Accounting Chapter 5 & 6 review

Question 1

FOB Shipping Point is where buyer takes ownership if the goods after the good leave the ... place of business

Accepted Answer

seller's

Question 2

In the periodic inventory system, a manual count of inventory occurs

Accepted Answer

True

Question 3

Freight-in discount terms 3/15 n/30 means discount of 3% applied if paid within 15 days.

Accepted Answer

True

Question 4

For closing entries, what accounts are listed as expenses?

Accepted Answer

COGS, Seller Expenses, Admin Expenses

Question 5

What term is defined as a company should report least favorable figures in financial statements?

Accepted Answer

Conservatism

Question 6

Specific Identification keeps a running computerized record of

Accepted Answer

merchandise inventory

Question 7

In the perpetual inventory system, merchants reply on computers and no physical count is conducted

Accepted Answer

False

Question 8

The materiality concept is when a company must perform strictly proper accounting only for significant items.

Accepted Answer

False

Question 9

An invoice is the seller's request for payment from

Accepted Answer

purchaser

Question 10

Customer returned $4,000 merchandise on account before the bill was paid, which account is debited for the refund?

Accepted Answer

Refunds Payable

Question 11

What are the two formats for the income statement?

Accepted Answer

Single-step and Multi-step

Question 12

For multi-step income statement, is Net Sales - Cost of Good Sold =

Accepted Answer

Gross Profit

Question 13

For closing entries, Income Summary is closed out to Retained Earnings

Accepted Answer

True

Question 14

A company must perform strictly proper accounting only for items that are significant to business financial situation.

Accepted Answer

Consistency Principle

Question 15

Two main types of inventory accounting systems used by merchandiser are:

Accepted Answer

Periodic and Perpetual, Periodic and Alternative

Question 16

Gross Profit - Expenses = Sales Revenue

Accepted Answer

False

Question 17

The four costing methods can be used to determine merchandise inventory costs:

Accepted Answer

specific identification method, FIFO, LIFO, and weighted-average method.

Question 18

Freight-in is the transportation costs to ship goods over out the country only.

Accepted Answer

False

Question 19

Good controls ensure inventory purchases & sales are properly

Accepted Answer

authorized and accounted for

Question 20

A merchandiser is a business that sells....

Accepted Answer

merchandise, or goods, to customers

Question 21

Disclosure principle states a companies financial statements report enough information..

Accepted Answer

for outsiders to make knowledgeable decisions

Question 22

LIFO method results in the highest cost of good sold and the lowest gross profit when costs are rising.

Accepted Answer

True

Question 23

ABC Manufacturing purchased $3,000 in merchandise inventory on account. Which account is debited?

Accepted Answer

Merchandise Inventory

Question 24

Purchase Allowance is the amount granted to purchasers as incentive to keep goods that are "not as ordered"

Accepted Answer

True

Question 25

A merchandiser's statement of retained earnings looks exactly like that of a service business.

Accepted Answer

True

Accounting Chapter 5 & 6 review

Questions 25

Accounting Chapter 5 & 6 review

Questions 25