Exam2

Question 1

Cogs =

Answer 1

(Beginning inventory + total $ of merch) - ending inventory

Afs-ei = cogs

Question 2

Gross profit =

Answer 2

Sales - cogs

Question 3

Net income =

Answer 3

Gross profit-expenses
( sales revenue - cogs - other expenses)

Question 4

Total merch =

Answer 4

Ending inventory - beginning inventory +cogs

Question 5

Periodic inventory system

Answer 5

Cogs are recorded at the end of the period (less expensive)

Question 6

Beg inventory + net purchase =

Answer 6

Merch available for sale (AFS)

Question 7

Beginning inventory+ net purchases =

Answer 7

Goods available for sale

Question 8

GAFS - ending inventory =

Answer 8

Cogs

Question 9

Net sales - cogs =

Answer 9

gross profit

Question 10

Purchased inventory for $500 cash what journal entry should they record?

Answer 10

Dr inventory $500
Cr cash $500

Question 11

2/ 10 n/60

Answer 11

2% discount,10 days
Must pay by day 60

Question 12

Gross method for recording purchases

Answer 12

Inventory isrecorded at full amount disregarding discounts

Question 13

bank purchases inventory for $1000 on credit terms 2/10, n/30, paid day 15 what is the general entry?

Answer 13

Dr inventory $1000
Cr A/P $1000

Question 14

Cost principle

Answer 14

Record the asset for what we actually paid for it

Question 15

Purchased inventory for $1000 on credit terms 2/10, n/30 assuming they pay on day 10 what is the general entry?
After day 10?

Answer 15

Dr a/p $1000
Cr inventory $20
Cr cash $980

Dr A/ P $1000
cr cash $1000

Question 16

$250 purchase on credit with $75 allowance
Record purchase and allowance

Answer 16

Purchase:
Dr inventory $250
Cr A/P $250

Allowance:
Dr a/p $75
cr inventory $75

Question 17

bank spent $250 on purchase and returned a $50 piece

Answer 17

Purchase:
Dr inventory $250
Cr a/p $250

Return:
Dr a/p $50
cr inventory $50

Question 18

Fob shipping and journal entry

Answer 18

Ownership transfers from seller to buyer when good leaves business
Debit merchandise inventory
Credit cash

Question 19

Fob destination and journal entry

Answer 19

Ownership transfers from seller to buyer when goods arrive at buyer
Debit delivery expense
Credit cash

Question 20

Bank returned $50 inventory, record journal entry

Answer 20

Dr a/p $50
cr inventory $50

Question 21

Cogs is a _______ account

Answer 21

Expense

Question 22

Net purchases + beginning inventory

Answer 22

Available for sale ( AFS )

Question 23

To record a return as seller

Answer 23

Debit inventory
Credit cogs

Question 24

A multistep income statement includes

Answer 24

Gross profit, income statement of operations, net income, operating expenses

Question 25

Selling expenses include

Answer 25

Depreciation expense Salesperson salary expense Rent expense Supplies expense Advertising expense

Question 26

General and administrative expenses

Answer 26

Office depreciation expense Office salaries Office insurance Office rent Office supplies

Question 27

non-operating activities income examples

Answer 27

Interest income Dividend income Rent income Gains from asset disposals Interest expense Losses on dispositions

Question 28

Merch inventory includes all the

Answer 28

Goods the company owns and has available for sale

Question 29

Damaged goods aren't always

Answer 29

0$

Question 30

Merchandise inventory cost =

Answer 30

Invoice cost - discounts- other costs ( shipping, storage, import duties, insurance)

Question 31

Specific identification

Answer 31

Assumes each inventory can be matched with a specific purchase invoice

Question 32

Weighted average

Answer 32

Assumes cost flow at an average of the costs available

Question 33

Net sales - cogs =

Answer 33

Gross profit

Question 34

Weighted average cost per unit =

Answer 34

Cost of goods available for sale/ number of units available for sale

Question 35

When costs rise FIFO When costs fall FIFO and results in

Answer 35

Reports lowest cogs Reports highest cogs Results in lowest gross profit and net income

Question 36

When costs rise LIFO When costs fall LIFO

Answer 36

Reports highest cogs Reports lowest cogs Results in highest gross profit and net income