Accounting Test 2

92 Questions | Total Attempts: 398

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Accounting Quizzes & Trivia

As the texts keep diving deeper and deeper to what you have covered so far, the need to take up proper revision also increases. The quiz below is designed to help you pass the tests that are drawing nearer. Give it a go and all the best as you tackle it.


Questions and Answers
  • 1. 
    Gross profit will result if:
    • A. 

      Sales revenue are greater than cost of goods sold.

    • B. 

      Operating expenses are greater than cost of goods sold.

    • C. 

      Operating expenses are less than net income.

    • D. 

      Sales revenue are greater than operating expenses

  • 2. 
    Under a perpetual inventory system, when goods are purchased for resale by a company:
    • A. 

      Purchases on account are debited to Merchandise Inventory.

    • B. 

      Purchases on account are debited to Purchases

    • C. 

      Purchase returns are debited to Purchase Returns and Allowances

    • D. 

      Freight costs are debited to Freight-out

  • 3. 
    The sales accounts that normally have a debit balance are:
    • A. 

      Sales Returns and Allowances.

    • B. 

      Neither Sales Discounts nor Sales Returns and Allowances.

    • C. 

      Both Sales Discounts and Sales Returns and Allowances.

    • D. 

      Sales Discounts.

  • 4. 
    A credit sale of $750 is made on June 13, term 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is:
    • A. 

      $700

    • B. 

      $650

    • C. 

      $686

    • D. 

      $685

  • 5. 
    Which of the following accounts will normally appear in the ledger of a merchandising company that uses a perpetual inventory system?
    • A. 

      Freight-in

    • B. 

      Purchases

    • C. 

      Purchase Discounts

    • D. 

      Cost of Goods Sold

  • 6. 
    To record the sale of goods for cash in a perpetual inventory system:
    • A. 

      Two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods and reduction of inventory.

    • B. 

      Only one journal entry is necessary to record the reciept of cash and the sales revenue.

    • C. 

      Two journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue.

    • D. 

      Only one journal entry is necessary to record cost of goods sold and reduction of inventory.

  • 7. 
    • A. 

      A mutiple-step income statement is required for a merchandising company.

    • B. 

      Closing journal entries are not required for a merchandising company.

    • C. 

      A post-closing trial balance is not required for a merchandising company.

    • D. 

      An additional journal entry for inventory may be needed in a merchandising company.

  • 8. 
    The multiple-step income statement for a merchandising company shows each of the following features except:
    • A. 

      Investing activities section.

    • B. 

      Gross profit.

    • C. 

      A sales revenue section.

    • D. 

      Cost of goods sold.

  • 9. 
    If sales revenues are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000 the gross profit is:
    • A. 

      $90,000

    • B. 

      $340,000

    • C. 

      $400,000

    • D. 

      $30,000

  • 10. 
    A single-step income statement:
    • A. 

      Reports gross profit.

    • B. 

      Reports sales revenue and "Other revenues and gains" in the revenues section of the income statement.

    • C. 

      Reports operating income separately.

    • D. 

      Does not report cost of goods sold.

  • 11. 
    Which of the following appears on both a single-step and a multiple-step income statement?
    • A. 

      Income from operations

    • B. 

      Merchandising inventory

    • C. 

      Gross profit

    • D. 

      Cost of goods sold

  • 12. 
    In determining cost of goods sold:
    • A. 

      Freight-in added to net purchases.

    • B. 

      Freight-out is added to net purchases.

    • C. 

      Purchases returns and allowances are deducted from net purchases.

    • D. 

      Purchase discounts are deducted from net purchases.

  • 13. 
    If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, cost of goods sold is:
    • A. 

      $420,000

    • B. 

      $390,000

    • C. 

      $370,000

    • D. 

      $330,000

  • 14. 
    When goods are purchased for resale by a company using a periodic inventory system:
    • A. 

      Purchases on account are debited to Purchases.

    • B. 

      Freight costs are debited to Purchases.

    • C. 

      Purchase returns are debited to Purchase Returns and Allowances.

    • D. 

      Purchases on account are debited to Merchandise Inventory.

  • 15. 
    In a worksheet, Merchandise Inventory is shown in the following columns:
    • A. 

      Income statement credit and balance sheet debit.

    • B. 

      Income statement credit and adjusted trial balance debit.

    • C. 

      Adjusted trial balance debit and balance sheet debit.

    • D. 

      Income statement debit and balance sheet debit.

  • 16. 
    Sales revenue less cost of goods sold is called net profit.
    • A. 

      True

    • B. 

      False

  • 17. 
    In a perpetual inventory system, a company determines the cost of goods sold each time a sale occurs.
    • A. 

      True

    • B. 

      False

  • 18. 
    In a periodic inventory system, companies keep detailed inventory records of the goods on hand throughout the period.
    • A. 

      True

    • B. 

      False

  • 19. 
    FOB destination means that the seller places the goods free on board the common carrier and the buyer pays the freight costs.
    • A. 

      True

    • B. 

      False

  • 20. 
    Sales Returns and Allowances is a contra revenue account to Sales and has a normal debit balance.
    • A. 

      True

    • B. 

      False

  • 21. 
    A merchandiser using a perpetual system will require one additional adjusting entry to make the record agree with the actual inventory on hand.
    • A. 

      True

    • B. 

      False

  • 22. 
    The income statement for retailers contains one expense catergory just like the income statement of a service company.
    • A. 

      True

    • B. 

      False

  • 23. 
    A multiple-step income statement distinguishes between operating and non-operating activities.
    • A. 

      True

    • B. 

      False

  • 24. 
    Under a periodic system, the company uses seperate accounts to record freight costs, returns, and discounts.
    • A. 

      True

    • B. 

      False

  • 25. 
    There are more steps involved in preparing a worksheet for a merchandising company than for a service company.
    • A. 

      True

    • B. 

      False