Which of the following is classified as a plant asset?
answer
Office equipment
question
Assets, liabilities, and equity accounts are not closed; these accounts are called:
answer
permanent accounts
question
Tara Westmont, the proprietor of Tiptoe Shoes, had annual revenues of $185,000, expenses of $103,700, and withdrew $18,000 from the business during the current year. The owner's capital account before closing had a balance of $297,000. The Net Income for the year is:
answer
$81,300
question
The following information is available for Zephyr Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Zephyr, Capital account?
Net Income $115,000
Zephyr, Capital 110,000
Zephyr, Withdrawals 39,000
answer
$186,000
question
Temporary accounts include all of the following except:
Consulting revenue.
Withdrawals.
Rent expense.
Prepaid rent.
Income Summary.
answer
Prepaid rent.
question
Which of the following statements about a company's operating cycle is not true:
Non-current items are those expected to come due within one year or the company's operating cycle
The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services.
The length of a company's operating cycle depends on its activities.
For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers.
answer
Non-current items are those expected to come due within one year or the company's operating cycle.
question
The following information is available for Brendon Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Brendon, Capital?
J. Brendon, Capital $ 112,000
J. Brendon, Withdrawals 32,000
Fees earned 187,000
Depreciation Expense—Equipment 12,000
Wages expense 71,400
Interest expense 3,300
Insurance expense 11,700
Rent expense 24,200
answer
$64,400
question
It is obvious that an error occurred in the preparation and/or posting of closing entries if:
all revenue and expense accounts have zero balances.
the owner's capital account is debited for the amount of the net loss for the period.
the income summary account is debited for the amount of net income for the period.
all balance sheet accounts have zero balances.
only permanent accounts appear on the post-closing trial balance.
answer
all balance sheet accounts have zero balances.
question
The following information is available for the Higgins Travel Agency. After closing entries are posted, what will be the balance in the C. Higgins, Capital account?
Net Income $ 42,500
C. Higgins, Capital 130,000
C. Higgins, Withdrawals 12,000
answer
$160,500.
question
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals:
answer
$1,600
question
Which of the following accounts would be closed at the end of the accounting period with a debit?
answer
Sales
question
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:
A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $500, was added to the invoice amount. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:
Prentice Company had cash sales of $94,275, credit sales of $83,450, sales returns and allowances of $1,700, and sales discounts of $3,475. Prentice's net sales for this period equal:
answer
$172,550
question
Cushman Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:
answer
$450,000
question
The operating cycle for a merchandiser that sells only for cash moves from:
answer
Purchases of merchandise to inventory to cash sales.
question
Fragment Company is a wholesaler that sells merchandise in large quantities. Its catalog indicates a list price of $300 per unit on a particular product and a 40% trade discount is offered for quantity purchases of 50 units or more. The cost of shipping the merchandise is $7 per unit under terms FOB shipping point. If a customer purchases 100 units of this product, what is the amount of sales revenue that Fragment will record from this sale?
answer
$18,000
question
Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:
An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:
answer
Single-step income statement.
question
The inventory turnover ratio is calculated as:
answer
Cost of goods sold divided by average merchandise inventory.
question
Perfection Company had cost of goods sold of $853,000, ending inventory of $70,500, and average inventory of $71,600. Its inventory turnover equals:
answer
11.9
question
During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is:
answer
FIFO method
question
Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to the ending inventory using FIFO.
Date Activities UnitsAcquiredCost UnitsSoldRetail
May 1 BegInv 150 units @ $10.00
5 Purchase 220 units @ $12.00
10 Sales 140 units @ $20.00
15 Purchase 100 units @ $13.00
24 Sales 90 units @ $21.00
A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's current inventory consists of 200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit. What is the amount of the lower cost of market adjustment the company must make as a result of this decline in value?
answer
$600
Explain: 200 units * ($16 - $13) = $600
question
Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows:
Year 1 Year 2
Beg inv $120,000 $ 130,000
COGP 250,000 275,000
COGAFS 370,000 405,000
End inv 130,000 135,000
COGS $ 240,000 $ 270,000
Lucia Company made two errors: 1) ending inventory at the end of Year 1 was understated by $15,000 and 2) ending inventory at the end of Year 2 was overstated by $6,000. Given this information, the correct cost of goods sold figure for Year 2 would be:
answer
$291,000
Explain: If ending inventory for Year 1 was reported at $130,000 but was understated by $15,000, the correct ending inventory figure for Year 1 was $145,000. That amount becomes the beginning inventory for Year 2. Add to that amount the $275,000 of cost of goods purchased in Year 2 and you get cost of goods available for sale of $420,000. Finally, the reported ending inventory figure for Year 2 of $135,000 was overstated by $6,000. Thus, the correct ending inventory figure for Year 2 was $129,000. Subtracting ending inventory of $129,000 from cost of goods available for sale of $420,000 yields cost of goods sold of $291,000.
question
Giorgio had cost of goods sold of $9,421 million, ending inventory of $2,089 million, and average inventory of $1,965 million. Its inventory turnover equals:
answer
4.79.
question
A company's inventory records report the following:
August 1 Beginning balance 15 units @ $12
August 5 Purchase 10 units @ $13
August 12 Purchase 20 units @ $14
On August 15, it sold 30 units. Using the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?
answer
$210
question
The inventory turnover ratio:
answer
Reveals how many times a company sells its merchandise inventory during a period.
question
Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000, credit terms 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.
