test3_ch05-6 - Achievement Test 3: Chapters 5 and 6...

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Achievement Test 3: Chapters 5 and 6 Name ___________________________ Financial Accounting, 5e Instructor ________________________ Section # _________ Date __________ Part I II III IV V Total Points 36 26 18 10 10 100 Score PART I — MULTIPLE CHOICE (36 points) Instructions: Designate the best answer for each of the following questions. ____ 1. Hopkins Enterprises returned merchandise purchased on account for $500 to Weatherly Company. Weatherly’s cost for the goods was $300. To record this transaction, a. Hopkins should credit Accounts Payable for $500. b. Weatherly should credit Sales Returns and Allowances for $300. c. Weatherly should credit Accounts Receivable for $500. d. Hopkins should credit Merchandise Inventory for $300. ____ 2. Credit terms of 2/10, n/30 mean that a. a 10% cash discount may be taken if payment is made immediately; a 2% discount if paid within 30 days. b. a 2% cash discount may be taken if payment is made within 10 days of the invoice date; otherwise the full amount is due at the end of the month. c. an additional amount equal to 2% of the invoice price must be paid if payment is not received within 10 days; the account is overdue after 30 days. d. a 2% cash discount may be taken if payment is made within 10 days of the invoice date; otherwise the full amount is due within 30 days. ____ 3. A periodic inventory system a. allows for the determination of cost of goods sold after each sale. b. traditionally has been used with low unit-value items. c. requires that detailed inventory records be kept. d. requires the use of a cost of goods sold account. ____ 4. In accordance with the revenue recognition principle, sales revenues are recorded when a. earned, which typically occurs when the goods are transferred from the seller to the buyer. b. cash is received from the customer for items already delivered. c. an order is received from a customer with delivery of the product expected to take place within the next 30 days.
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Test Bank for Financial Accounting, Fifth Edition d. the accountant determines which period's income statement "needs" more revenue. ____ 5. Expenses that relate to such activities as personnel management, accounting, and store security generally should appear in a multiple-step income statement in the a. Cost of Goods Sold section. b. Administrative Expenses section. c. Non-operating section. d. Selling Expenses section. ____ 6. Which of the following accounts should appear in the Non-operating section of a multiple-step income statement? a. Freight-out b. Sales Discounts c. Sales Returns and Allowances d. Interest Expense ____ 7. Freight terms of FOB shipping point mean that the a. buyer must bear the freight costs. b. seller must debit freight out. c. goods are placed free on board at the buyer's place of business. d. seller must bear the freight costs. ____ 8. With regard to accounting for a merchandising company versus a service enterprise, which of the following is false?
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This note was uploaded on 05/08/2008 for the course ACC 220 taught by Professor J during the Winter '08 term at South Central College: Faribault Campus.

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test3_ch05-6 - Achievement Test 3: Chapters 5 and 6...

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