midterm

midterm - Name Date 1 Revenues are A Profits B The amount a...

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Name: __________________________ Date: _____________ 1. Revenues are: A) Profits. B) The amount a business earns after subtracting all expenses from sales. C) Earnings. D) The amounts earned from selling products and services. E) Costs incurred with sales. 2. The financial statement that shows the beginning balance of owner's equity; the changes in equity that resulted from new investments by the owner, net income (or net loss), and withdrawals; and the ending balance is the: A) Statement of financial position. B) Statement of cash flows. C) Balance sheet. D) Income statement. E) Statement of owner's equity. 3. Of the office supplies Sandoval Consulting buys each month, 60% are paid for during the same month and 40% are paid for during the following month. The business purchased $600 of office supplies during July and during August paid bills of $450 related to office supplies. The office supplies inventory was $160 on July 31 and was $90 on August 31. What should be reported as office supplies expense during August? Page 1
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4. Bakstreet, Inc. wants to estimate inventory destroyed by flood. Its average gross profit percentage is 37%. The following information is available: (1) Beginning inventory: $112,350 (2) Purchases: $520,850 (3) Purchases returns and allowances: $5,000 (4) Transportation-in: $4,725 (5) Sales: $885,950 (6) Sales returns and allowances: $9,760 Instructions: Calculate the value of the destroyed ending inventory using the gross profit method. Page 2
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5. Sales Accts. Other Account Cash Disc. Rec. Sales Accounts Date Credited PR Debit Debit Credit Credit Credit Jan. 31 Balance 51,739 1,023 13,265 5,567 33,930 Feb. 12 H. Jones X 637 13 650 14 Notes Pay 351 Page 3
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6. Explain why the allowance method satisfies the generally accepted principles of conservatism and matching. 7. Martock Company uses the periodic inventory system. The following information is available for the period ending December 31: (1) Sales: $30,000 (2) Beginning inventory: $7,500 (3) Ending inventory: $6,000 (4) Purchases: $20,000 The cost of goods sold for the period is: A) $27,500. B) $26,500. C) $21,500. D) $25,100. E) $21,000. Page 4
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8. The partially completed income statements for Hendricks Corporation follow: 1st Year 2nd Year 3rd Year Revenues $ 7,500 $10,000 $10,000 Beginning inventory (a)_____ 375 750 Purchases 2,400 3,600 4,800 Purchases discounts 38 (d)_____ 87 Purchases returns and allow. (b)_____ 63 38 Net purchases 2,300 3,475 (i)_____ Transportation-in 100 (e)_____ 200 Goods available for sale 3,150 (f)_____ 5,625 Page 5
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9. Unearned revenue is reported in the financial statements as: A) A revenue on the balance sheet. B) A liability on the balance sheet. C) An unearned revenue on the income statement. D)
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midterm - Name Date 1 Revenues are A Profits B The amount a...

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