Accounting I-Exam II Review

# Accounting I-Exam II Review - Circle the letter of the...

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Circle the letter of the best response. 1. The Inventory account has a debit balance of \$30,000 on December 31. A physical count reveals that the merchandise on hand is \$29,000. The entry to adjust the inventory on December 31 would include a: A. credit to Cost of Goods Sold d \$1,000. B. credit to Inventory, \$1,000. C. credit to Accounts Payable, \$1,000. D. credit to Retained Earnings, \$1,000. 2. Two categories of expenses in all merchandising companies are: a. cost of goods sold and financing expenses b. operating expenses and sales c. cost of goods sold and operating expenses d. sales and cost of goods sold. Table 5-1 Selling expenses. ......................................................................... \$ 20,000 Cost of goods sold. ........................................................................ 160,000 Sales. ............................................................................................... 245,000 General expenses. ............................................................................ 40,000 Interest expense. ................................................................................ 2,000 Sales returns and allowances. ........................................................... 5,000 3. Refer to Table 5-1. On a multi-step income statement, operating income is: A. \$25,000. B. \$20,000. C. \$18,000. D. \$85,000. 4. Sales revenue less cost of goods sold is called: a. gross profit b. net profit (loss) c. operating expense d. net sales. 5. Would Gross Profit, Operating Income, and Net Income appear on a single-step income statement? Gross Profit Operating Income Net Income A. No No Yes B. Yes Yes Yes C. No Yes Yes D. Yes No No 6. The primary difference between a periodic and perpetual inventory system is that a periodic system: a. keeps a record showing the inventory on hand at all times 1

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b. provides better control over inventories c. records the cost of the sale on the date the sale is made d. determines the inventory on hand only at the end of the accounting period. 7. Under a perpetual inventory system, acquisition of merchandise for resale is debited to: a. the Inventory account b. the Sales account c. the Supplies account d. the Cost of Goods Sold account. 8. Freight costs incurred by a seller on merchandise sold to customers will cause an increase: a. in the selling expenses of the buyer b. in operating expenses for the seller c. to the cost of goods sold of the seller d. to a discount received account of the seller. Hermione Co. reported the following information: Table 6-1 Units Unit Cost Total Cost Units Sold Beginning inventory (Jan. 1) 4 \$400 \$1,600 Sale (Mar. 1) 3 Purchase (Apr. 15) 4 405 1,620 Sale (June 22) 3 Purchase (Oct. 11) 2 425 850 Total Units in ending inventory 10 4 \$4,070 6 9. Refer to Table 6-1. Assume that Hermione uses perpetual LIFO. The cost of the ending inventory is: A. \$1,700 B. \$1,670 C. \$1,655 D. \$1,600 10. Refer to Table 6-1. Assume that Hermione uses perpetual FIFO. The entry to record the March 1 credit sale at
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## This note was uploaded on 11/11/2011 for the course ACCT 101 taught by Professor Quamina during the Fall '11 term at Howard.

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Accounting I-Exam II Review - Circle the letter of the...

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