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Chapter Quiz
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1
If net sales are greater than cost of goods sold, then the company will report a gross profit.
A)True
B)False
2
A decrease in Sales Discount results in an increase in Net Income.
A)True
B)False
3
Reversing entries are journalized and posted after adjusting and closing entries are journalized and posted.
A)True
B)False
4
On the income statement, the ending merchandise inventory is deducted from goods available for sale to yield income from operations.
A)True
B)False
5
The Income Summary account will appear on a Multiple Step Income Statement.
A)True
B)False
6
Net Sales is Sales minus Sales Returns and Allowances and minus Sales Discount.
A)True
B)False
7
The adjusting entry for supplies used will show a debit to Supplies Expense.
A)True
B)False
8
Accounts whose balances are closed at the end of an accounting period are called temporary accounts
A)True
B)False
9
The calculation of the total goods available for sale is not affected by the amount of the beginning merchandise inventory.
A)True
B)False
10
On the Statement of Owner's Equity, the beginning and ending balances in the owner's Capital account are reported
A)True
B)False
11
On an income statement, Interest Expense is shown under the Other Expenses category.
A)True
B)False
12
On a classified Balance Sheet, the Building account is shown as a Current Asset.
A)True
B)False
13
On a classified Balance Sheet, the Accounts Receivable account is shown as a Current Asset.
A)True
B)False
14
The Sales account balance is closed at the end of an accounting period
A)True
B)False
15
The Accumulated Depreciation account balance is closed at the end of an accounting period
A)True
B)False
16
Which of the following lists of items is used to compute the goods available for sale?
A)delivered cost of purchases, beginning inventory
B)net sales, beginning inventory, ending inventory
C)gross profit, beginning inventory, ending inventory
D)sales, beginning inventory, ending inventory
E)none of these
17
A Classified Balance Sheet has which of the following classification and/or sub classifications
A)owner's equity.
B)current liabilities.
C)current assets.
D)all of these were true.
E)none of these were true.
18
On the income statement, adding delivered cost of purchases to beginning merchandise inventory results in
A)net income or net loss.
B)goods available for sale.
C)cost of goods sold.
D)gross profit.
E)none of these.
19
In the first closing journal entry for a merchandiser, which of the following accounts is closed
A)current assets.
B)plant and equipment.
C)long-term liabilities.
D)current liabilities.
E)none of the above.
20
On an income statement, net sales minus cost of goods sold equals
A)gross profit.
B)goods available for sale.
C)net income.
D)delivered cost of purchases.
E)none of these.
21
Assuming Net Sales is $180,000; Cost of Goods Sold is $79,000; Selling Expenses, $28,500; and General Expenses, $22,800, Gross Profit is
A)$27,700.
B)$207,700.
C)$101,000.
D)$95,300.
E)none of these.
22
If Cash has a balance of $90,000; Equipment is $120,000; Accounts Payable $24,000; Accounts Receivable $106,000 and Insurance Expense $4,000 total assets are
A)$316,000.
B)$340,000
C)$320,000.
D)$210,000.
E)none of these.
23
Assuming Net Sales is $110,000; Cost of Goods Sold is $40,000; Selling Expenses, $10,500; and General Expenses, $1,800, Gross Profit is
A)$57,700.
B)$207,700.
C)$70,000.
D)$110,000.
E)none of these.
24
The post-closing trial balance will include which of the following accounts
A)Income Summary
B)Sales
C)Cash.
D)Owner's Withdrawals
E)none of these
25
Which of the following accounts is closed at the end of an accounting period
A)owner's withdrawal.
B)accounts receivable.
C)accumulated depreciation.
D)unearned revenue.
E)wages payable.
26
Which of the following is the THIRD step of the closing process
A)Close the Withdrawals account to the owner's capital account.
B)Close expense accounts and those accounts used in computing cost of goods sold having debit balances to Income Summary
C)Close revenue accounts and those accounts used in computing cost of goods sold having credit balances to Income Summary
D)Close the Income Summary account to the owner's capital account.
27
Which of the following is the FIRST step of the closing process
A)Close the Withdrawals account to the owner's capital account.
B)Close expense accounts and those accounts used in computing cost of goods sold having debit balances to Income Summary
C)Close revenue accounts and those accounts used in computing cost of goods sold having credit balances to Income Summary
D)Close the Income Summary account to the owner's capital account.
28
Which of the following trial balances is the most accurate to be used to prepare the financial statements of a business
A)the post-closing trial balance.
B)the adjusted trial balance.
C)the unadjusted trial balance.
D)any of these could be used.
29
The Income Summary account would appear on which of the following formal financial statements.
A)Income Statement.
B)Statement of Owner's Equity.
C)Balance Sheet.
D)None of these is correct.
30
The Purchases account would be included in which of the four closing journal entries
A)Closing the Withdrawals account to the owner's capital account.
B)Closing expense accounts and those accounts used in computing cost of goods sold having debit balances to Income Summary
C)Closing revenue accounts and those accounts used in computing cost of goods sold having credit balances to Income Summary
D)Closing the Income Summary account to the owner's capital account.





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