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4. If the adjusting entry to adjust the unearned revenue account for earned
revenue was not done at eh end of the month the financial statements would
have the following problems
5. Management usually wants ______ financial statements and the IRS requires
all businesses to file _______ tax returns.
6. Unearned Revenue is classified as a liability.
10.Depreciation on the furniture for the month is $200. The adjusting entry done
at the end of the month is
11.Accrued revenues are earned but not yet received or recorded.
12.Under the accrual basis of accounting
19.Goods purchased for future use in the business, such as supplies, are called
prepaid expenses.
20.At the end of the month on a Wednesday, the business owes employees
$720; the business will not pay the employees until Friday. The adjusting
entry done at the end of the month is
Quiz 5
4. Inventory becomes part of cost of goods sold when a company sells the
inventory.
5. What type of account is Sales Returns and Allowances? Contra Revenue
6. A credit sale of $900 is made on July 15, terms 2/10, net/30, on which a
return of $50 is granted on July 18. What amount is received as payment in
full on July 24?
13.A Sales Returns and Allowances account is not debited if a customer utilizes a
prompt payment incentive.
14.The operating expenses section of an income statement for a merchandising
company would not include Cost of goods sold.
15.Use the following data to answer the question.
Sales $1,200,000
Sales Discounts $18,000
Sales Returns and Allowances $24, 000
Cost of Goods Sold $720,000
Operating Expenses $240, 000
Gross Profit on the Income Statement is
16.You are a sporting goods store owner. You want your gross profit rate to be
high.
17.A merchandiser that sells directly to consumers is a retailer.
18.Sales revenues are usually considered earned when goods have been
transferred from the seller to the buyer.
19.Holmes Company paid within the discount period for merchandise with a cost
of $8,000; the payment terms were 2/10, n/30. The journal entry to record
this transaction is
20.Use the following data for this question.
Operating Expenses $45,000
Sales Returns and Allowances $13,000
Sales Discounts $6,000
Sales $150,000
Cost of Goods Sold $67,000
The gross profit rate would be
Quiz 6
10.If companies use different inventory cost flow assumptions when the cost
of goods have not been constant through the year, then the cost of goods
purchased during the year will be identical.
11.In a period of rising prices, which of the following inventory methods
generally results in the lowest net income figure? LIFO method
12.Your merchandising company is taking inventory. Your company has
bought goods from Hawthorne Company. The goods are in transit from
Hawthorne Company shipped FOB destination. These goods should be
included in the inventory of Hawthorne Company.