ACCT 201A EXAM #2
✓ Freight costs incurred by the seller on outgoing merchandise are an operating expense
to the seller.
✓ -True or False - CORRECT ANSWER -True
✓ For a jewelry retailer, which is an example of Other Revenues and Gains?
✓ -Gain on sale of display cases
✓ -Discount received for paying for merchandise inventory within the discount period
✓ -Unearned revenue
✓ -Repair revenue - CORRECT ANSWER -Gain on sale of display cases
✓ The operating cycle of a merchandising company is ordinarily shorter than that of a
service company.
✓ -True or False - CORRECT ANSWER -False
✓ When credit terms of 1/15, n/60 are offered, how long is the discount period?
✓ -15 days
✓ -45 days
✓ -60 days
,✓ -1 day - CORRECT ANSWER -15 days
✓ Martin Company purchases $4,200 of merchandise on March 1, with credit terms of
3/10, n/30. If Martin pays on March 1, what is the cost of this purchase?
✓ -$4,200
✓ -$3,864
✓ -$3,780
✓ -$4,074 - CORRECT ANSWER -$4,074
✓ Which one of the following statements is correct?
✓ -A company which uses a perpetual inventory system needs only one journal entry
when it sells merchandise.
✓ -A company which uses a perpetual inventory system needs two journal entries when
it sells merchandise.
✓ -A company which uses a perpetual inventory system debits inventory and credits cost
of goods sold when it sells merchandise.
✓ -None of the answer choices are correct. - CORRECT ANSWER -A company which uses
a perpetual inventory system needs two journal entries when it sells merchandise.
✓ Assume that sales revenue are $450,000, sales discounts are $10,000, net income is
$35,000, and cost of goods sold is $320,000. How much are gross profit and operating
expenses, respectively?
, ✓ -$120,000 and $85,000
✓ -$130,000 and $95,000
✓ -$130,000 and $85,000
✓ -$120,000 and $95,000 - CORRECT ANSWER -$120,000 and $85,000
✓ Arbor Corporation had reported the following amounts at December 31, 2014: Sales
revenue $184,000: ending inventory $11,600: beginning inventory $17,200: purchases
$60,400: purchases discounts $3,000: purchase returns and allowances $1,100:
freight-in $600: freight-out $900. Calculate the cost of goods available for sale.
✓ -$56,900
✓ -$197,700
✓ -$69,400
✓ -$74,100 - CORRECT ANSWER -$74,100
✓ Under what system is cost of goods sold determined at the end of an accounting
period?
✓ -Periodic inventory system
✓ -Double entry inventory system
✓ -Perpetual inventory system
✓ -Single entry inventory system - CORRECT ANSWER -Periodic inventory system
✓ Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and
sales revenues total $95,000. How much is the profit margin?
✓ -20%
✓ -79%
✓ -75%
✓ -16% - CORRECT ANSWER -20%
✓ Freight costs incurred by the seller on outgoing merchandise are an operating expense
to the seller.
✓ -True or False - CORRECT ANSWER -True
✓ For a jewelry retailer, which is an example of Other Revenues and Gains?
✓ -Gain on sale of display cases
✓ -Discount received for paying for merchandise inventory within the discount period
✓ -Unearned revenue
✓ -Repair revenue - CORRECT ANSWER -Gain on sale of display cases
✓ The operating cycle of a merchandising company is ordinarily shorter than that of a
service company.
✓ -True or False - CORRECT ANSWER -False
✓ When credit terms of 1/15, n/60 are offered, how long is the discount period?
✓ -15 days
✓ -45 days
✓ -60 days
,✓ -1 day - CORRECT ANSWER -15 days
✓ Martin Company purchases $4,200 of merchandise on March 1, with credit terms of
3/10, n/30. If Martin pays on March 1, what is the cost of this purchase?
✓ -$4,200
✓ -$3,864
✓ -$3,780
✓ -$4,074 - CORRECT ANSWER -$4,074
✓ Which one of the following statements is correct?
✓ -A company which uses a perpetual inventory system needs only one journal entry
when it sells merchandise.
✓ -A company which uses a perpetual inventory system needs two journal entries when
it sells merchandise.
✓ -A company which uses a perpetual inventory system debits inventory and credits cost
of goods sold when it sells merchandise.
✓ -None of the answer choices are correct. - CORRECT ANSWER -A company which uses
a perpetual inventory system needs two journal entries when it sells merchandise.
✓ Assume that sales revenue are $450,000, sales discounts are $10,000, net income is
$35,000, and cost of goods sold is $320,000. How much are gross profit and operating
expenses, respectively?
, ✓ -$120,000 and $85,000
✓ -$130,000 and $95,000
✓ -$130,000 and $85,000
✓ -$120,000 and $95,000 - CORRECT ANSWER -$120,000 and $85,000
✓ Arbor Corporation had reported the following amounts at December 31, 2014: Sales
revenue $184,000: ending inventory $11,600: beginning inventory $17,200: purchases
$60,400: purchases discounts $3,000: purchase returns and allowances $1,100:
freight-in $600: freight-out $900. Calculate the cost of goods available for sale.
✓ -$56,900
✓ -$197,700
✓ -$69,400
✓ -$74,100 - CORRECT ANSWER -$74,100
✓ Under what system is cost of goods sold determined at the end of an accounting
period?
✓ -Periodic inventory system
✓ -Double entry inventory system
✓ -Perpetual inventory system
✓ -Single entry inventory system - CORRECT ANSWER -Periodic inventory system
✓ Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and
sales revenues total $95,000. How much is the profit margin?
✓ -20%
✓ -79%
✓ -75%
✓ -16% - CORRECT ANSWER -20%
