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| 1.
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Gross profit from sales is the difference between |
| | A) | net sales and operating expenses |
| | B) | net sales and the cost of goods sold |
| | C) | net sales and the cost of goods sold plus all the expenses |
| | D) | gross sales less the sales discounts and sales returns and allowances |
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| 2.
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The buyer received an invoice from the seller for merchandise with a list price of $400 and credit terms of 210, n60. The number 10 in the credit terms is the |
| | A) | credit period |
| | B) | cash discount allowed for early payment of the invoice |
| | C) | discount period |
| | D) | ade discount |
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| 3.
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The records for Uptown Pet Shop showed the following: | Sales | $75,000 | Beginning merchandise inventory | $10,000 | | Purchases | 45,000 | Cost of goods sold | 50,000 |
The ending merchandise inventory must have been: |
| | A) | $5,000 |
| | B) | $15,000 |
| | C) | $25,000 |
| | D) | $40,000 |
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| 4.
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Under the periodic inventory system, the Purchases account is used to record |
| | A) | only cash purchases of merchandise inventory |
| | B) | purchases of any asset on account or note payable |
| | C) | only purchases of merchandise inventory on account |
| | D) | purchases of merchandise inventory for cash or on account |
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| 5.
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The Sun Set Shade Company purchased three pieces of office equipment for a total price of $2,100. One piece of equipment costing $800 was damaged on delivery and was returned to the vendor. The invoice has not been paid. The proper journal entry for the return is |
| | A) | Merchandise Inventory, debit, $800; Accounts Payable, credit, $800 |
| | B) | Acc. Payable, debit, $800; Merchandise Inventory, credit, $800 |
| | C) | Accounts Payable, debit $800; Office Equipment, credit, $800 |
| | D) | Accounts Payable, debit $2,100; Purchases, credit, $2,100 |
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| 6.
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| Sales | $95,000 | Beginning merchandise inventory | $10,000 | | Purchases | 45,000 | Gross profit from sales | 50,000 | | Transportation-In | 500 | Purchases discounts | 1,000 |
The ending merchandise inventory (periodic) |
| | A) | must be $5,000 |
| | B) | must be $6,000 |
| | C) | must be $9,500 |
| | D) | must be $10,000 |
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| 7.
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Which of the following is used to determine the cost of goods available for sale (periodic inventory)? |
| | A) | beginning merchandise inventory + purchases + ending merchandise inventory |
| | B) | ending merchandise inventory + purchases - freight charges |
| | C) | beginning merchandise inventory + purchases - freight charges |
| | D) | beginning merchandise inventory + purchases - purchases discount + freight charges |
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| 8.
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Under a perpetual inventory system merchandise is purchased on account. The correct journal entry for this purchase will be a |
| | A) | debit to Purchases and a credit to Cash |
| | B) | debit to Merchandise Inventory and a credit to Accounts Payable |
| | C) | debit to Merchandise Inventory and a credit to Cash |
| | D) | debit to Purchases Returns and a credit to Cost of Goods Sold |
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| 9.
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Under a perpetual inventory system part of the merchandise purchased on account at an earlier time is now being returned. None of the goods have been paid for. The correct journal entry for this return will be a |
| | A) | debit to Cash and a credit to Purchases |
| | B) | debit to Merchandise Inventory and a credit to Accounts Payable |
| | C) | debit to Accounts Payable and a credit to Merchandise Inventory |
| | D) | debit to Purchases Returns and a credit to Cost of Goods Sold |
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| 10.
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Under a perpetual inventory system supplies are purchased for cash. The correct journal entry for this purchase will be a |
| | A) | debit to Purchases and a credit to Cash |
| | B) | debit to Merchandise Inventory and a credit to Cash |
| | C) | debit to Supplies and credit Cost of Goods Sold |
| | D) | debit to Supplies and a credit to Cash |
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| 11.
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An item of merchandise was sold with an invoice price of $400 and credit terms of 210, n30. The entry to record the sale would include a credit to Sales of |
| | A) | $400.00 |
| | B) | $396.00 |
| | C) | $408.00 |
| | D) | $392.00 |
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| 12.
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An item of merchandise was sold for $800 cash by a business using the perpetual inventory system. The product sold cost the business $600. After the sale entry has been recorded, a second entry will |
| | A) | debit Cash and credit Sales for $800 |
| | B) | debit Sales and credit Merchandise Inventory for $600 |
| | C) | debit Cost of Goods Sold and credit Merchandise Inventory $600 |
| | D) | debit Merchandise Inventory and credit Cost of Goods Sold $800 |
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| 13.
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Under the periodic inventory system, which of the following is a correct closing entry? |
| | A) | Income Summary, debit; Sales, credit |
| | B) | Income Summary, credit; Sales Returns and Allowances, debit |
| | C) | Income Summary, debit; Merchandise Inventory (beginning), credit |
| | D) | Purchases, debit; Income Summary, credit |
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| 14.
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When ____________________________, the cost of goods sold will be the same as the cost of purchases. |
| | A) | there is no beginning merchandise inventory (first year of business) |
| | B) | there is no ending merchandise inventory |
| | C) | purchases are equal to net sales |
| | D) | the beginning and ending merchandise inventory values are the same |
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| 15.
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An item of merchandise with a list price of $100 was purchased with a trade discount of 40% and credit terms of 210, n30. If the vendor is paid within the discount period, the journal entry to record the payment would be |
| | A) | Purchases, dr., $100.00; Purchase Discounts, cr., $42.00; Cash, cr., $58.00 |
| | B) | Accounts Payable, dr., $60.00; Purchase Discounts, cr., $1.20; Cash, cr., $58.80 |
| | C) | Accounts Payable, dr., $100.00; Purchase Discounts, cr., $42.00; Cash, cr., $58.00 |
| | D) | Accounts Payable, dr., $40.00; Purchase Discounts, cr., $.80; Cash, cr., $39.20 |
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| 16.
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If gross sales is $40,000, sales returns and allowances $1,000, sales discounts $400, and delivery expenses $100, the net sales of the business will total |
| | A) | $38,500 |
| | B) | $38,600 |
| | C) | $40,000 |
| | D) | $39,000 |
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| 17.
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Which of the following statements is true regarding closing entries for periodic inventory system? |
| | A) | Beginning inventory is credited and Ending inventory is debited. |
| | B) | Sales, sales discount, sales returns and allowances are debited, and Income Summary account is credited. |
| | C) | Purchase, purchase discount, purchase returns and allowances are credited, Income summary account is debited. |
| | D) | Cost of goods sold is credited and Income Summary account is debited. |
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| 18.
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Tylex Company's net sales are $288,000, cost of goods sold is $162,000. What is Tylex's gross profit (margin) ratio? |
| | A) | $126,000 |
| | B) | 43.75% |
| | C) | 56.25% |
| | D) | 77.78% |
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| 19.
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Which of the following entries is correct for recording merchandise inventory discount for a payment in a perpetual inventory system. |
| | A) | Debit Accounts Payable, credit Purchase Discounts, and Cash. |
| | B) | Debit Accounts Payable, credit Merchandise Inventory, and Cash. |
| | C) | Debit Cash, and Purchase Discounts, credit Accounts Payable. |
| | D) | Debit Cash, and Merchandise Inventory, credit Accounts Payable. |
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| 20.
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Under the perpetual inventory system, the return of previously purchased office supplies should be recorded as: |
| | A) | Debit Accounts Payable, credit Merchandise Inventory. |
| | B) | Debit Accounts Payable, credit Purchase Returns. |
| | C) | Debit Office Supplies, credit Accounts Payable. |
| | D) | Debit Accounts Payable, credit Office Supplies. |
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