ACC 200 EXAM 2 QUESTIONS WITH VERIFIED
ANSWERS
What type of asset is equipment? - Answers - Plant, Property, and Equipment
What is stockholders' equity? - Answers - Common stock + Retained Earnings
Equation for Net Sales - Answers - Sales - Discounts - Returns = Net Sales
Equation for Gross Profit - Answers - Net Sales - Cost of Goods Sold = Gross Profit
What are some issues with high inventory levels? - Answers - Storage and other costs,
obsolete goods
What are some issues with low inventory levels? - Answers - Lost sales
If the value of inventory is lower than its cost what do you do? - Answers - Write down
inventory to market value
How often does the perpetual system update inventory and cost of goods sold? -
Answers - With every purchase and sale
How often does the periodic system update inventory and the cost of goods sold? -
Answers - At the end of the account period
What is the adjusting journal entry for a buyer who pays within the discount time?
(Bought 1000, terms 2/10, n/30, returned 200) - Answers - Dr. Accounts Payable
amount owed (800)
Cr. Cash amount paid (784) Cr. Inventory discount amount (16)
What is the adjusting journal entry for a seller who sold inventory (1000) on a discount
(terms 2/10, n/30) with a cost of goods sold (300)? - Answers - Dr. Accounts Receivable
amount sold (1000)
Cr. Sales (1000)
Dr. Cost of Goods Sold (300)
Cr. Inventory (300)
What is the adjusting journal entry for a seller whose buyer returned inventory (200) with
a cost (80)? - Answers - Dr. Sales Returns and Allowances amount returned (200)
Cr. Accounts Receivables (200)
Dr. Inventory incurred expense (80)
Cr. Cost of Goods Sold (80)
ANSWERS
What type of asset is equipment? - Answers - Plant, Property, and Equipment
What is stockholders' equity? - Answers - Common stock + Retained Earnings
Equation for Net Sales - Answers - Sales - Discounts - Returns = Net Sales
Equation for Gross Profit - Answers - Net Sales - Cost of Goods Sold = Gross Profit
What are some issues with high inventory levels? - Answers - Storage and other costs,
obsolete goods
What are some issues with low inventory levels? - Answers - Lost sales
If the value of inventory is lower than its cost what do you do? - Answers - Write down
inventory to market value
How often does the perpetual system update inventory and cost of goods sold? -
Answers - With every purchase and sale
How often does the periodic system update inventory and the cost of goods sold? -
Answers - At the end of the account period
What is the adjusting journal entry for a buyer who pays within the discount time?
(Bought 1000, terms 2/10, n/30, returned 200) - Answers - Dr. Accounts Payable
amount owed (800)
Cr. Cash amount paid (784) Cr. Inventory discount amount (16)
What is the adjusting journal entry for a seller who sold inventory (1000) on a discount
(terms 2/10, n/30) with a cost of goods sold (300)? - Answers - Dr. Accounts Receivable
amount sold (1000)
Cr. Sales (1000)
Dr. Cost of Goods Sold (300)
Cr. Inventory (300)
What is the adjusting journal entry for a seller whose buyer returned inventory (200) with
a cost (80)? - Answers - Dr. Sales Returns and Allowances amount returned (200)
Cr. Accounts Receivables (200)
Dr. Inventory incurred expense (80)
Cr. Cost of Goods Sold (80)
