Key_to_Prelim2practice

Key_to_Prelim2practice - AEM 221 Prelim#2 PRACTICE TEST...

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AEM 221 Prelim #2- PRACTICE TEST Fall 2004 Multiple Choice (15 at 2 points each) 1) On a multiple-step income statement, the amount of sales returns and allowances is A) added into selling expenses. B) Subtracted from gross margin to determine net sales. C) added in the calculation of cost of goods sold. D) Subtracted from gross sales to determine net sales. E) Both A and D are acceptable methods of disclosing the effect of sales returns and allowances. 2) ABC Toys received an order from a customer on March 1. The toys were shipped on March 18. The customer sent a check for full payment on April 10. ABC received the check on April 12 and deposited it in the bank account. ABC should record sales revenue related to this series of transactions on A) March 1. B) March 18. C) April 10. D) April 12. E) None of the above is correct. 3) Matson Company sold goods for $20,000 to Dunlow Company on March 12 on credit. Terms of the sale were 2/10, n/30. At the time of the sale, Matson recorded the transaction by debiting accounts receivable for $20,000 and crediting sales revenue for $20,000. Dunlow paid the balance due on March 20. To record the March 20 transaction, Matson would debit A) Accounts receivable for $20,000. B) Cash for $19,600. C) Sales discounts for $400. D) Cash for $20,000. E) Both B and C would be debited. 4) A company had the following partial list of account balances at year-end: Sales Returns and Allowances $ 800 Accounts Receivable 25,000 Sales Discounts (a contra account) 1,200 Sales Revenue 83,000 Allowance for Doubtful Accounts 750 The amount of Net Sales shown on the income statement would be A) $81,000. B) $80,250. C) $81,800. D) $82,200. E) None of the above is correct.
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5) In 2000, Timberland's gross profit percentage was 46.6% while their competitor, Wolverine World Wide's percentage was 31.9%. Which was the most likely reason for Timberland's higher percentage? A) Lower selling prices
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Key_to_Prelim2practice - AEM 221 Prelim#2 PRACTICE TEST...

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