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The journal entry to record a credit sale is

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These are Multiple Choice Questions

Question 1

1. Freight terms that require the buyer to pay the freight cost
2. Sales less sales returns and allowances and sales discounts.
3. Detailed inventory records are maintained in this inventory system?
4. When a perpetual inventory system is used, the acquisition of merchandise inventory is debited to this account?
5. Sales Returns and Allowances and Sales Discounts have normal debit balances and both are?
6. Indicates those people authorized to sign checks.
7. Anything that a bank will accept for deposit.
8. Mechanical and electronic control devices.
9. One who issues a check.
10. An extensive network of approvals by authorized individuals.

A. Bank signature card
B. Maker
C. Cash
D. Merchandise inventory
E. Cash registers, garment senors, and burglar alarms are examples
F. Voucher system
G. FOB shipping point
H. Specific identification method
I. Contra revenue account
J. Net sales

Question 2

A business that buys and sells goods rather than performing services to earn a profit

Net sales less cost of goods sold.

Requires a physical count of goods on hand to compute cost of goods sold.

Measures the number of times inventory sold during the period.

Title of goods transfers when the goods are delivered to the buyer.

One to whom a check is payable.

Two or more employees circumventing prescribed procedures.

Prevent a transaction from being recorded more than once.

Checks which have been paid by the depositor's bank.

Checks which have been returned by the maker's bank for lack of funds.

A- Periodic inventory system
B- FOB destination
C- Inventory turnover
D- NSF checks
E- Collusion
F- Merchandiser
G- Canceled checks
H- Gross profit
I- Prenumbered documents
J- Payee

3. Detailed records of goods held for resale are not maintained under a
Answer
perpetual inventory system.
periodic inventory system.
double entry accounting system.
single entry accounting system.

4. The journal entry to record a credit sale is
Cash Sales
Cash Service Revenue
Accounts Receivable Service Revenue
Accounts Receivable
Sales

5.  In a perpetual inventory system, a return of defective merchandise by a cash customer is recorded by crediting

6. A merchandising company using a perpetual system will make

7. Rudolf Diesel Company's inventory records show the following data:
Units Unit Cost
Inventory January 1 5,000 $9.00
Purchases June 18 4,500 $8.00
November 8 3,000 $7.00
A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO method, the December 31 inventory is

$21,000.
$21,750.
$24,000.
$27,000.

8. Use the following information :
July 1 Beginning Inventory 10 units @ $120
5 Purchases 60 units @ $112
14 Sale 40 units
21 Purchases 30 units @ $115
30 Sale 28 units

Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis?

$3,664
$3,674
$7,696
$7,706

9. A buyer would record a payment within the discount period under a perpetual inventory system by crediting

10. Cartier Company purchased inventory from Pissaro Company. The shipping costs were $400 and the terms of the shipment were FOB shipping point. Cartier uses a perpetual inventory system. Cartier would have the following entry regarding the shipping charges:

11. When opening a bank checking account, a signature card

12. A physical count of inventory is taken at the end of an accounting period under a periodic system in order to

13. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of

14. After gross profit is calculated, operating expenses are deducted to determine

15. The consistent application of an inventory costing method is essential for

16. At April 30, Beckett Company has the following bank information: cash balance per bank $4,600; outstanding checks $280; deposits in transit $550; credit memo for interest $10; bank service charge $20. What is Beckett’s adjusted cash balance on April 30?

17. Use the following inventory information
July 1 Beginning Inventory 20 units @ $19 $380
July 7 Purchases 70 units @ $20 1,400
July 22 Purchases 10 units @ $22 220
$2,000
A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

18. The following information was available for Carton Company at December 31, 2008: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $660,000; and sales $900,000.Carton's days in inventory in 2008 was

19. During August, 2008, Sal's Supply Store generated revenues of $30,000. The company's expenses were as follows: cost of goods sold of $12,000 and operating expenses of $2,000. The company also had rent revenue of $500 and a gain on the sale of a delivery truck of $1,000.Sal's operating income for the month of August, 2008 is

20. A sales invoice is a source document that

21. At May 1, 2008, Treeline Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows:200 units at $7 300 units at $8The company sold 500 units during the month for $12 per unit. Treeline uses the average cost method. The value of Treeline's inventory at May 31, 2008 is

22. Cost of goods sold is computed from the following equation:

23. If a check correctly written and paid by the bank for $491 is incorrectly recorded on the company's books for $419, the appropriate treatment on the bank reconciliation would be to

24. The use of remittance advices for mail receipts is an example of

25. An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is

26. A voucher system is a series of prescribed control procedures

27. In the balance sheet, ending merchandise inventory is reported

28. A credit balance in Cash Over and Short is reported as a(n)

29. Tier II Company uses a periodic inventory system. Details for the inventory account for the month of January, 2008 are as follows:

Balance 1/1/08 200 @ $5.00 $1,000
Purchase 1/15/08 100 @ $5.30 530
Purchase 1/28/08 100 @ $5.50 550
An end of the month (1/31/08) inventory showed that 120 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

30. Control over cash disbursements is generally more effective when

31. The sales revenue section of an income statement for a retailer would not include

32. Internal controls are not designed to safeguard assets from

33. Inventories affect
Answer
only the balance sheet.
only the income statement.
both the balance sheet and the income statement.
neither the balance sheet nor the income statement.

34. Journal entries are required by the depositor for all of the following except
collection of a note receivable.
bank errors.
bank service charges.
an NSF check.

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