Accounting 101 Test Chp. 4 & 5
Questions and Answers
Which account does a merchandiser use that a service company does not use?
D - ANS-A. Merchandise Inventory
B. Cost of Goods Sold
C. Sales Revenue
D. All of the above
The two main inventory accounting systems are the___
C - ANS-A. returns and allowances.
B. purchase and sale.
C. perpetual and periodic.
D. cash and accrual.
Chapter 4 - ANS-
Temporary account (nominal accounts) - ANS-Account that relates to particular
accounting period and is closed at end of period
Revenues, expenses, incomes summary, and owner withdrawals
Permanent account - ANS-Account that's not closed at end of period
Asset, liability, and owner capital
Closing entries - ANS-Entries that transfer the revenues, expenses, and owner
withdrawals balances to owner capital account to prepare the company's books for the
next period
Income summary - ANS-Temporary account into which revenues and expenses are
transferred prior to their final transfer into the owner capital account
Summarizes net income or loss for the period
Post closing trial balance - ANS-List of accounts and thief balance at end of period after
journalizing and posting closing entries
ONLY permanent accounts
, Accounting cycle - ANS-Process by which companies produce financial statements for a
specific period
Current ratio - ANS-Measures company's ability to pay current liabilities from current
assets
Total current assets/ Total current liabilities
Reversing entry - ANS-Special journal entry that eases the burden of accounting for
transactions in next period
Switches debit and credit of previous entry
Exact opposite of prior adjusting entry
Chapter 5 - ANS-
Merchandiser - ANS-Business that sells merchandise or goods to customers
Merchandise inventory - ANS-Merchandise that business sells to customers
Wholesaler - ANS-Type of merchandiser that buys goods from manufacturers and then
sells them to retailers
Vendor - ANS-The individual or business from whom a company purchases goods
Retailer - ANS-Type or merchandiser that buys merchandise either from a manufacturer
or wholesaler and then sells those goods to consumers
Cost Of Goods Sold
(COGS) - ANS-Cost of merchandise inventory that the business has sold to customers
Gross Profit (margin) - ANS-Expenses of net Sales Revenue - COGS
Operating expenses - ANS-Expenses, other then COGS, that are incurred in entity's
major ongoing operations
Periodic inventory system - ANS-An inventory system that requires businesses to obtain
a physical count of inventory to determine quantities on hand.
Perpetual inventory system - ANS-An inventory system that keeps a running
computerized record of merchandise inventory
Invoice - ANS-Seller's request for payment from purchaser
Purchase discount - ANS-Discount that businesses offer to purchase as an incentive for
early payment
Questions and Answers
Which account does a merchandiser use that a service company does not use?
D - ANS-A. Merchandise Inventory
B. Cost of Goods Sold
C. Sales Revenue
D. All of the above
The two main inventory accounting systems are the___
C - ANS-A. returns and allowances.
B. purchase and sale.
C. perpetual and periodic.
D. cash and accrual.
Chapter 4 - ANS-
Temporary account (nominal accounts) - ANS-Account that relates to particular
accounting period and is closed at end of period
Revenues, expenses, incomes summary, and owner withdrawals
Permanent account - ANS-Account that's not closed at end of period
Asset, liability, and owner capital
Closing entries - ANS-Entries that transfer the revenues, expenses, and owner
withdrawals balances to owner capital account to prepare the company's books for the
next period
Income summary - ANS-Temporary account into which revenues and expenses are
transferred prior to their final transfer into the owner capital account
Summarizes net income or loss for the period
Post closing trial balance - ANS-List of accounts and thief balance at end of period after
journalizing and posting closing entries
ONLY permanent accounts
, Accounting cycle - ANS-Process by which companies produce financial statements for a
specific period
Current ratio - ANS-Measures company's ability to pay current liabilities from current
assets
Total current assets/ Total current liabilities
Reversing entry - ANS-Special journal entry that eases the burden of accounting for
transactions in next period
Switches debit and credit of previous entry
Exact opposite of prior adjusting entry
Chapter 5 - ANS-
Merchandiser - ANS-Business that sells merchandise or goods to customers
Merchandise inventory - ANS-Merchandise that business sells to customers
Wholesaler - ANS-Type of merchandiser that buys goods from manufacturers and then
sells them to retailers
Vendor - ANS-The individual or business from whom a company purchases goods
Retailer - ANS-Type or merchandiser that buys merchandise either from a manufacturer
or wholesaler and then sells those goods to consumers
Cost Of Goods Sold
(COGS) - ANS-Cost of merchandise inventory that the business has sold to customers
Gross Profit (margin) - ANS-Expenses of net Sales Revenue - COGS
Operating expenses - ANS-Expenses, other then COGS, that are incurred in entity's
major ongoing operations
Periodic inventory system - ANS-An inventory system that requires businesses to obtain
a physical count of inventory to determine quantities on hand.
Perpetual inventory system - ANS-An inventory system that keeps a running
computerized record of merchandise inventory
Invoice - ANS-Seller's request for payment from purchaser
Purchase discount - ANS-Discount that businesses offer to purchase as an incentive for
early payment
