ACC 112 - Chapters 5 & 7 Exam

Question 0

Generally, the revenue account for a merchandising business is entitled:

Answer 0

Sales

Question 1

Net income plus operating expenses is equal to:

Answer 1

Gross Profit

Question 2

Expenses that are incurred directly or entirely in connection with the sales of merchandise are classified as:

Answer 2

Selling Expenses

Question 3

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:

Answer 3

Single-step Statement

Question 4

Multi-step income statements show:

Answer 4

Both Gross Profit and Income from Operations

Question 5

When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the:

Answer 5

Report Form

Question 6

The retained earnings statement shows:

Answer 6

All the changes in retained earnings as a result of net income, net loss, and dividends

Question 7

Merchandise inventory is classified on the balance sheet as a:

Answer 7

Current Asset

Question 8

The inventory system employing accounting records that continuously disclose the amount of inventory is called:

Answer 8

Perpetual

Question 9

When the perpetual inventory system is used, the inventory sold is shown on the income statement as:

Answer 9

Cost of Merchandise Sold (COMS)

Question 10

Using the perpetual inventory system, the entry to record the sale of merchandise on account includes a:

Answer 10

Credit to Merchandise Inventory

Question 11

Which of the following accounts has a normal debit balance?

Answer 11

Sales Returns and Allowances

Question 12

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a:

Answer 12

Debit to Merchandise Inventory

Question 13

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

Answer 13

Credit Memorandum

Question 14

The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

Answer 14

Credit Terms

Question 15

In credit terms of 1/10, n/30, the “1” represents the:

Answer 15

Percent of cash discount

Question 16

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:

Answer 16

Credit to Sales for $500

Question 17

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?

Answer 17

$100

Question 18

Which of the following accounts has a normal credit balance?

Answer 18

Sales

Question 19

The entry to record the return if merchandise from a customer would include a:

Answer 19

Debit to Sales Returns and Allowances

Question 20

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a:

Answer 20

Debit to Cash and a Credit to Sales

Question 21

When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry:

Answer 21

Debit Cash; Credit Merchandise Inventory

Question 22

Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a:

Answer 22

Debit to Merchandise Inventory

Question 23

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a:

Answer 23

Credit to Merchandise Inventory

Question 24

The amount of the total cash paid to the seller for merchandise purchased would normally include:

Answer 24

The list price plus the sales tax

Question 25

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?

Answer 25

$3,666

Question 26

Which of the following accounts usually has a debit balance?

Answer 26

Transportation-In

Question 27

If the buyer has to pay the transportation cost of delivering merchandise, delivery terms are stated as:

Answer 27

FOB Shipping Point

Question 28

If the seller is to pay the transportation costs of delivering merchandise, the delivery terms are stated as:

Answer 28

FOB Destination

Question 29

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?

Answer 29

Accounts Receivable-Y, debit $10,000; Sales, credit $10,000, and Accounts Receivable-Y, debit $200; Cash, credit $200

Question 30

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

Answer 30

Cost of Merchandise Sold (COMS)

Question 31

An example of preventive control is:

Answer 31

Separation of the Purchasing Department and Accounting Department personnel

Question 32

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:

Answer 32

Preventative Controls

Question 33

A voucher:

Answer 33

is normally prepared in the Accounting Department

Question 34

A voucher is usually supported by:

Answer 34

• A Suppliers Invoice
• A Purchase Order
• A receiving Report

All of the Above

Question 35

Under the voucher system, every transaction is recorded at the time of:

Answer 35

Incurring

Question 36

On the bank’s accounting records, customers’ accounts are orally shown as:

Answer 36

A Liability

Question 37

A person authorized to write checks drawn on a checking account at a bank must sign and have on file with the bank a:

Answer 37

Signature Card

Question 38

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):

Answer 38

addition to the balance per the depositor’s records

Question 39

A bank reconciliation should be prepared periodically because:

Answer 39

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

Question 40

The bank reconciliation:

Answer 40

Is part of the internal control system

Question 41

Journal entries based on bank reconciliation are required in the depositor’s accounts for:

Answer 41

Book Errors

Question 42

Accompanying the bank statement was a debit memorandum for bank service charges. What entry is required in the depositor’s accounts?

Answer 42

Debit Miscellaneous Administrative Expense; Credit Cash

Question 43

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):

Answer 43

Addition to the balance per depositor’s records

Question 44

The amount of deposits in transit is included on the bank statement as a(n):

Answer 44

Addition to the balance per bank statement

Question 45

The amount of the outstanding checks is included on the banks reconciliation as a(n):

Answer 45

Deduction from the balance per bank statement

Question 46

Which of the following items appeared on the bank reconciliation did not require an adjusting entry?

Answer 46

Deposits in Transit

Question 47

The amount of cash to be reported on the balance sheet at June 30 is the:

Answer 47

Adjusted balance appearing in the bank reconciliation for June 30