Exam #5

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aznbabeforu
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291574
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Exam #5
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2014-12-14 18:40:28
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  1. Determine Cost of Goods Sold.
    Purchases - Purchases Return and Allowances - Purchases Discounts = Net Purchases

    Net Purchases + Freight In = Delivered Cost of Purchases

    Beginning Inventory + Delivered Cost of Purchases - Ending Merchandise Inventory = Cost of Goods Sold
  2. Periodic Inventory System.
    Does not require an entry to Merchandise Inventory until a physical inventory has been taken.
  3. The unearned revenue account would be used when a company...
    Collects cash and earns the revenue over two fiscal periods.
  4. Unearned revenue is classified as a(n)...
    Liability account.
  5. The service income account is classified as a(n)...
    Revenue account.
  6. Under a perpetual inventory system, a shortage in inventory requires an adjusting entry that...
    Debits Cost of Goods Sold and Credits Merchandise Inventory.
  7. The appropriate journal for recording the adjusting entry for Merchandise Inventory is...
    The general journal.
  8. Which of the following lists of items is used to compare the Cost of Goods Available for Sale...
    Beginning & Ending Inventory.
  9. On the income statement, adding Delivered Cost of Purchases to Beginning Merchandise Inventory results in...
    Cost of Goods Available for Sale.
  10. Cost of Goods Sold may be compared to...
    Subtracting Ending Inventory from Cost of Goods Available for Sale.
  11. On an income statement, net sales minus Cost of Goods Sold equals...
    Gross Profit.
  12. Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500 and General Expenses are $22,800, then gross profit is...
    $101,000.

    Net Sales - Cost of Goods Sold.
  13. Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500, General Expenses are $22,800 and Interest Expense $2,000, then income from operation is...
    $49,700.

    Net sales - Cost of Goods Sold - Operating Expenses.
  14. Assuming net sales is $180,000, Cost of Goods Sold is $79,000, Selling Expenses are $28,500, General Expenses are $22,800 and Interest Expense $2,000, then net income is...
    $47,700.

    Income from operation - Interest Expense.
  15. Net purchases is equal to...
    Purchases minus Purchases Returns & Allowances - Purchases Discounts.
  16. An example of other income for a firm other than a bank or real estate office is...
    All of these.
  17. If Ending Merchandise Inventory is $22,000, Purchases are $85,000, Purchases Discounts are $1,800, Freight In is $3,500 and Beginning Merchandise Inventory is $28,000, the Cost of Goods Sold is...
    $92,700.
  18. When goods are bought under the Periodic Inventory System, Merchandise Inventory is debited.
    False.
  19. When goods are bought under the Perpetual Inventory System, Merchandise Inventory is credited.
    False.
  20. Both wholesalers and retailers are types of merchandising companies.
    True.
  21. The interest income account is classified as other income on the income statement.
    True.
  22. The purchases account is not classified as a selling expense.
    True.
  23. Income from operations is gross profit minus operating expense.
    True.
  24. The sales discounts account is shown with the other expenses on the income statement.
    False.
  25. Which of the following accounts normally has a debit balance?
    Assets, expenses, losses, and the owner's drawing account.
  26. Second Merchandise Inventory Adjusting Entry.
    In the second adjusting entry (to enter the ending inventory), debit Merchandise Inventory and credit Income Summary.
  27. First Merchandise Inventory Adjusting Entry.
    In the first adjusting entry (to remove the beginning inventory), debit Income Summary and credit Merchandise Inventory.
  28. Wages Payable.
    For accrued wages: debit Wages Expense and credit Wages Payable.
  29. Purchases.
  30. Ending Merchandise Inventory.
  31. Unearned Revenue.
    For unearned revenue: debit the unearned revenue account and credit the revenue account (to record revenue earned).

    Cash received in advance for goods or services to be delivered later; considered to be a liability until the revenue is earned.
  32. Income Summary.
  33. Beginning Merchandise Inventory.

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