ACCOUNTING UPDATED EXAM Questions And
CORRECT Answers
Identify the statements below which summarize what cash discounts are. (Check all that apply.)
- CORRECT ANSWERS Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
A buyer views a cash discount as a purchase discount.
Cash discounts are described in the credit terms.
A reduced payment applies to the discount period.
Demonstrate how to prepare a multiple-step income statement by ranking the items below in
the order they would appear on a multiple-step income statement of a merchandiser. -
CORRECT ANSWERS Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Other revenues and expenses
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 16, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. - CORRECT ANSWERS Debit Accounts
Payable $1,000; credit Cash $980; credit Merchandise Inventory $20.
Sally Beauty Warehouse uses the perpetual inventory system to account for its merchandise. On
Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the required
journal entry to record the receipt of payment from the customer on Nov 13, by selecting all of
the correct actions below. (Check all that apply.) - CORRECT ANSWERS Debit Cash
686;Debit Sales Discounts 14;Credit Accounts Receivable 700
, (sales discounts is a contra revenue account so it should be increased with a debit)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold
$1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500.
Demonstrate the required journal entry to record the sale and the cost of the sale by selecting
all of the correct actions below. (Check all that apply.) - CORRECT ANSWERS Debit Cost of
Goods Sold $500.
Debit Accounts Receivable $1,400.
Credit Sales $1,400.
Credit Merchandise Inventory $500.
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 30, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. - CORRECT ANSWERS Debit Accounts
Payable $1,000; credit Cash $1,000.
Under the periodic inventory system, a sale on account will result in the following journal entry:
- CORRECT ANSWERS debit to Accounts Receivable and a credit to Sales
On Jan 5, a customer returned merchandise that had been purchased earlier on credit. The
original sale was for $500, and the cost to the seller was $150. Demonstrate the required
journal entry to record the return on the books of the seller, assuming the goods can be sold to
another customer. - CORRECT ANSWERS Debit Sales Returns and Allowances $500; debit
Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold
$150.
Given the following information, analyze XYZ Company's liquidity. (Check all that apply.)
CORRECT Answers
Identify the statements below which summarize what cash discounts are. (Check all that apply.)
- CORRECT ANSWERS Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
A buyer views a cash discount as a purchase discount.
Cash discounts are described in the credit terms.
A reduced payment applies to the discount period.
Demonstrate how to prepare a multiple-step income statement by ranking the items below in
the order they would appear on a multiple-step income statement of a merchandiser. -
CORRECT ANSWERS Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Other revenues and expenses
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 16, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. - CORRECT ANSWERS Debit Accounts
Payable $1,000; credit Cash $980; credit Merchandise Inventory $20.
Sally Beauty Warehouse uses the perpetual inventory system to account for its merchandise. On
Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the required
journal entry to record the receipt of payment from the customer on Nov 13, by selecting all of
the correct actions below. (Check all that apply.) - CORRECT ANSWERS Debit Cash
686;Debit Sales Discounts 14;Credit Accounts Receivable 700
, (sales discounts is a contra revenue account so it should be increased with a debit)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold
$1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500.
Demonstrate the required journal entry to record the sale and the cost of the sale by selecting
all of the correct actions below. (Check all that apply.) - CORRECT ANSWERS Debit Cost of
Goods Sold $500.
Debit Accounts Receivable $1,400.
Credit Sales $1,400.
Credit Merchandise Inventory $500.
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is
made on December 30, demonstrate the required journal entry for Toys R Fun to record the
payment under the perpetual inventory system. - CORRECT ANSWERS Debit Accounts
Payable $1,000; credit Cash $1,000.
Under the periodic inventory system, a sale on account will result in the following journal entry:
- CORRECT ANSWERS debit to Accounts Receivable and a credit to Sales
On Jan 5, a customer returned merchandise that had been purchased earlier on credit. The
original sale was for $500, and the cost to the seller was $150. Demonstrate the required
journal entry to record the return on the books of the seller, assuming the goods can be sold to
another customer. - CORRECT ANSWERS Debit Sales Returns and Allowances $500; debit
Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold
$150.
Given the following information, analyze XYZ Company's liquidity. (Check all that apply.)
