acc210 #2 - Chapter1 1. The operating cycle of a...

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Chapter1 1. The operating cycle of a merchandising company is ordinarily shorter than that of a service company. A. B. False 2. Discount terms of 2/10, n/30 mean that a 10% cash discount is available if payment is made within 30 days. A. B. False 3. Sales Returns and Allowances is a contra revenue account. A. B. False 4. Gross profit is the difference between net sales and cost of goods sold. A. B. False 5. If the profit margin ratio is 5% and operating expenses are $1,330,000, the net sales are $1,400,000. A. B. False 6. Cost of goods sold is determined at the end of an accounting period under the A. B. periodic inventory system. C. double entry inventory system. D. perpetual inventory system. 7. A company with merchandise that has a high unit value would probably use a A. B. double entry inventory system. C. periodic inventory system.
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1. The operating cycle of a merchandising company is ordinarily shorter than that of a service company. A. B. False D. single entry inventory system. 8. Beginning inventory is $12,000; purchases are $34,000; sales are $60,000; and cost of goods sold is $31,000. Ending inventory is: A. B. $31,000. C. $46,000. D. $14,000. 9. When credit terms of 1/10, n/30 are offered, the discount period is A. B. 10 days. C. 20 days. D. 30 days. 10. Freight costs incurred by the seller on outgoing merchandise are recorded in the A. B. Cost of Goods Sold account. C. Freight-in account. D. Freight-out account. 11. Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 11, what is the cost of this purchase? A. B. $3,780
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8. Beginning inventory is $12,000; purchases are $34,000; sales are $60,000; and cost of goods sold is $31,000. Ending inventory is: A. B. $31,000. C. $46,000. D. $14,000. C. $4,074 D. $3,864 12. Which of the following would be classified in an income statement as a nonoperating activity? A. B. Interest expense C. Freight-out D. Cost of goods sold 13. Which of the following would be classified in an income statement as a nonoperating activity? A. B. Returning merchandise C. Receiving an allowance for merchandise damaged in shipment D. Paying for a purchase of inventory 14. A sales discount is based on A. B. invoice less discount. C. invoice price plus freight-out. D. invoice price less returns and allowances. 15. Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase
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13. Which of the following would be classified in an income statement as a nonoperating activity? A.
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This note was uploaded on 03/20/2008 for the course ACC210 AND acc210 and taught by Professor Ernstberger during the Spring '08 term at N.C. State.

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acc210 #2 - Chapter1 1. The operating cycle of a...

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