Quiz
Chapter 4 Accounting
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Questions in this quiz (32)
1A company had sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:
- A$(417,000)
- B$695,000
- C$278,000
- D$417,000
- E$973,000
2Beginning inventory plus net cost of purchases is:
- ACost of goods sold.
- BMerchandise available for sale.
- CEnding inventory.
- DSales
- EShown on the balance sheet.
3Cost of goods sold is reported on both the income statement and the balance sheet.
- ATrue
- BFalse
4Merchandise inventory consists of products that a company acquires to resell to customers.
- ATrue
- BFalse
5Sales less sales discounts less sales returns and allowances equals:
- ANet purchases.
- BCost of goods sold.
- CNet sales.
- DGross profit.
- ENet income.
6Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:
- ACost of goods sold.
- BSelling expenses.
- CPurchasing expenses.
- DGeneral and administrative expenses.
- ENonoperating activities.
7Merchandise inventory:
- AIs a long-term asset.
- BIs a current asset.
- CIncludes supplies.
- DIs classified with investments on the balance sheet.
- EMust be sold within one month.
8The current period's ending inventory is:
- AThe next period's beginning inventory.
- BThe current period's cost of goods sold.
- CThe prior period's beginning inventory.
- DThe current period's net purchases.
- EThe current period's beginning inventory.
9Cost of goods sold is also called cost of sales.
- ATrue
- BFalse
10Cost of goods sold:
- AIs another term for merchandise sales.
- BIs the cost of merchandise sold to customers.
- CIs another term for revenue.
- DIs also called gross margin.
- EIs a term only used by service firms.
11Multiple-step income statements:
- AAre required by the FASB.
- BContain more detail than a simple listing of revenues and expenses.
- CAre required for the perpetual inventory system.
- DList cost of goods sold as an operating expense.
- ECan only be used in perpetual inventory systems.
12A perpetual inventory system continually updates accounting records for inventory transactions.
- ATrue
- BFalse
13Sales returns:
- ARefer to merchandise that customers return to the seller after the sale.
- BRefer to reductions in the selling price of merchandise sold to customers.
- CRepresent cash discounts.
- DRepresent trade discounts.
- EAre not recorded under the perpetual inventory system until the end of each accounting period.
14A company had sales of $350,000 and cost of goods sold of $200,000, which means gross profit is equal to $550,000.
- ATrue
- BFalse
15The credit terms 2/10, n/30 are interpreted as:
- A2% cash discount if the amount is paid within 10 days, with the balance due in 30 days.
- B10% cash discount if the amount is paid within 2 days, with balance due in 30 days.
- C30% discount if paid within 2 days.
- D30% discount if paid within 10 days.
- E2% discount if paid within 30 days.
16A company's current assets were $17,980, its quick assets were $11,420, and its current liabilities were $12,190. Its quick ratio equals:
- A0.94
- B1.07
- C1.48
- D1.57
- E2.40
17Herald Company had sales of $135,000, sales discounts of $2,000 and sales returns of $3,200. Herald Company's net sales equals:
- A$5,200
- B$129,800
- C$133,000
- D$135,000
- E$140,200
18The acid-test ratio is also called the quick ratio.
- ATrue
- BFalse
19On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. The journal entry or entries that Robertson will make on October 1 is:
- ASales.......5800
AR........ 5800 - BSales........ 5800
AR.......... 5800
COGS........ 4000
Merch Inv.. 4000 - CAR......... 5800
Sales... 5800 - DAR............. 5800
Sales....... 5800
COGS........ 4000
Merch Inv.. 4000 - EAR......... 4000
Sales.... 4000
- ASales.......5800
20A company's gross profit was $83,750 and its net sales were $347,800. Its gross margin ratio equals:
- A4.2%
- B24.1%
- C75.9%
- D$83,750
- E$264,050
21On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 7, what would be the appropriate journal entry?
- AMerch Inv........... 5250
.....AP.............................5250 - BAP............ 5250
..Merch inv........ 5250 - CAP............ 5250
..Cash............... 5250 - DAP............. 5145
..Cash................. 5145 - EAP............. 5250
.. Merch Inv........ 105
.. Cash................. 5145
- AMerch Inv........... 5250
22The gross margin ratio:
- AIs also called the net profit ratio.
- BMeasures a merchandising firm's ability to earn a profit from the sale of inventory.
- CIs also called the profit margin.
- DIs a measure of liquidity.
- EShould be greater than 1.
23A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:
- A$3,725.00
- B$3,925.00
- C$3,995.00
- D$4,000.50
- E$4,075.00
24With credit terms of 2/10, n/30, the seller is offering the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date. Otherwise, the full amount is due in 30 days.
- ATrue
- BFalse
25A company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is:
- A$6,479.60
- B$6,482.00
- C$7,275.00
- D$7,355.00
- E$6,680.00
26A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000, net income of $263,500, and cost of goods sold of $420,000. What is the gross profit/margin for the period?
- A$806,000
- B$1,031,000
- C$1,182,000
- D$1,080,000
- E$855,000
27A company has sales of $1,500,000, sales discounts of $102,000, sales returns and allowances of $123,000, shipping charges of $15,000, sales commissions of $34,000, net income totaled $263,500, and cost of goods sold of $420,000. What is the net sales amount for the period?
- A$1,500,000
- B$1,275,000
- C$1,725,000
- D$1,521,000
- E$1,479,000
28The gross margin ratio is defined as gross margin divided by net sales.
- ATrue
- BFalse
29A company has the following accounts. What is the acid test ratio?
- A3.58
- B3.17
- C1.80
- D4.00
- E2.68
30On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. Alberts pays the invoice on October 8 and takes the appropriate discount. The journal entry that Robertson makes on October 8 is:
- ACash..........5684
Sales Disc.....116
.. AR..................... 5800 - BCash.........4000
..AR.................... 4000 - CCash..........5800
..AR.................... 5800 - DCash............ 3920
Sales disc...... 80
..AR....................... 4000 - ECash............... 5684
..AR.......................... 5684
- ACash..........5684
31The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.
- ATrue
- BFalse
32On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the perpetual inventory system. On October 4, Alberts returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Robertson must make on October 4 is:
- ASales returna and allow.......... 500
.. AR................................................... 500
Merch inv..................................350
.. COGS.............................................. 350 - BSales R&A........... 500
.. AR............................ 500 - CAR..................... 500
.. Sales R&A............. 500 - DAR.............. 500
.. Sales R&A...... 500
COGS.......... 350
.. Merch Inv........ 350 - ESales R&A............... 350
..AR................................. 350
- ASales returna and allow.......... 500
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- Accounting Quiz on Chapter 4 Accounting, created by Rachel Cascada on 27/03/2018.
- Author
- Rachel Cascada
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- English
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