ACCT 201 EXAM 2 QUESTIONS AND
ANSWERS
Contra revenue account - ANS an account that is offset against a revenue account on the
income statement
cost of goods sold - ANS the total cost of merchandise sold during the period
FOB destination - ANS freight terms indicating that the seller places the goods free on board
to the buyer's place of business, and the seller pays the freight
FOB shipping point - ANS freight terms indicating that the seller places goods free on board
the carrier, and the buyer pays the freight costs
gross profit - ANS the excess net sales over the cost of goods sold
gross profit rate - ANS gross profit expressed as a percentage, by dividing the amount of
gross profit by net sales
( gross profit / net sales = GPR )
income from operations - ANS income from a company's principal operating activity;
determined by subtracting cost of goods sold and operating expenses from net sales
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, multiple-step income statement - ANS an income statement that shows several steps in
determining net income
net sales - ANS sales revenue less sales returns and allowances and less sales discounts
nonoperating activities - ANS various revenues, expenses, gains, and losses that are
unrelated to a company's main line of operations
operating expenses - ANS expenses incurred in the process of earning sales revenue
other expenses and losses - ANS a nonoperating-activities section of the income statement
that shows expenses and losses unrelated to the company's main line of operations
other revenue and gains - ANS a nonoperating-activities section of the income statement
that shows revenues and gains unrelated to the company's main line of operations
periodic inventory system - ANS an inventory system under which the company does not
keep detailed inventory records throughout the accounting period but determines the cost of
goods sold only at the end of an accounting period
perpetual inventory system - ANS an inventory system under which the company keeps
detailed records of the cost of each inventory purchase and sale, and the records continuously
show the inventory that should be on hand
purchase allowance - ANS a deduction made to the selling price of merchandise, granted by
the seller so that the buyer will keep the merchandise
purchase discount - ANS a cash discount claimed by a buyer for prompt payment of a
balance due
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ANSWERS
Contra revenue account - ANS an account that is offset against a revenue account on the
income statement
cost of goods sold - ANS the total cost of merchandise sold during the period
FOB destination - ANS freight terms indicating that the seller places the goods free on board
to the buyer's place of business, and the seller pays the freight
FOB shipping point - ANS freight terms indicating that the seller places goods free on board
the carrier, and the buyer pays the freight costs
gross profit - ANS the excess net sales over the cost of goods sold
gross profit rate - ANS gross profit expressed as a percentage, by dividing the amount of
gross profit by net sales
( gross profit / net sales = GPR )
income from operations - ANS income from a company's principal operating activity;
determined by subtracting cost of goods sold and operating expenses from net sales
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 1
, multiple-step income statement - ANS an income statement that shows several steps in
determining net income
net sales - ANS sales revenue less sales returns and allowances and less sales discounts
nonoperating activities - ANS various revenues, expenses, gains, and losses that are
unrelated to a company's main line of operations
operating expenses - ANS expenses incurred in the process of earning sales revenue
other expenses and losses - ANS a nonoperating-activities section of the income statement
that shows expenses and losses unrelated to the company's main line of operations
other revenue and gains - ANS a nonoperating-activities section of the income statement
that shows revenues and gains unrelated to the company's main line of operations
periodic inventory system - ANS an inventory system under which the company does not
keep detailed inventory records throughout the accounting period but determines the cost of
goods sold only at the end of an accounting period
perpetual inventory system - ANS an inventory system under which the company keeps
detailed records of the cost of each inventory purchase and sale, and the records continuously
show the inventory that should be on hand
purchase allowance - ANS a deduction made to the selling price of merchandise, granted by
the seller so that the buyer will keep the merchandise
purchase discount - ANS a cash discount claimed by a buyer for prompt payment of a
balance due
COPYRIGHT © 2025 BRAINBARTER ALL RIGHTS RESERVED 2
