ENT 3451 Exam 2 Questions With
Accurate Answers
1. What is NOT correct regarding the perpetual inventory system?
A) It's a computerized program that keeps up with items purchased, items sold and
items in ending inventory.
B) It requires a weekly physical count to determine inventory on hand.
C) It requires a yearly physical count as a check on the perpetual inventory system.
D) The merchandise inventory account is used to track the goods purchased for resale.
- ANSWER B
2. Cost of Goods Sold (COGS) account is used by a Merchandiser to report what
amount and on what financial statement?
A) Asset of Cost of Goods purchased for resale on the Balance Sheet
B) Expense reporting Cost of Merchandise Inventory that was sold on the Inc Stmt
C)Liability to record amounts due for Goods purchased to resale on the Balance Sheet
D)Revenue to record cost of goods sold on the Income Stmt - ANSWER B
3. Merchandise Inventory account is what?
A) Asset account to record Cost of Goods sold.
B)Asset account to record Merchandise for resale, plus Office supplies and Equipment.
C)Asset account to only record the Merchandise Inventory for resale.
D) Asset account to track amount due on Merchandise inventory purchased for resale. -
ANSWER C
4. Gross Profit is the term used to report what?
A) Cost of Goods sold plus Net Sales Revenue
B) Amount of Merchandise Inventory on hand available for resale
C)Sales Revenue less the discount offered customers.
D)Net Sales Revenue less Cost of Goods Sold. - ANSWER D
5. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is the net cost of inventory purchased?
A) $18,000
, B)$17,890
C)$18,610
D)$17,640 - ANSWER B
6. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the return?
A) DR Accts Payable; CR Merch Inventory
B)CR Acct Payable; DR Merch Inventory
C)DR Accts Payable; CR Cash
D)DR Cash; CR Merchandise Inventory - ANSWER A
7. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the payment of
the freight bill?
A)DR Freight Expense; CR Accts Payable
B)DR Freight Expense; CR Merch Inventory
C)DR Merch Inventory; CR Cash
D)DR Merch Inventory; CR Freight Expense - ANSWER C
8. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the payment on
July 21st?
A) DR A/P 20,000; CR Cash 20,000
B)DR A/P 18,000; CR Cash 18,000
C)DR Cash 18,000; CR Merch Inv 18,000
D) DR A/P 18,000; CR Merch Inv 360; CR Cash 17,640 - ANSWER D
9. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 31. What is included in the JE to record the payment on
July 31st?
A) DR A/P $20,000; CR Cash $20,000
B) DR A/P $20,250; CR Cash $20,250
C) DR A/P $18,000; CR Merch Inv $360; CR Cash $17,640
D) DR A/P $18,000; CR Cash $18,000 - ANSWER D
10. On June 1, Mike's Boats sold $42,000 of merchandise on account to a client with
terms 3/15, n/30. The merchandise cost $20,000. Mike's paid $150 freight to deliver
product to the client. The client paid the amount due on June 26. What is included in the
JE to record the sale on June 1?
A) DR A/R 42,000; CR COGS 20,000
B) DR A/R 42,000; CR Revenue 42,000
C) DR A/R 40,740; CR Cash 40,740
Accurate Answers
1. What is NOT correct regarding the perpetual inventory system?
A) It's a computerized program that keeps up with items purchased, items sold and
items in ending inventory.
B) It requires a weekly physical count to determine inventory on hand.
C) It requires a yearly physical count as a check on the perpetual inventory system.
D) The merchandise inventory account is used to track the goods purchased for resale.
- ANSWER B
2. Cost of Goods Sold (COGS) account is used by a Merchandiser to report what
amount and on what financial statement?
A) Asset of Cost of Goods purchased for resale on the Balance Sheet
B) Expense reporting Cost of Merchandise Inventory that was sold on the Inc Stmt
C)Liability to record amounts due for Goods purchased to resale on the Balance Sheet
D)Revenue to record cost of goods sold on the Income Stmt - ANSWER B
3. Merchandise Inventory account is what?
A) Asset account to record Cost of Goods sold.
B)Asset account to record Merchandise for resale, plus Office supplies and Equipment.
C)Asset account to only record the Merchandise Inventory for resale.
D) Asset account to track amount due on Merchandise inventory purchased for resale. -
ANSWER C
4. Gross Profit is the term used to report what?
A) Cost of Goods sold plus Net Sales Revenue
B) Amount of Merchandise Inventory on hand available for resale
C)Sales Revenue less the discount offered customers.
D)Net Sales Revenue less Cost of Goods Sold. - ANSWER D
5. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is the net cost of inventory purchased?
A) $18,000
, B)$17,890
C)$18,610
D)$17,640 - ANSWER B
6. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the return?
A) DR Accts Payable; CR Merch Inventory
B)CR Acct Payable; DR Merch Inventory
C)DR Accts Payable; CR Cash
D)DR Cash; CR Merchandise Inventory - ANSWER A
7. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the payment of
the freight bill?
A)DR Freight Expense; CR Accts Payable
B)DR Freight Expense; CR Merch Inventory
C)DR Merch Inventory; CR Cash
D)DR Merch Inventory; CR Freight Expense - ANSWER C
8. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 21. What is included in the JE to record the payment on
July 21st?
A) DR A/P 20,000; CR Cash 20,000
B)DR A/P 18,000; CR Cash 18,000
C)DR Cash 18,000; CR Merch Inv 18,000
D) DR A/P 18,000; CR Merch Inv 360; CR Cash 17,640 - ANSWER D
9. BG, Inc purchased $20,000 of inventory on account on July12 with terms 2/10, n/30.
BG Inc paid $250 for freight bill on July 15. They returned $2000 of inventory on July 17.
They paid amount owed on July 31. What is included in the JE to record the payment on
July 31st?
A) DR A/P $20,000; CR Cash $20,000
B) DR A/P $20,250; CR Cash $20,250
C) DR A/P $18,000; CR Merch Inv $360; CR Cash $17,640
D) DR A/P $18,000; CR Cash $18,000 - ANSWER D
10. On June 1, Mike's Boats sold $42,000 of merchandise on account to a client with
terms 3/15, n/30. The merchandise cost $20,000. Mike's paid $150 freight to deliver
product to the client. The client paid the amount due on June 26. What is included in the
JE to record the sale on June 1?
A) DR A/R 42,000; CR COGS 20,000
B) DR A/R 42,000; CR Revenue 42,000
C) DR A/R 40,740; CR Cash 40,740
