
       $ 7,150.
       $ 7,850. 
       $ 5,850.
       None of these is correct

3. When a company is purchasing inventory, and there are either returns or allowances for damaged goods, those amounts are recorded as a debit to the Sales returns and allowances account. (Points : 1)
       True
       False

4. A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the average-cost inventory costing method, what is the amount of ending inventory on December 31? (Points : 1)
       $1,000
       $1,250 
       $2,250
       $1,500
       None of these is correct


5. The following data is available:


Net sales, first month
$13,000
Normal gross profit
45%
Beginning inventory
8,000
Net purchases
7,000


Using the gross profit method, the amount of Gross profit would be: (Points : 1)
       $15,000.
       $ 6,750.
       $ 5,850. 
       $ 3,600.
       None of these is correct

6. Which of the following defines Gross profit? (Points : 1)
       Sales revenue less Sales discounts and allowances
       Sales revenue less Operating expenses
       Net sales revenue less Sales discounts
       Net sales revenue less Cost of goods sold

7. Under Last-In, First-Out, the Cost of goods sold is based on the oldest purchases. (Points :1)
       True
       False

8. A purchase return of goods purchased on credit is recorded by the purchasing company as a debit to what account? (Points : 1)
       Accounts receivable
       Inventory
       Cost of goods sold
       Accounts payable

9. In the credit terms of 2/10, n/30, what does the 2/10 mean? (Points : 1)
       The invoice must be paid in 2 days or a 10% late charge will be assessed.
       The invoice was printed 2 days after the sale and is due in 10 days.
       The goods shipped took 2 days to arrive and the charge was $10.00.
       The purchaser may take a 2% dicount if the invoice is paid in 10 days.

10. A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the average-cost inventory costing method, what is the amount of Cost of goods sold on the December 31 income statement? (Points : 1)
       $6,750
       $3,750 
       $4,000
       $3,500



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