chapter 5 willey plus

Which of the following statements about a periodic inventory system is true? Entry field with correct answer Companies continuously maintain detailed records of the cost of each inventory purchase and sale. The increased use of computerized systems has increased the use of the periodic system. Companies determine cost of goods sold only at the end of the accounting period. The periodic system provides better control over inventories than a perpetual system.

Which of the following statements is correct? Entry field with correct answer A perpetual inventory system provides better control over inventories than does a periodic inventory system. A periodic inventory system computes cost of goods sold each time a sale occurs. A perpetual inventory system computes cost of goods sold only at the end of the accounting period. A periodic inventory system provides better control over inventories than does a perpetual inventory system.

Discount term of 2/10, n/30 mean that a 10% cash discount is available if payment is made within 30 days. the entire invoice is within 30 days Entry field with correct answer True False

Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200? Entry field with correct answer A debit to Freight-out for $200 A debit to Delivery Expense for $200 A debit to Cash for $200 A debit to Inventory for $200

Cosmos Corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21? Entry field with correct answer Credit to Cash for $1,600 Debit to Cash for $1,600 Debit to Accounts Payable for $2,000 Credit to Accounts Payable for $1,600

When credit terms of 1/15, n/60 are offered, how long is the discount period? Entry field with correct answer 15 days 1 day 45 days 60 days

Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 11, what is the cost of this purchase? Entry field with correct answer $4,074 $3,864 $4,200 $3,780

Which of the following items does not result in an entry to the Inventory account under a perpetual system? Entry field with correct answer A return of Inventory to the supplier A purchase of merchandise Payment of freight costs for goods shipped to a customer Payment of freight costs for goods received from a supplier

Sales Returns and Allowances is a contra-revenue account. Entry field with correct answer True False

Sales Discounts is a contra asset account. Entry field with correct answer True False

Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what account will Marsh record this cost in a perpetual inventory system? Entry field with correct answer Inventory Freight-out account Freight-in account Cost of goods sold account

Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase on March 11, what entry does Myers make to record receipt of the payment? Entry field with correct answer Cash 1,800 Sales Discount 36 Accounts Receivable 1,764 Cash 1,764 Accounts Receivable 1,764 Cash 1,800 Sales Returns and Allowances 500 Accounts Receivable 1,300 Cash 1,274 Sales Discount 26 Accounts Receivable 1,300

In a perpetual inventory system, which accounts will the seller credit when merchandise is returned by a customer? Entry field with correct answer Accounts Receivable and Cost of Goods Sold Sales Returns and Allowances and Accounts Receivable Inventory and Cost of Goods Sold Sales Returns and Allowances and Inventory

Which statement is true for the seller? Entry field with correct answer The Sales Returns and Allowances account is debited for defective merchandise returned by a customer. The Sales Discounts account is debited for defective merchandise returned by a customer. The Sales Returns and Allowances account is credited for defective merchandise returned by a customer. The Sales Discounts account is credited for defective merchandise returned by a customer.

Which of these accounts normally have a debit balance? Entry field with correct answer Sales Discounts only Sales Returns and Allowances only Both Sales Discounts and Sales Returns and Allowances Neither Sales Discount nor Sales Returns and Allowances

Which statement is true when recording the sale of goods for cash in a perpetual inventory system? Entry field with correct answer Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory. Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and to reduce inventory. Only one journal entry is necessary. It will record the receipt of cash and sales revenue. Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the the cost of goods sold and sales revenue. SHOW ANSWER

Gross profit is the difference between net sales and cost of goods sold. Entry field with correct answer True False

Sales revenue total to $10,000. Sales returns and allowances are $500 and sales discounts are $1,000. How much is net sales? Entry field with correct answer $10,500 $10,000 $8,500 $11,500

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold? Entry field with correct answer $40,000 $60,000 $35,000 $15,000

Which of the following is classified in an income statement as a nonoperating activity? Entry field with correct answer Interest expense Cost of goods sold Advertising expense Freight-out

Which of the following is classified in an income statement as a nonoperating activity? Entry field with correct answer Returning merchandise Receiving an allowance for merchandise damaged in shipment Paying for a purchase of inventory Receiving dividend revenue from an investment

Assume that sales revenue are $450,000, sales discounts are $10,000, net income is $35,000, and cost of goods sold is $320,000. How much are gross profit and operating expenses, respectively? Entry field with correct answer $120,000 and $85,000 $130,000 and $85,000 $130,000 and $95,000 $120,000 and $95,000

Which one of the following will result in gross profit? Entry field with correct answer Sales revenue less cost of goods sold Sales revenue less operating expenses Operating expenses less cost of goods sold Operating expenses less net income

If beginning inventory is $60,000, cost of goods purchased is $380,000, sales revenue is $800,000 and ending inventory is $50,000, how much is cost of goods sold under a periodic system? Entry field with correct answer $390,000 $410,000 $420,000 $440,000

Under what system is cost of goods sold determined at the end of an accounting period? Entry field with correct answer Double entry inventory system Perpetual inventory system Periodic inventory system Single entry inventory system

Beginning inventory is $12,000: purchases are $34,000: sales revenue are $60,000: and cost of goods sold is $31,000. How much is ending inventory? Entry field with correct answer $15,000 $31,000 $46,000 $14,000

A company has the following account balances: Sales revenue $2,000,000: Sales Returns and Allowances $250,000: Sales Discounts $50,000: and Cost of Goods Sold $1,275,000. How much is the gross profit rate? Entry field with correct answer 51% 64% 25% 36%

Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is the gross profit rate? Entry field with correct answer 75.0% 46.7% 26.7% 20.0%

Which of the following would affect the gross profit rate if sales remain constant? Entry field with correct answer A decrease in insurance expense A decrease in depreciation expense An increase in cost of goods sold An increase in advertising expense

To what is the gross profit rate equal? Entry field with correct answer Net income divided by net sales Sales minus cost of goods sold, divided by cost of goods sold Cost of goods sold divided by net sales Net sales minus cost of goods sold, divided by net sales

Which factor would not affect the gross profit rate? Entry field with correct answer An increase in the sale of luxury items An increase in the cost of heating the store An increase in the use of "discount pricing" to sell merchandise An increase in the price of inventory items