Chapter 5 Quiz Questions PDF

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Chapter 5 Quiz Lincoln Glass Company sold goods for $5,000 to Olivia Company on March 12 on credit. Terms of the sale were 3/10, n/30. At the time of the sale, Lincoln recorded the transaction by debiting accounts receivable for $5,000 and crediting sales revenue for $5,000 while Olivia debited Purchases for $5,000 and credited Accounts Payable for $5,000. Olivia paid the balance due, less the discount, on March 21. To record the March 21 transaction, Olivia would debit which of the following? 1 Accounts payable for $5,000 2 Cash for $5,000 3 Cash for $4,850 4 Accounts payable for $4,850 5 None of the others alternatives are correct

Answer: 1 The cost of goods sold (COGS) in a periodic inventory system is found by 1 deducting the cost of the ending inventory from the net cost of purchases 2 deducting the cost of beginning inventory from the cost of goods available for sale 3 deducting the cost of ending inventory from the cost of goods available for sale 4 adding the net cost of purchases to the ending inventory 5 None of the others alternatives are correct

Answer: 3 Brady Inc., had credit card sales of $50,000 for the month of July. The credit card company charges a 3% service charge for processes the sale. How much will Brady Inc., receive when payment is received from the credit card company? 1 $48,500 2 There is insufficient information to determine this 3 $50,000 4 3% of $50,000 5 $51,500

Answer: 1 At the end of the month Main Ltd. determined that the cost of goods that had been sold during the month was $125,000. How might this information be recorded? 1 A decrease in inventory of $125,000 and an increase in expenses of $125,000 2 The information is not recorded as no economic event had taken place. 3 An increase in expenses of $125,000 and an increase in accounts payable of $125,000 4 An increase in inventory of $125,000 and a decrease in cash of $125,000. 5 None of the others alternatives are correct

Answer: 1

A company purchases $25,000 of inventory in January 20X6, pays for it in March 20X6 and sells them in May 20X6. The accounting period ends on December 31st. Which of the following statements is correct? 1 The 20X6 Statement of Retained Earnings will not be affected by this transaction 2 None of the others alternatives are correct 3 The statement of cash flows for 20X6 will report an operating cash outflow of $25,000 4 The company will report accounts payable of $25,000 in 20X6 Balance Sheet 5 The 20X5 income statement will report the $25,000 as cost of goods sold

Answer: 3 If a company returns an item to a supplier, the supplier will record the return as: 1 None of the above 2 Shrinkage 3 Sales returns & allowances 4 Sales discounts 5 Purchase returns & allowances

Answer: 3 A company purchases $25,000 of inventory in November 20X6, pays for it in December 20X6 and sells them in March 20X7. The accounting period ends on December 31st. Which of the following statements is correct? 1 The statement of cash flows for 20X6 will report an operating cash outflow of $25,000 2 The 20X6 income statement will report the $25,000 as cost of goods sold 3 The 20X6 Statement of Retained Earnings will be affected by this transaction 4 The company will report accounts payable of $25,000 in 20X6 Balance Sheet 5 None of the others alternatives are correct

Answer: 1 Which of these transactions did not result in revenue being reported: 1 Sold merchandise for cash 2 None of a, b, or c result in revenue being reported 3 All of the above result in revenue being reported 4 Collected account receivable 5 Sold merchandise on account

Answer: 4 A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Inventory and Cr. Accounts Payable 1 Just-in-time system 2 Perpetual system 3 Periodic system 4 None of the others alternatives are correct 5 Specific identification system

Answer: 2

Bag Company buys on account $1,000 of merchandise from Cart Company subject to terms 2/10 n/30 on Feb 1. On Feb 2 it returns $200 worth of merchandise for full credit. Bag pays its balance in full on Feb 5. Bag would write a cheque on Feb 5 for: 1 $780 2 $1,000 3 $800 4 $784 5 None of the above

Answer: 4 The 20X5 records of Western Company showed beginning inventory, $80,000; cost of goods sold, $460,000; and ending inventory, $90,000. The purchases for 20X5 equal: 1 None of the others alternatives are correct 2 $450,000 3 $470,000 4 $480,000 5 $410,000

Answer: 3 Revenue should not be recognized by a firm: 1 a, b and c are all correct statements 2 when cash is received if the accrual method is being used 3 until title to the goods sold has passed if goods are in transit at year end 4 normally before goods are shipped 5 a, b and c are all incorrect statements

Answer: 3 Atkinson Corporation sold merchandise with an invoice price of $3,000 to Zoltan, Inc., with terms of 4/10, n/30. In the books of Zoltan, which of the following is the correct entry to record the payment by Zoltan within the 10 days if the company uses the periodic inventory system and the gross method to record purchases? Answer: Dr. Accounts Payable 3,000 Cr. Cash 2,880 Cr. Purchase Discount 120 The 20X5 records of Western Company showed beginning inventory, $100,000; cost of goods sold, $400,000; and ending inventory, $200,000. The amount of inventory to be reported in the Balance Sheet of 20X4 is: 1 $500,000 2 $200,000 3 $300,000 4 $400,000 5 $100,000

Answer: 5

A company reports its 20X4 cost of goods sold at $10 million. Its ending inventory for 20X4 is $1.5 million and for 20X3, ending inventory was $1.2 million. How much inventory did the company purchase during 20X4? 1 $13.3 million 2 $12.7 million 3 None of the others alternatives are correct 4 $13.0 million 5 $10.3 million

Answer: 5 The following amounts have been extracted from the accounts of Sell-It at its year-end, December 31, 20x9: Sales $50,000 Cost of Goods Sold $43,000 Inventory $10,000 Account Payable $8,000 If an error were made computing Sell-its ending inventory and inventory were understated by $2,000 then: 1 None of the others alternatives are correct 2 Cost of goods sold is understated 3 gross profit is understated by $2,000 4 liabilities are overstated by $2,000 5 net income is overstated by $2,000

Answer: 3 A company purchases $25,000 of inventory in November 20X6, pays for it in December 20X6 and sells them in March 20X7. The accounting period ends on December 31st. Which of the following statements is correct? 1 None of the others alternatives are correct 2 The company will report accounts payable of $25,000 in 20X6 Balance Sheet 3 The 20X6 Statement of Retained Earnings will not be affected by this transaction 4 The statement of cash flows for 20X7 will report an operating cash outflow of $25,000 5 The 20X6 income statement will report the $25,000 as cost of goods sold

Answer: 3 Which of the following documents does not initiate an entry being made in the accounts 1 Sales invoice 2 Credit memo 3 Purchase invoice 4 Purchase order 5 None of the others alternatives are correct

Answer: 4

A company purchases $25,000 of inventory in January 20X6, pays for it in March 20X6 and sells them in May 20X6. The accounting period ends on December 31st. Which of the following statements is correct? 1 The statement of cash flows for 20X5 will report an operating cash outflow of $25,000 2 The 20X5 Statement of Retained Earnings will not be affected by this transaction 3 The company will report accounts payable of $25,000 in 20X6 Balance Sheet 4 The 20X5 income statement will report the $25,000 as cost of goods sold 5 None of the others alternatives are correct

Answer: 2 A company reports its 20X4 purchases at $13 million. Its ending inventory for 20X4 is $1.5 million and for 20X3, ending inventory was $1.2 million. How much cost of goods sold did the company report in 20X4? 1 $13.0 million 2 $13.3 million 3 $10.3 million 4 $12.7 million 5 None of the others alternatives are correct

Answer: 4 The following amounts have been extracted from the accounts of Sell-It at its year-end, December 31, 20x9: Sales $50,000 Cost of Goods Sold $45,000 Inventory $10,000 Account Payable $8,000 The gross profit which Sell-it would report is 1 $5,000 2 $40,000 3 $42,000 4 $50,000 5 None of the others alternatives are correct

Answer: 1 A company purchases $25,000 of inventory in January 20X6 and will pay for it in March 20X6, which of the following statements is false? 1 None of the others alternatives are correct 2 None of the others specific alternatives are correct 3 The income statement will report the $25,000 as cost of goods sold in January 2016 when they are purchased 4 The company will report accounts payable of $25,000 in February 2016 5 The statement of cash flows will report an operating cash outflow of $25,000 in March 2016

Answer: 3

Lincoln Glass Company sold goods for $5,000 to Olivia Company on March 12 on credit. Terms of the sale were 3/10, n/30. At the time of the sale, Lincoln recorded the transaction by debiting accounts receivable for $5,000 and crediting sales revenue for $5,000 while Olivia debited Purchases for $5,000 and credited Accounts Payable for $5,000. Olivia paid the balance due, less the discount, on March 21. To record the March 21 transaction, Olivia would credit which of the following? 1 Cash for $4,850 2 None of the others alternatives are correct 3 Discount gained $150 4 Discount lost $150 5 Cash for $5,000

Answer: 3 On January 1, 20X7, the ledger of Conglomo Corporation correctly showed supplies inventory of $900. During 20X7, supplies purchases amounted to $6,000. A count (inventory) of supplies on hand at December 31, 20X7, showed $1,800. The 20X7 Balance Sheet statement should report supplies amounting to: 1 $6,000 2 $1,800 3 $6,900 4 $5,100 5 None of the others alternatives are correct

Answer: 2 On January 1, 20X7, the ledger of Conglomo Corporation correctly showed supplies inventory of $1,000. During 20X7, supplies purchases amounted to $6,000. A count (inventory) of supplies on hand at December 31, 20X7, showed $2,000. The 20X6 Balance Sheet statement should report supplies amounting to: 1 $5,000 2 $7,000 3 None of the others alternatives are correct 4 $6,000 5 $2,000

Answer: 3 A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Purchases and Cr. Accounts Payable 1 Specific identification system 2 Perpetual system 3 Just-in-time system 4 Periodic system 5 None of the others alternatives are correct

Answer: 4

A company reports its 20X4 cost of goods sold at $10 million. Its ending inventory for 20X4 is $1.5 million and for 20X3, ending inventory was $1.2 million. How much inventory did the company purchase during 20X4? 1 None of the others alternatives are correct 2 $13.3 million 3 $12.7 million 4 $10.3 million 5 $13.0 million

Answer: 4 Which of the following accounts are increased by credits and decreased by debits? 1 Purchase Returns & Allowances 2 Retained Earnings 3 Accumulated Depreciation 4 Allowance for Doubtful Accounts 5 All of the above

Answer: 5 On January 15, Frazier Company received merchandise for resale from its normal supplier. The invoice price was $3,600 with terms of 4/10, n/30 for 100 units of Part #345. The invoice was paid on January 19. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the unit cost that should be recorded for each of the 100 units of Part # 345? 1 $37.20 2 $36.00 3 $34.56 4 None of the others alternatives are correct 5 $35.76

Answer: 5 Atkinson Corporation sold merchandise with an invoice price of $5,000 to Zoltan, Inc., with terms of 5/10, n/30. In the books of Zoltan, which of the following is the correct entry to record the payment by Zoltan within the 10 days if the company uses the perpetual inventory system and the gross method to record purchases? Answer: Dr. Accounts Payable 5,000 Cr. Cash 4,750 Cr. Purchase Discount 250

Lincoln Glass Company sold goods for $5,000 to Olivia Company on March 12 on credit. Terms of the sale were 3/10, n/30. At the time of the sale, Lincoln recorded the transaction by debiting accounts receivable for $5,000 and crediting sales revenue for $5,000 while Olivia debited Purchases for $5,000 and credited Accounts Payable for $5,000. Olivia paid the balance due, less the discount, on March 21. To record the March 21 transaction, Lincoln would debit which of the following? 1 None of the others alternatives are correct 2 Accounts receivable for $5,000 3 Cash for $4,850 4 Cash for $5,000 5 Accounts receivable for $4,850 Answer: 3 Sales of $1000 are made by Acme Ltd. to Deuce Ltd. with sales terms of 2/10 net 30 and all the goods are returned by the customer within the discount period. Acme follows the "gross method "of recording sales and Deuce follows the net method of recording Purchases. Acme agrees to the return. 1 The two journal entries by Acme and Deuce will be for different amounts. 2 Acme will credit a contra account and reduce its receivable 3 The two journal entries for Acme and Deuce will be for identical amounts 4 none of the above statements are correct 5 Deuce will debit a contra account and reduce its payable Answer: 1 The 20X5 records of Western Company showed beginning inventory, $80,000; cost of goods sold, $460,000; and ending inventory, $90,000. The purchases for 20X5 equal: 1 $470,000 2 $480,000 3 $450,000 4 $410,000 5 None of the others alternatives are correct Answer: 1 When a company uses the periodic inventory system in accounting for its merchandise inventory, which of the following is true? 1 The inventory account is updated throughout the year as purchases are made 2 The inventory account is updated after each sale. 3 Purchases are recorded in the cost of goods sold account. 4 Cost of goods sold is computed at the end of the accounting period rather than at each sale 5 None of the others alternatives are correct Answer: 4

At the end of the month Main Ltd. determined that the cost of goods that had been sold during the month was $125,000. How might this information be recorded? 1 The information is not recorded as no economic event had taken place. 2 An increase in inventory of $125,000 and a decrease in cash of $125,000. 3 None of the others alternatives are correct 4 A decrease in inventory of $125,000 and an increase in expenses of $125,000 5 An increase in expenses of $125,000 and an increase in accounts payable of $125,000 Answer: 4 A company that makes the following journal entry at the time of purchasing inventory is using which of the following inventory systems? Dr. Inventory and Cr. Accounts Payable 1 Periodic system 2 Just-in-time system 3 Perpetual system 4 None of the others alternatives are correct 5 Specific identification system Answer: 3 On January 1, 20X7, the ledger of Conglomo Corporation correctly showed supplies inventory of $1,000. During 20X7, supplies purchases amounted to $6,000. A count (inventory) of supplies on hand at December 31, 20X7, showed $2,000. The 20X7 Balance Sheet statement should report supplies amounting to: 1 $5,000 2 $6,000 3 $2,000 4 $7,000 5 None of the others alternatives are correct Answer: 3...