acct test 2

Question 1

Periodic cost of inventory formula

Answer 1

Beginning Inventory 
\+ purchases
 = COG available for sale
 - ending inventory
 = COGS

Question 2

COG available for sale formula

Answer 2

beginning inventory

+ purchases

Question 3

COGS formula

Answer 3

COGS Available for sale

- ending inventory

Question 4

Perpetual inventory

Answer 4

happens in real time, still must do a physical count at least annually

Question 5

Cash Purchases. DE CR

Answer 5

debit inventory.

credit cash

Question 6

Credit Purchases DE CR

Answer 6

debit inventory.

credit accounts payable

Question 7

Purchase returns and allowances. DE CR

Answer 7

debit account payable.

credit inventory

Question 8

purchase discount expressed ex. 3/15, n/30

Answer 8

3% if paid in full with 15 days, no discount if paid within 30 days

Question 9

purchase discount DE CR (hint there are 3 entries)

Answer 9

debit accounts payable. 
credit cash(payment). 
credit inventory(discount).

Question 10

cash sales DE CR

Answer 10

debit cash.
credit sales revenue.
debit COGS.
credit inventory

Question 11

credit sales DE CR

Answer 11

debit accounts receivable.
credit sales revenue.
debit COGS.
credit inventory

Question 12

sales return is what kind of account

Answer 12

contra asset revenue

Question 13

the difference between sales return and sales allowance

Answer 13

sales return(didnt like) 
sales allowance(inventory destroyed)

Question 14

sales return DE CR

Answer 14

debit sales return and allowances.
credit accounts receivable.
debit inventory.
credit COGS

Question 15

sales allowances DE CR

Answer 15

debit sales return and allowances.
credit accounts receivable.
nothing with inventory as inventory was not logged

Question 16

sales discount is what kind of account

Answer 16

contra revenue account

Question 17

sales discount DE CR(3 entries)

Answer 17

debit cash.
debit sales discount.
credit accounts receivable

Question 18

net sales formula

Answer 18

gross sales
minus
sales returns
minus
sales discount

Question 19

FOB

Answer 19

free on board

Question 20

FOB shipping point

Answer 20

buyer pays freight charges.

inventory cost increases

Question 21

FOB Destination

Answer 21

seller pays delivery expenses

selling cost increases

Question 22

other selling costs

Answer 22

salaries
advertising
depreciation
delivery

Question 23

gross profit formula

Answer 23

net sales
minus
cogs

Question 24

assets on classified balance sheet(current)

Answer 24

will be converted to cash, sold or used up within the next year
examples:
cash
accounts receivable
prepaid expenses
inventory

Question 25

assets on the classified balance sheet(long term)

Answer 25

all other, non-current assets
example
land
buildings
furniture

Question 26

liabilities on the classified balance sheet(current)

Answer 26

must be paid or fulfilled within a year
example
accounts payable
salaries payable
unearned revenue

Question 27

liabilities on the classified balance sheet(long term)

Answer 27

obligations that extend beyond one year
examples
mortgage payable
notes payable

Question 28

Gross profit percentage

Answer 28

gross profit(net sale minus COGS)
divided by
net sales revenue
(gross sales-sales return-sales discount)

Question 29

net income percentage

Answer 29

net income(revenues-expense)
divided by
net sales revenue

Question 30

normal balance of debit

Answer 30

Assets
Dividends
Expenses
or ADE

Question 31

normal balance of credit

Answer 31

Liabilities
Common Stock
Revenues
Retained earnings

Question 32

Cost assigned to inventory item when sold is the actual cost paid for the item; cost flow through accounting records exactly matches physical flow of goods

Answer 32

Specific Identification

Question 33

Assumes earliest inventory costs are assigned to items when sold; cost flow through accounting records will closely match physical flow of goods.

Answer 33

FIFO; first in first out

Question 34

Assumes most recent inventory costs are assigned to items when sold; cost flow through accounting records will be nearly opposite of physical flow of goods

Answer 34

LIFO; last in first out

Question 35

assumes a weighted-average cost per item is assigned as items as sold; cost of good sold and ending inventory will fall between amounts determined by FIFO and LIFO

Answer 35

Average Cost

Question 36

how accounting records reflect cost of goods sold using inventory costing method business has chosen

Answer 36

Cost Flow

Question 37

How goods are stocked and how they are removed when sold

Answer 37

Physical flow

Question 38

Inventory turnover formula

Answer 38

COGS / AVG Inventory((Beginning Inventory+Ending Inventory) /2)

Question 39

Days Sales In Inventory formula

Answer 39

AVG Inventory((Beginning Inventory+Ending Inventory) /2) / (COGS/365)