ACC 112 - Chapters 5 & 7 Exam Flashcards
Generally, the revenue account for a merchandising business is entitled:
Sales
Net income plus operating expenses is equal to:
Gross Profit
Expenses that are incurred directly or entirely in connection with the sales of merchandise are classified as:
Selling Expenses
The form of income statement that derives it’s name from the fact that the total of all expenses is deducted from the total of all revenues is called a:
Single-step Statement
Multi-step income statements show:
Both Gross Profit and Income from Operations
When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the:
Report Form
The retained earnings statement shows:
All the changes in retained earnings as a result of net income, net loss, and dividends
Merchandise inventory is classified on the balance sheet as a:
Current Asset
The inventory system employing accounting records that continuously disclose the amount of inventory is called:
Perpetual
When the perpetual inventory system is used, the inventory sold is shown on the income statement as:
Cost of Merchandise Sold (COMS)
Using the perpetual inventory system, the entry to record the sale of merchandise on account includes a:
Credit to Merchandise Inventory
Which of the following accounts has a normal debit balance?
Sales Returns and Allowances
Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a:
Debit to Merchandise Inventory
If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:
Credit Memorandum
The arrangements between buyer and seller as to when payments for merchandise are to be made are called:
Credit Terms
In credit terms of 1/10, n/30, the “1” represents the:
Percent of cash discount
Merchandise with a sales price of $500 is sold on account with terms of 2/10, n/30. The journal entry to record the sale would include a:
Credit to Sales for $500
Merchandise subject to terms 1/10, n/30, FOB shipping point, is so,d on account to a customer for $15,000. The seller paid transportation costs of $1000 and issue a credit memorandum for $5000 prior to payment. What is the amount of the cash discount allowable?
$100
Which of the following accounts has a normal credit balance?
Sales
The entry to record the return if merchandise from a customer would include a:
Debit to Sales Returns and Allowances
Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a:
Debit to Cash and a Credit to Sales
When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry:
Debit Cash; Credit Merchandise Inventory
Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a:
Debit to Merchandise Inventory
Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a:
Credit to Merchandise Inventory
The amount of the total cash paid to the seller for merchandise purchased would normally include:
The list price plus the sales tax
A sales invoice included the following information: merchandise price, $4,000; transportation, $300; terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of $600 is granted prior to payment, that the transportation is prepaid by the seller, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?
$3,666
Which of the following accounts usually has a debit balance?
Transportation-In
If the buyer has to pay the transportation cost of delivering merchandise, delivery terms are stated as:
FOB Shipping Point
If the seller is to pay the transportation costs of delivering merchandise, the delivery terms are stated as:
FOB Destination
X sold Y merchandise on account FOB shipping point, 2/10, net 30, for $10,000. X prepaid the $200 shipping charge. Which of the following entries does X make to record this sale?
Accounts Receivable-Y, debit $10,000; Sales, credit $10,000, and Accounts Receivable-Y, debit $200; Cash, credit $200
Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
Cost of Merchandise Sold (COMS)
An example of preventive control is:
Separation of the Purchasing Department and Accounting Department personnel
Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called:
Preventative Controls
A voucher:
is normally prepared in the Accounting Department
A voucher is usually supported by:
- A Suppliers Invoice
- A Purchase Order
- A receiving Report
All of the Above
Under the voucher system, every transaction is recorded at the time of:
Incurring
On the bank’s accounting records, customers’ accounts are orally shown as:
A Liability
A person authorized to write checks drawn on a checking account at a bank must sign and have on file with the bank a:
Signature Card
A check drawn by a depositor for $180 in payment of a liability was recorded in the journal as $810. This item would be included in the bank reconciliation as a(n):
addition to the balance per the depositor’s records
A bank reconciliation should be prepared periodically because:
Any differences between the depositor’s records and the bank’s records should be determined, and any errors made by either party should be discovered and corrected
The bank reconciliation:
Is part of the internal control system
Journal entries based on bank reconciliation are required in the depositor’s accounts for:
Book Errors
Accompanying the bank statement was a debit memorandum for bank service charges. What entry is required in the depositor’s accounts?
Debit Miscellaneous Administrative Expense; Credit Cash
Recepts from cash sales of $9,500 were recorded incorrectly in the cash receipts journal as $5,900. This item would be included in the bank reconciliation as a(n):
Addition to the balance per depositor’s records
The amount of deposits in transit is included on the bank statement as a(n):
Addition to the balance per bank statement
The amount of the outstanding checks is included on the banks reconciliation as a(n):
Deduction from the balance per bank statement
Which of the following items appeared on the bank reconciliation did not require an adjusting entry?
Deposits in Transit
The amount of cash to be reported on the balance sheet at June 30 is the:
Adjusted balance appearing in the bank reconciliation for June 30
