ACCT 2000 REVIEW EXAMS TEST PAPER
QUESTIONS AND ANSWERS SURE A+
✔✔The ____ of an asset is the difference between the cost of a depreciable asset and
its related accumulated depreciation. - ✔✔book value
✔✔The following are all types of merchandising except? - ✔✔service firm
✔✔A department store uses a perpetual inventory system. At year-end, the balance in
the merchandise inventory account is $2 million. Assuming that the inventory records
have been maintained properly, a year-end physical inventory - ✔✔will probably
indicate less than $2 million in merchandise on hand.
✔✔In a ____ inventory system, the cost of goods is determined only at the end of the
accounting period. - ✔✔periodic
✔✔How do you calculate the cost of goods for sale if closing inventory is nil? - ✔✔by
adding beginning inventory to purchases and freight-in
✔✔A company receives a discount for paying for merchandise purchased within the
discount period. How will the amount of the discount be recorded in a perpetual
inventory system? - ✔✔credited to inventory
, ✔✔What does the freight term "FOB destination" mean? - ✔✔the seller pays the freight
costs
✔✔A retailer acquires merchandise for resale, how would this be documented? -
✔✔Debited to Inventory
✔✔If the credit terms on a sales invoice read "2/10, n/30," what does this mean? -
✔✔The buyer should pay within the discount period and recognize a savings
✔✔In which of the following scenarios would a Sales and Returns and Allowances
account NOT be debited? - ✔✔A customer utilizes a prompt payment incentive.
✔✔________ has a normal credit balance. - ✔✔Sales Revenue
✔✔Which of the following is NOT a contra revenue account? - ✔✔Sales Revenue
✔✔In a perpetual inventory system, when is the Cost of Goods Sold account used? -
✔✔whenever there is a sale of merchandise or a return of merchandise sold
✔✔________ is shown on a multiple-step but not on a single-step income statement. -
✔✔Gross Profit
✔✔Why might a company choose to use the single-step income statement? Select all
that apply - ✔✔The single-step income statement is easier to read.
The company does not realize any type of profit or income until total revenues exceed
total expenses.
✔✔At the beginning of January 2014, a company reported inventory of $4,000. During
the month, the company made purchases of $17,800. On January 31, 2014, a physical
count of inventory reported $4,200 on hand. Find the cost of goods sold for the month. -
✔✔$17,600
✔✔________ requires a physical count of goods on hand to compute the cost of goods
sold. - ✔✔A periodic inventory system
✔✔During the year, a company's inventory decreased by $20,000. If the company's
cost of goods sold for the year was $400,000, find the amount for purchases. -
✔✔$380,000
✔✔How is the gross profit rate computed? - ✔✔by dividing the amount of gross profit by
net sales
QUESTIONS AND ANSWERS SURE A+
✔✔The ____ of an asset is the difference between the cost of a depreciable asset and
its related accumulated depreciation. - ✔✔book value
✔✔The following are all types of merchandising except? - ✔✔service firm
✔✔A department store uses a perpetual inventory system. At year-end, the balance in
the merchandise inventory account is $2 million. Assuming that the inventory records
have been maintained properly, a year-end physical inventory - ✔✔will probably
indicate less than $2 million in merchandise on hand.
✔✔In a ____ inventory system, the cost of goods is determined only at the end of the
accounting period. - ✔✔periodic
✔✔How do you calculate the cost of goods for sale if closing inventory is nil? - ✔✔by
adding beginning inventory to purchases and freight-in
✔✔A company receives a discount for paying for merchandise purchased within the
discount period. How will the amount of the discount be recorded in a perpetual
inventory system? - ✔✔credited to inventory
, ✔✔What does the freight term "FOB destination" mean? - ✔✔the seller pays the freight
costs
✔✔A retailer acquires merchandise for resale, how would this be documented? -
✔✔Debited to Inventory
✔✔If the credit terms on a sales invoice read "2/10, n/30," what does this mean? -
✔✔The buyer should pay within the discount period and recognize a savings
✔✔In which of the following scenarios would a Sales and Returns and Allowances
account NOT be debited? - ✔✔A customer utilizes a prompt payment incentive.
✔✔________ has a normal credit balance. - ✔✔Sales Revenue
✔✔Which of the following is NOT a contra revenue account? - ✔✔Sales Revenue
✔✔In a perpetual inventory system, when is the Cost of Goods Sold account used? -
✔✔whenever there is a sale of merchandise or a return of merchandise sold
✔✔________ is shown on a multiple-step but not on a single-step income statement. -
✔✔Gross Profit
✔✔Why might a company choose to use the single-step income statement? Select all
that apply - ✔✔The single-step income statement is easier to read.
The company does not realize any type of profit or income until total revenues exceed
total expenses.
✔✔At the beginning of January 2014, a company reported inventory of $4,000. During
the month, the company made purchases of $17,800. On January 31, 2014, a physical
count of inventory reported $4,200 on hand. Find the cost of goods sold for the month. -
✔✔$17,600
✔✔________ requires a physical count of goods on hand to compute the cost of goods
sold. - ✔✔A periodic inventory system
✔✔During the year, a company's inventory decreased by $20,000. If the company's
cost of goods sold for the year was $400,000, find the amount for purchases. -
✔✔$380,000
✔✔How is the gross profit rate computed? - ✔✔by dividing the amount of gross profit by
net sales
