Quiz 2 - Quize 2 10/8/2008 I. Multiple choice questions 1....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Quize 2 10/8/2008 I. Multiple choice questions 1. Which of the following accounts would most likely appear on the income statement for a merchandising company, but not on the income statement for a service company? a. Selling & Administrative Expenses b. Revenue c. Cost of Goods Sold d. Payroll Tax Expense c (moderate) 2. Gross profit can be calculated by sales less a. cost of goods sold b. expenses c. inventory d. selling expenses a (easy) 3. Which of the following statements defines an operating cycle? a. A one-year business period that begins on the first day of operation and ends twelve months after that date b. A business year that is determined for a merchandising company by the Internal Revenue Service c. The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale d. A business year that is determined for a merchandising company by the financial accounting standards board (FASB) c (moderate) 4. When a merchandising business purchases goods for resale, those goods get recorded as a. raw materials on the balance sheet b. cost of goods sold on the income statement c. inventory on the balance sheet d. cost of goods sold on the balance sheet c (easy) 5. Jacob Company purchased $200 worth of merchandise on account from Jones Company. How would Jacob Company record this transaction in its accounting records assuming that the company uses a perpetual inventory system? a. Debit cost of goods sold and credit cash b. Debit inventory and credit cash c. Credit cost of goods sold and debit accounts payable d. Debit inventory and credit accounts payable d (moderate) 6. Which term indicates to a buyer that merchandise is free of transportation charges? a. FOB shipping point b. Freight-In c. Transportation-in d. FOB Destination d (moderate) 7. Sebastian Merchandising purchased goods on account from Nemo Incorporated. The goods were purchased FOB destination for $200. How would these freight charges be recorded in Sebastian’s accounting records assuming that the company uses a perpetual inventory system? a. They would not be included in Sebastian’s accounting records. b. Debit freight-expense, credit accounts payable c. Debit freight-out, credit accounts payable d. Debit inventory and credit accounts payable a (difficult)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 8. The company purchases goods with the terms 1/15, n /45. What do the terms mean? a.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Quiz 2 - Quize 2 10/8/2008 I. Multiple choice questions 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online