Test _2 chapters 5 & 6

Test _2 chapters 5 & 6 - Due Thur 7/21/11 at 10:00am...

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Due Thur 7/21/11 at 10:00am 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. When a customer returns merchandise purchased on credit, the a. customer should credit Accounts Payable. b. seller should credit Sales Returns and Allowances. c. customer should credit Accounts Receivable. d. none of the above. ____ 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. 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. Nonoperating section. d. Selling Expenses section.
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____ 6. When a seller grants credit for returned goods, the account that is credited is a. Sales. b. Sales Returns and Allowances. c. Merchandise Inventory. d. Accounts Receivable. ____ 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.
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This note was uploaded on 07/20/2011 for the course ACCT 111 taught by Professor Richards during the Spring '11 term at CUNY Brooklyn.

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Test _2 chapters 5 & 6 - Due Thur 7/21/11 at 10:00am...

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