Intro to Financial Accounting Exam 2
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questions with answers |\ |\
Merchandising Companies - CORRECT ANSWERS |\ |\ |\ |\ |\
✔✔Buy/Sell Goods for Sales Revenue |\ |\ |\ |\
Income Measurement - CORRECT ANSWERS ✔✔Sales
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Revenue - COG Sold = Gross Profit |\ |\ |\ |\ |\ |\
Gross Profit - Operating Expenses = Net Income
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Cost of Goods (COG) Sold - CORRECT ANSWERS ✔✔Total
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cost of merchandise sold during the accounting period
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Length of Operating Cycles - CORRECT ANSWERS
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✔✔Merchandising Company is longer than Service |\ |\ |\ |\ |\ |\
Company
Perpetual System - CORRECT ANSWERS ✔✔Flow of Costs
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Detailed records; Continuously Updated; Determines COG
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Sold at each sale
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Periodic System - CORRECT ANSWERS ✔✔Flow of Costs
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, No detailed records; Physical Inventory Count; COG Sold
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determined in the end |\ |\ |\
Advantages of Perpetual System - CORRECT ANSWERS |\ |\ |\ |\ |\ |\ |\
✔✔High unit costs; Better control over inventory
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Purchasing Inventory - CORRECT ANSWERS ✔✔Cash or on |\ |\ |\ |\ |\ |\ |\
account; Recorded when goods are received; Invoice
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used at each sale
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Operating Expense - CORRECT ANSWERS ✔✔Freight costs
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incurred by the seller
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Purchase Return - CORRECT ANSWERS ✔✔Return of goods
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if dissatisfied; Cash for cash, Credit for credit
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Purchase Allowance - CORRECT ANSWERS ✔✔Buyer keeps
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purchase if discount is given by the seller
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Purchase Discounts - CORRECT ANSWERS ✔✔Purchaser
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saves money; Seller can convert accounts receivable to
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cash earlier |\
Credit Terms - CORRECT ANSWERS ✔✔Permits buyer to
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claim a cash discount for a prompt payment
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questions with answers |\ |\
Merchandising Companies - CORRECT ANSWERS |\ |\ |\ |\ |\
✔✔Buy/Sell Goods for Sales Revenue |\ |\ |\ |\
Income Measurement - CORRECT ANSWERS ✔✔Sales
|\ |\ |\ |\ |\ |\
Revenue - COG Sold = Gross Profit |\ |\ |\ |\ |\ |\
Gross Profit - Operating Expenses = Net Income
|\ |\ |\ |\ |\ |\ |\
Cost of Goods (COG) Sold - CORRECT ANSWERS ✔✔Total
|\ |\ |\ |\ |\ |\ |\ |\ |\
cost of merchandise sold during the accounting period
|\ |\ |\ |\ |\ |\ |\
Length of Operating Cycles - CORRECT ANSWERS
|\ |\ |\ |\ |\ |\ |\
✔✔Merchandising Company is longer than Service |\ |\ |\ |\ |\ |\
Company
Perpetual System - CORRECT ANSWERS ✔✔Flow of Costs
|\ |\ |\ |\ |\ |\ |\
Detailed records; Continuously Updated; Determines COG
|\ |\ |\ |\ |\
Sold at each sale
|\ |\ |\ |\
Periodic System - CORRECT ANSWERS ✔✔Flow of Costs
|\ |\ |\ |\ |\ |\ |\
, No detailed records; Physical Inventory Count; COG Sold
|\ |\ |\ |\ |\ |\ |\ |\
determined in the end |\ |\ |\
Advantages of Perpetual System - CORRECT ANSWERS |\ |\ |\ |\ |\ |\ |\
✔✔High unit costs; Better control over inventory
|\ |\ |\ |\ |\ |\
Purchasing Inventory - CORRECT ANSWERS ✔✔Cash or on |\ |\ |\ |\ |\ |\ |\
account; Recorded when goods are received; Invoice
|\ |\ |\ |\ |\ |\ |\ |\
used at each sale
|\ |\ |\
Operating Expense - CORRECT ANSWERS ✔✔Freight costs
|\ |\ |\ |\ |\ |\
incurred by the seller
|\ |\ |\ |\
Purchase Return - CORRECT ANSWERS ✔✔Return of goods
|\ |\ |\ |\ |\ |\ |\
if dissatisfied; Cash for cash, Credit for credit
|\ |\ |\ |\ |\ |\ |\ |\
Purchase Allowance - CORRECT ANSWERS ✔✔Buyer keeps
|\ |\ |\ |\ |\ |\
purchase if discount is given by the seller
|\ |\ |\ |\ |\ |\ |\ |\
Purchase Discounts - CORRECT ANSWERS ✔✔Purchaser
|\ |\ |\ |\ |\ |\
saves money; Seller can convert accounts receivable to
|\ |\ |\ |\ |\ |\ |\ |\
cash earlier |\
Credit Terms - CORRECT ANSWERS ✔✔Permits buyer to
|\ |\ |\ |\ |\ |\ |\ |\
claim a cash discount for a prompt payment
|\ |\ |\ |\ |\ |\ |\
