introduction chapters
chapter 5
Special Issues for
Merchants
goals discussion
goals
achievement
fill
in the blanks
multiple
choice
problems
check list and key terms
Select the appropriate response.
Sales returns and allowances should be recorded by:
debiting Sales Returns and Allowances or debiting Sales
Which of the following types of discounts would be recorded in a Sales Discounts account?
trade discounts or cash discounts
Sales returns and allowances and sales discounts are known as:
contra-revenue accounts or expense accounts
Under which of the following terms would the purchaser be responsible for freight charges?
F.O.B. destination or F.O.B. shipping point
Who would initially pay the freight charges under the following terms: F.O.B. shipping point, freight pre-paid?
The Purchases Discounts Lost account would be utilized under the:
If the gross method is utilized to record purchases and available cash discounts are taken, how many accounts would be affected by the appropriate journal entry to record payment of the invoice?
Beginning inventory plus net purchases equals:
goods available for sale or cost of goods sold
Net purchases equals gross purchases plus freight-in minus purchase discounts and purchase returns and allowances.
The total cost of goods available for sale should be allocated to:
cost of goods sold and ending inventory or gross profit
Modern computers have greatly increased the ability of firms to apply the:
periodic inventory system or perpetual inventory system
Is a physical inventory count recommended no matter which inventory system is used?
Which of the following income statement formats is justified on the grounds of simplicity and ease of understanding?
single-step approach or multiple-step approach
Gross profit and income from operations are important subtotals on a multiple-step income statement.
The separation of duties, accountability procedures, and sound personnel practices are all part of a properly designed internal control system.