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Flashcards in Chp 5 Quiz Deck (25):

Which account is NOT classified as a selling expense?
A. Sales salaries
B. Freight out
C. Sales discounts
D. Advertising expense

C. Sales discounts


Where are the selling and administrative expenses found on the multi step income statement?
A. Before gross profit
B. After sales and before gross profit
C. After net income before expenses
D. After gross profit

D. After gross profit


When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the
A. Account form
B. Comparative form
C. Horizontal form
D. Report form

D. Report form


A chart of accounts for a merchandising business
A. Usually is the same as a service business
B. Requires more accounts than a service business
C. Standardized by the FASB for all merch busi.
D. Always use the three digit numbering system



Which of the following accounts has a normal debit balance?
A. Accounts payable
B. Sales returns and allowances
C. Sales
D. Interest revenue



Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. The freight costs $2,000 and issued a credit memo for $10,000 prior to payment. What is the amount of cash debited to the AP?

B. $150


When comparing a retail business to a service business, the financial statement that changes the most is the

B. Income statement


When merchandise is returned under the perpetual inventory system, the buyer would credit

Merchandise inventory


When goods are shipped FOB destination and the seller pays the freight charges, the buyer

D. Makes no journal entry for freight


Generally, the revenue account for a merchandising business is entitled

A. Sales


Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

C. Administrative expense


If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

C. Credit memo


Isaac co sells merchandise on account to sonar co in the amount of $9600. The invoice is dated on april 15 with terms ** net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to receive the discount?

C. $96 april 30


What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

A. Gross profit


If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

A. FOB shipping point


If title to merchandise purchases passes to the buyer when goods are shipped from the seller, the terms are

FOB shipping point


Multi step income statements show

C. Both gross profit and income from operations


Merchandise inventory is classified as a

B. Current asset


In credit terms of 3/15, n/45, the 3 represents the

D. Percent of the cash discount


Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes

Debit to merchandise inventory


Which is closed to income summary at the end of the fiscal year

D. Cost of merchandise sold


Difference between perpetual and periodic inventory system is that

A. Periodic determines the inventory on hand only at the end of the accounting period


The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of the revenues is called a

D. Single step statement


What is the same between a retail business and service business?

C. Accounting equation


Sales to customers who use bank credit cards such as MasterCard and visa are usually recorded by a

B. Debit to CASH and credit to SALES