WILEY PLUS EXAM 2 QUESTIONS AND
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+
t/f: A perpetual inventory system provides better control over inventories than does
a periodic inventory system. - ANSWER✔✔true
Which of the following items does not result in an entry to the Inventory account
under a perpetual system? - ANSWER✔✔Payment of freight costs for goods
shipped to a customer
Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what
account will Marsh record this cost in a perpetual inventory system? -
ANSWER✔✔Freight-out account
defective merchandise returned by a customer does what - ANSWER✔✔The Sales
Returns and Allowances account is debited
true when recording the sale of goods for cash in a perpetual inventory system? -
ANSWER✔✔Two journal entries are necessary: one to record the receipt of cash
and sales revenue, and one to record the cost of goods sold and to reduce
inventory.
Gross profit - ANSWER✔✔the difference between net sales and cost of goods
sold.
Which of the following is classified in an income statement as a nonoperating
activity? - ANSWER✔✔Interest expense
, Which of the following is classified in an income statement as a nonoperating
activity? - ANSWER✔✔Receiving dividend revenue from an investment
Which of the following would affect the gross profit rate if sales remain constant? -
ANSWER✔✔An increase in cost of goods sold
Which factor would not affect the gross profit rate? - ANSWER✔✔An increase in
the cost of heating the store
In a perpetual inventory system, which accounts will the seller credit when
merchandise is returned by a customer? - ANSWER✔✔Accounts Receivable and
Cost of Goods Sold
When is a physical inventory usually taken? - ANSWER✔✔At the end of the
company's fiscal year
Which of the following should not be included in the physical inventory of a
company? - ANSWER✔✔Goods held on consignment from another company
Which of the following is not a legitimate business reason for taking a physical
inventory? - ANSWER✔✔To verify the profitability of individual inventory items
t/f:Under FIFO, cost of goods sold consists of the units with the oldest costs. -
ANSWER✔✔true
Which of the following is true of the FIFO inventory method? - ANSWER✔✔It
assumes that the cost of the earliest units purchased are the first to be allocated to
cost of goods sold.
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+
t/f: A perpetual inventory system provides better control over inventories than does
a periodic inventory system. - ANSWER✔✔true
Which of the following items does not result in an entry to the Inventory account
under a perpetual system? - ANSWER✔✔Payment of freight costs for goods
shipped to a customer
Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what
account will Marsh record this cost in a perpetual inventory system? -
ANSWER✔✔Freight-out account
defective merchandise returned by a customer does what - ANSWER✔✔The Sales
Returns and Allowances account is debited
true when recording the sale of goods for cash in a perpetual inventory system? -
ANSWER✔✔Two journal entries are necessary: one to record the receipt of cash
and sales revenue, and one to record the cost of goods sold and to reduce
inventory.
Gross profit - ANSWER✔✔the difference between net sales and cost of goods
sold.
Which of the following is classified in an income statement as a nonoperating
activity? - ANSWER✔✔Interest expense
, Which of the following is classified in an income statement as a nonoperating
activity? - ANSWER✔✔Receiving dividend revenue from an investment
Which of the following would affect the gross profit rate if sales remain constant? -
ANSWER✔✔An increase in cost of goods sold
Which factor would not affect the gross profit rate? - ANSWER✔✔An increase in
the cost of heating the store
In a perpetual inventory system, which accounts will the seller credit when
merchandise is returned by a customer? - ANSWER✔✔Accounts Receivable and
Cost of Goods Sold
When is a physical inventory usually taken? - ANSWER✔✔At the end of the
company's fiscal year
Which of the following should not be included in the physical inventory of a
company? - ANSWER✔✔Goods held on consignment from another company
Which of the following is not a legitimate business reason for taking a physical
inventory? - ANSWER✔✔To verify the profitability of individual inventory items
t/f:Under FIFO, cost of goods sold consists of the units with the oldest costs. -
ANSWER✔✔true
Which of the following is true of the FIFO inventory method? - ANSWER✔✔It
assumes that the cost of the earliest units purchased are the first to be allocated to
cost of goods sold.
