INTRO TO FINANCIAL ACCOUNTING EXAM 2
CHAPTERS 4-6 FREQUENTLY TESTED ACTUAL
QUESTIONS WITH CORRECT ANSWERS
Question 1.
A merchandiser:
ANSWER
Earns net income by buying and selling merchandise
Question 2.
Cost of goods sold:
ANSWER
Is the term used for the expense of buying and preparing merchandise for sale
Question 3.
A company has net sales of $729,000 and cost of goods sold of $292,000. Its gross profit equals:
ANSWER
$437,000 (Take cost of goods sold minus net sales)
Question 4.
A company has net sales of $375,000 and its gross profit is $157,500. Its cost of goods sold is:
ANSWER
$217,500 (gross profit minus 157,500)
Question 5.
Merchandise Inventory:
ANSWER
is a current asset
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, Question 6.
A company's gross profit (or gross margin) was $73,920 and its net sales were $352,000. Its gross
mar gin ratio is:
ANSWER
21% (Divide 73,920 by
- 352,000)
Question 7.
The credit terms 2/10, n/30 are interpreted as:
ANSWER
2% cash discount if the amount is paid within 10 days, or the full balance due in 30 days
Question 8.
A company purchased $2,000 of merchandise on August 15 with terms 1/10, n/30. On August 17, it
returned $200 worth of merchandise. On August 18, it paid the amount due. The amount of the cash
paid on August 18 equals:
ANSWER
$1,782 (2000 minus 200= 1800. 1800*.01=18. 1800-18=1782)
Question 9.
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned
$200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a
perpetual inventory system, and records purchases using the GROSS METHOD, the correct journal
entry to record the payment on July 28 is:
ANSWER
Debit Accounts Payable $1,600; credit Cash $1,600
Question 10.
A company purchased $4,000 worth of merchandise. Transportation costs for the buyer were an
additional $350. The company returned $275 worth of merchandise and then paid the invoice within
the 2% cash discount period. The total cost of this merchandise is:
ANSWER
$4,000.50 ({4000-275}
*.98) +350= 4,000.50
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CHAPTERS 4-6 FREQUENTLY TESTED ACTUAL
QUESTIONS WITH CORRECT ANSWERS
Question 1.
A merchandiser:
ANSWER
Earns net income by buying and selling merchandise
Question 2.
Cost of goods sold:
ANSWER
Is the term used for the expense of buying and preparing merchandise for sale
Question 3.
A company has net sales of $729,000 and cost of goods sold of $292,000. Its gross profit equals:
ANSWER
$437,000 (Take cost of goods sold minus net sales)
Question 4.
A company has net sales of $375,000 and its gross profit is $157,500. Its cost of goods sold is:
ANSWER
$217,500 (gross profit minus 157,500)
Question 5.
Merchandise Inventory:
ANSWER
is a current asset
1/8
, Question 6.
A company's gross profit (or gross margin) was $73,920 and its net sales were $352,000. Its gross
mar gin ratio is:
ANSWER
21% (Divide 73,920 by
- 352,000)
Question 7.
The credit terms 2/10, n/30 are interpreted as:
ANSWER
2% cash discount if the amount is paid within 10 days, or the full balance due in 30 days
Question 8.
A company purchased $2,000 of merchandise on August 15 with terms 1/10, n/30. On August 17, it
returned $200 worth of merchandise. On August 18, it paid the amount due. The amount of the cash
paid on August 18 equals:
ANSWER
$1,782 (2000 minus 200= 1800. 1800*.01=18. 1800-18=1782)
Question 9.
A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned
$200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a
perpetual inventory system, and records purchases using the GROSS METHOD, the correct journal
entry to record the payment on July 28 is:
ANSWER
Debit Accounts Payable $1,600; credit Cash $1,600
Question 10.
A company purchased $4,000 worth of merchandise. Transportation costs for the buyer were an
additional $350. The company returned $275 worth of merchandise and then paid the invoice within
the 2% cash discount period. The total cost of this merchandise is:
ANSWER
$4,000.50 ({4000-275}
*.98) +350= 4,000.50
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