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A company starts the period with 100 computers in inventory,purchases 30 more,returns 4 of them to suppliers,and has 83 in inventory at the end of the period.If there is no shrinkage,how many computers were sold?


A) 47
B) 43
C) 17
D) 83

E) B) and D)
F) B) and C)

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If merchandise costing $500 that was sold cash at a price of $620 is returned by the customer,how would this transaction recorded when using a perpetual inventory system?


A) Debit Cash and credit Sales Revenue for $620
B) Debit Inventory and credit Cost of Goods Sold for $620
C) Debit Sales Revenue and credit Cash for $620; debit Inventory and credit Cost of Goods Sold for $500
D) Debit Sales Returns & Allowances and credit Cash for $620; debit Inventory and credit Cost of Goods Sold for $500

E) A) and C)
F) C) and D)

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On July 1,Darin Company sold inventory costing $4,500 to Dee Company for $6,000,terms 2/10,n/30.Both companies use the perpetual inventory system.Dee Company pays the invoice on July 8 and takes the appropriate discount.What journal entry will be recorded by Dee Company on July 8?


A) Debit Accounts Payable and credit Cash for $6,000
B) Debit Accounts Payable for $5,880, credit Inventory for $120, and credit Cash for $6,000
C) Debit Accounts Payable for $6,000, credit Cash for $5,880, and credit Inventory for $120
D) Debit Cost of Goods Sold and credit Cash for $4,500

E) C) and D)
F) B) and D)

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Explain whether the following items should be included in the inventory of Simpson Company. Item a.Goods sold FOB shipping point by Simpson are in transit to its customer. Item b.Goods sold FOB destination by Simpson are in transit to its customer. 195.Indicate whether the Inventory account is debited (Dr),credited (Cr),or neither (N)when using a perpetual inventory system to record each of the following transactions: 1._____ The company purchases $3,000 of goods intending to sell them to customers. 2._____ The company returns $200 of damaged goods to the supplier. 3._____ The company pays a shipping firm $685 to ship an order of goods from the supplier to the company. 4._____ The company receives a purchase discount for prompt payment to a supplier. 5._____ Customers return $550 of goods in excellent condition to the company. 6._____ The company sells $4,600 of goods to consumers. 7._____ The company purchases $1,600 of supplies intending to use them internally. 9._____ The company does a physical count and finds three items missing due to shrinkage.

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1.Dr
2.Cr
...

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BetterBuy sells $50,000 of TVs to a customer.The credit terms state a 2% discount if paid in 7 days and a 1% discount if paid in 8-14 days.The customer pays in 12 days.How would BetterBuy record the customer's payment?


A) Debit Cash for $50,000 and credit Accounts Receivable for $50,000
B) Debit Accounts Receivable for $50,000, credit Cash for $49,500, and credit Inventory for $500
C) Debit Cash for $49,500, credit Accounts Receivable for $50,000, and debit Sales Discounts for $500
D) Debit Cash for $49,500, credit Accounts Receivable for $49,000, and credit Sales Returns & Allowances for $500

E) B) and D)
F) A) and B)

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A company's trial balance included the following account balances at year-end: A company's trial balance included the following account balances at year-end: The amount of net sales reported on the income statement would be: A) $114,400. B) $128,400. C) $112,000. D) $111,400. The amount of net sales reported on the income statement would be:


A) $114,400.
B) $128,400.
C) $112,000.
D) $111,400.

E) B) and C)
F) None of the above

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Generally,a physical count of inventory is performed annually in both a perpetual inventory system and a periodic inventory system.

A) True
B) False

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Which of the following would generally be considered an operating revenue or expense?


A) Income from renting out extra warehouse space
B) Interest on a note payable
C) Dividends earned on an investment is another company's stock
D) Depreciation

E) A) and C)
F) All of the above

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Which of the following statements regarding gross profit percentage is not correct?


A) It is possible for a company to increase both its gross profit percentage and net income without increasing the dollar amount of sales.
B) A decreasing gross profit percentage means that the company is selling products for a greater markup over its cost.
C) The gross profit percentage measures the percentage of profit earned on each dollar of sales.
D) Gross profit percentages vary across industries.

E) A) and D)
F) None of the above

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Goods available for sale can:


A) be sold and then become cost of goods sold on the income statement
B) not be sold and thus are not reported as Cost of Goods Sold on the balance sheet
C) not be sold and thus are reported as Inventory on the income statement
D) be sold and thus reported as Cost of Goods Sold on the balance sheet

E) C) and D)
F) A) and B)

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Sales Discounts is a ______ account with a normal ______ balance.


A) contra-asset; debit
B) contra-revenue; credit
C) contra-asset; credit
D) contra-revenue; debit

E) All of the above
F) A) and D)

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Which one of the following statements regarding sales discounts is correct?


A) If a company offers a discount to encourage prompt payment and the discount is taken, the discount reduces the amount of net sales.
B) Credit terms of "2/10, n/30" mean that if payment is made in two days, a 10% discount may be taken; if not paid within two days, the full invoice price will be due in thirty days.
C) The terms "sales discounts" and "sales credits" are used interchangeably by a company.
D) The Sales Discounts account is an expense account.

E) A) and B)
F) A) and C)

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Which of the following is the most common wording for a measure of the company's income from regular operating activities,before considering the effects of interest,income taxes,and any nonrecurring items?


A) Income from operations
B) Income from core operations
C) Income from peripheral operations
D) Income before interest, taxes, and nonrecurring items

E) A) and B)
F) A) and C)

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Acme Enterprises,which uses a perpetual inventory system,recorded a debit to Sales Returns & Allowances and a credit to Accounts Receivable.(No other accounts were affected.) What business event must have taken place?


A) The customer received a damaged product, but kept the product and asked for a reduction in the price.
B) The customer received a damaged product and returned it.
C) The customer received a discount because the invoice was paid on time.
D) The customer sent in a partial payment and promised to pay the balance next month.

E) All of the above
F) A) and B)

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A company has gross profit of $58,300 and a gross profit percentage of 25%.What were the company's net sales?


A) $233,200.
B) $14,575.
C) $72,825.
D) $711,260

E) B) and C)
F) A) and D)

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What are the differences between the periodic and the perpetual inventory systems? (Do not address or list the actual journal entries made in each system.)

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A periodic inventory system updates the ...

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Inventory costing $3,000 is sold for $4,000 on terms 2/10,n/30.If the buyer pays within the discount period,what amount will be reported on the income statement as net sales?


A) $3,920
B) $4,000
C) $1,000
D) $3,200

E) None of the above
F) A) and D)

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Ace Electronics had cost of goods sold of $20,000.If purchases were $23,000 and ending inventory was $6,000,Ace's beginning inventory must have been:


A) $3,000
B) $9,000
C) $26,000
D) $17,000

E) None of the above
F) C) and D)

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A company buys footwear and clothing from manufacturers,which it resells to discount stores in a large urban area.This company is an example of a:


A) wholesale merchandising company.
B) service company.
C) retail merchandising company.
D) secondary service company.

E) C) and D)
F) All of the above

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Inventory was sold on credit for $3,000,terms 1/10,n/30.How should the seller record the cash collection?


A) Debit Cash for $3,000 and credit Accounts Receivable for $3,000, if collected within the discount period.
B) Debit Cash for $3,000, credit Accounts Receivable for $2,970, and credit Sales Discounts for$30, if collected within the discount period.
C) Debit Cash for $3,000, credit Accounts Receivable for $2,970, and credit Sales Discounts for$30, if collected after the discount period.
D) Debit Cash for $3,000 and credit Accounts Receivable for $3,000, if collected after the discount period.

E) B) and C)
F) A) and D)

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