©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
Financial Accounting Exam 2 Questions
With Correct Answers
Inventory - answer✔Merchandise that the company intends to sell to its customers
Merchandising Companies - answer✔Companies that sell, but not manufacture, merchandise to
customers; wholesale and retail companies such as Wal-Mart, Nieman Marcus
Manufacturing Companies - answer✔Create merchandise from underlying raw materials; Exxon
and Boeing
Service Companies - answer✔Provide services to customers; law firms, consulting companies
True - answer✔Accounting for inventories is important because it can have a material effect on
both the BALANCE SHEET (ENDING INVENTORY) and the INCOME STATEMENT
(COST OF GOODS SOLD)
Gross Sales Revenue - answer✔Measures the value of inventory delivered to, and billed to,
customers, often referred to as the "invoice value"
, ©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
Sales Returns and Allowances - answer✔Contra-revenue account used to record customer
refunds or credits given to their accounts. Represents a reduction of sales revenue for the return
of (or allowance granted for) unsatisfactory goods
Sales Discounts - answer✔Contra-revenue account used to record discounts given to customers
for early payment of their account
Freight-Out - answer✔Transportation cost paid by the seller on merchandise deliverd to the
customer; this is a selling expense, not a contra-revenue account; not included in net sales
Net Sales - answer✔Gross Sales less all contra-revenue accounts (sales returns and allowances
and sales discounts)
Gross Purchase Cost - answer✔Measures the cost of inventory acquired as billed to the company
by the supplier
Purchase Returns and Allowances - answer✔Account used to record the decrease of the purchase
cost for the return of (or allowance granted for) unsatisfactory goods purchased
Purchase Discounts - answer✔Account used to record the decrease of the purchase cost for
discounts granted by the supplier for early payment of account payable
Freight-In - answer✔Account used to record the increase in the purchase cost of inventory due to
transportation costs paid by the buying company; included in net purchases
12/3/2024 11:27AM
Financial Accounting Exam 2 Questions
With Correct Answers
Inventory - answer✔Merchandise that the company intends to sell to its customers
Merchandising Companies - answer✔Companies that sell, but not manufacture, merchandise to
customers; wholesale and retail companies such as Wal-Mart, Nieman Marcus
Manufacturing Companies - answer✔Create merchandise from underlying raw materials; Exxon
and Boeing
Service Companies - answer✔Provide services to customers; law firms, consulting companies
True - answer✔Accounting for inventories is important because it can have a material effect on
both the BALANCE SHEET (ENDING INVENTORY) and the INCOME STATEMENT
(COST OF GOODS SOLD)
Gross Sales Revenue - answer✔Measures the value of inventory delivered to, and billed to,
customers, often referred to as the "invoice value"
, ©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM
Sales Returns and Allowances - answer✔Contra-revenue account used to record customer
refunds or credits given to their accounts. Represents a reduction of sales revenue for the return
of (or allowance granted for) unsatisfactory goods
Sales Discounts - answer✔Contra-revenue account used to record discounts given to customers
for early payment of their account
Freight-Out - answer✔Transportation cost paid by the seller on merchandise deliverd to the
customer; this is a selling expense, not a contra-revenue account; not included in net sales
Net Sales - answer✔Gross Sales less all contra-revenue accounts (sales returns and allowances
and sales discounts)
Gross Purchase Cost - answer✔Measures the cost of inventory acquired as billed to the company
by the supplier
Purchase Returns and Allowances - answer✔Account used to record the decrease of the purchase
cost for the return of (or allowance granted for) unsatisfactory goods purchased
Purchase Discounts - answer✔Account used to record the decrease of the purchase cost for
discounts granted by the supplier for early payment of account payable
Freight-In - answer✔Account used to record the increase in the purchase cost of inventory due to
transportation costs paid by the buying company; included in net purchases
