Accounting Quiz 201 Exam Questions!

41 Questions | By Jc173 | Updated: Mar 22, 2022 | Attempts: 589

Questions

Settings

Create your own Quiz

Accounting Quiz 201 Exam Questions! - Quiz

Questions and Answers

1.

The largest expense on the income statement for most merchandising companies is:
- A.
  
  Administrative expenses.
- B.
  
  Selling expenses.
- C.
  
  Cost of goods sold.
- D.
  
  Other expenses.
2.

The cost of the inventory that the business has sold to customers is called:
- A.
  
  Inventory.
- B.
  
  Cost of Goods Sold.
- C.
  
  Purchases
- D.
  
  Gross Profit.
3.

The cost of inventory that is still on hand and has NOT been sold to customers is called:
- A.
  
  Cost of goods sold, and it appears on the balance sheet.
- B.
  
  Inventory, a current asset that appears on the income statement.
- C.
  
  Inventory, a current asset that appears on the balance sheet.
- D.
  
  Cost of goods sold, and it appears on the income statement.
4.

Two accounts that would appear on the financial statements of a merchandising company that are not needed by a service company are:
- A.
  
  Cost of goods sold and depreciation.
- B.
  
  Cost of goods sold and net income.
- C.
  
  Cost of goods sold and inventory.
- D.
  
  Inventory and depreciation.
5.

Sales revenue is based on the _________ price of the inventory, while the cost of goods sold is based on the __________ of the inventory.
- A.
  
  Cost, sales
- B.
  
  Cost, cost
- C.
  
  Sales, sales
- D.
  
  Sales, cost
6.

On the income statement, after a company computes gross profit, it subtracts:
- A.
  
  Cost of goods sold.
- B.
  
  Inventory.
- C.
  
  Operating expenses.
- D.
  
  All of the above.
7.

A periodic inventory system:
- A.
  
  Is used for inexpensive goods.
- B.
  
  Is not expensive to maintain.
- C.
  
  Does not keep a running record of inventory on hand.
- D.
  
  Is all of the above.
8.

The inventory system that uses computer software to keep a running record of inventory on hand is the:
- A.
  
  Cost of goods sold inventory system.
- B.
  
  Periodic inventory system.
- C.
  
  Perpetual inventory system.
- D.
  
  Hybrid inventory system.
9.

Under a perpetual inventory system, when a sale is made:
- A.
  
  The company makes a journal entry to record the sale only.
- B.
  
  The company makes a journal entry to record only the cost of goods sold.
- C.
  
  The company makes a journal entry to record the sale and the cost of goods sold.
- D.
  
  No journal entry needs to be made.
10.

How do purchase returns and allowances and purchase discounts affect net purchases?
- A.
  
  Both are added to purchases.
- B.
  
  Both are subtracted from purchases.
- C.
  
  Purchase returns and allowances are added to purchases; purchase discounts are subtracted from purchases.
- D.
  
  Purchase returns and allowances are subtracted from purchases; purchase discounts are added to purchases.
11.

Exter Co. receives terms of 2/10, n/30 on all invoices from Garn Industries. On January 15, 2011, Exter purchased items from Garn for $4,200, excluding taxes and shipping costs. What amount would Exter use as the purchase discount if the invoice was paid on January 28, 2011?
- A.
  
  $ $0 13 DAYS
- B.
  
  $ 84
- C.
  
  $4,116
- D.
  
  $4,200
12.

What is the formula used to calculate net purchases?
- A.
  
  Purchases less Purchase Returns and Allowances plus Purchase Discounts less freight-in
- B.
  
  Purchases plus Purchase Returns and Allowances less Purchase Discounts plus freight-in
- C.
  
  Purchases less Purchase Returns and Allowances less Purchase Discounts plus freight-in
- D.
  
  Beginning Inventory less Purchases
13.

Unlike the periodic inventory system, the perpetual inventory system:
- A.
  
  Does not require a physical count of the ending inventory.
- B.
  
  Provides a continuous record of inventory on hand.
- C.
  
  Provides a continuous record of inventory on hand.
- D.
  
  Is not required by GAAP.
14.

Using a perpetual inventory system, which of the following entries would record the cost of merchandise sold on credit? Debit credit
- A.
  
  Sales discounts accounts payable
- B.
  
  Cost of goods sold purchase discounts
- C.
  
  Cost of goods sole inventory
- D.
  
  Inventory cost of goods sold
15.

Under a perpetual inventory system, which of the following entries would record the purchase of merchandise on credit? Debit credit
- A.
  
  Purchases account payable
- B.
  
  Inventory account payable
- C.
  
  Purchases cost of goods sold
- D.
  
  Sales accounts receivable
16.

A company purchased inventory for $800 per unit. The inventory was marked up to sell for $1,000 per unit. The entry to record the cost of a unit of inventory would include debits to which of the following accounts?
- A.
  
  Inventory, $800
- B.
  
  Cost of Goods Sold, $800
- C.
  
  Cost of Goods Sold, $1,000
- D.
  
  Inventory, $800
17.

BMX Co. sells item XJ15 for $1,000 per unit, and has a cost of goods sold percentage of 80%. The gross profit to be found for selling 20 items:
- A.
  
  Is $20,000.
- B.
  
  Is $16,000.
- C.
  
  Is $ 4,000.
- D.
  
  Cannot be calculated with a cost of goods sold percentage greater than 50%.
18.

A company purchased merchandise inventory on credit for $600 per unit, and later sold the inventory for $800 per unit. The journal entry to record the purchase of inventory included a debit to:
- A.
  
  Accounts Receivable.
- B.
  
  Inventory.
- C.
  
  Accounts Payable.
- D.
  
  Cost of Goods Sold.
19.

Which of the following is added to the purchase price of the inventory to determine net purchases?
- A.
  
  Freight-out
- B.
  
  Freight-in
- C.
  
  Purchase returns
- D.
  
  Purchase discounts
20.

Which of the following are subtracted from the purchase price of the inventory to determine net purchases?
- A.
  
  Freight-out and freight-in
- B.
  
  Purchase returns, purchase allowances and freight-in
- C.
  
  Purchase returns, purchase allowances, and purchase discounts
- D.
  
  None of the above
21.

Bonz, Inc. is using a perpetual inventory system with a December 31 year end date. The balance in this company’s inventory account as of September 30 would be equal to:
- A.
  
  Beginning inventory as of January 01.
- B.
  
  Beginning inventory as of January 01 plus all purchases from the beginning of the year through September 30, less all items sold from the beginning of the year through September 30.
- C.
  
  Beginning inventory as of January 01 plus all purchases from the beginning of the year through September 30.
- D.
  
  All purchases from the beginning of the year through September 30.
22.

The cost of inventory is the:
- A.
  
  Purchase price.
- B.
  
  Sum of all the costs incurred to bring the inventory to its intended use.
- C.
  
  Sum of all the costs incurred to bring the inventory to its intended use, plus any discounts and allowances.
- D.
  
  Sum of all the costs incurred to bring the inventory to its intended use, less any discounts and allowances.
23.

The choice of an inventory costing method will affect:
- A.
  
  The ending inventory.
- B.
  
  The cost of goods sold.
- C.
  
  The ending inventory and cost of goods sold.
- D.
  
  None of the above
24.

When the FIFO method is used, ending inventory is assumed to consist of the:
- A.
  
  Units with the lowest per unit cost.
- B.
  
  Units with the highest per unit cost.
- C.
  
  Oldest units.
- D.
  
  Most recently purchased units.
25.

When the LIFO method is used and there is no LIFO liquidation, the cost of goods sold is assumed to consist of:
- A.
  
  Units with the lowest per unit cost.
- B.
  
  Units with the highest per unit cost.
- C.
  
  Oldest units.
- D.
  
  Most recently purchased units.