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26 Cards in this Set
- Front
- Back
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The Cost of Goods Sold account is closed by
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Debiting Income Summary and crediting Retained Earnings
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Gross profit is the difference between
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Net sales and the cost of goods sold
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The credit term 2/10 n/30 means
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That there is a 2% discount if payment is received within 10 days
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The basic purpose of a subsidiary ledger is to
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Provide details about the individual items comprising the balance of a general ledger account
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Under the perpetual inventory system which journal entry would indicate a purchase of merchandise
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Debit, inventory and credit, cash
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Speedy Inc., has applied to its bank for a loan. The bank asks Speedy's controller the total amount of the company's accounts receivable. Assuming that all accounting records are up-to-date, the controller can best answer this question by referring to
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The accounts receivable controlling account
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In a perpetual inventory system
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Merchandising transactions are recorded as they occur
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The cost of transportation of inventory purchased
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Becomes part of the cost of inventory
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Arista Artworks Co. records purchases net of all available purchase discounts. If the company makes payment after the discount has expired, the entry to record the payment should include a...
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Debit to Purchase Discounts Lost
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Brooklyn's Best Bar reports net sales of $750,000 gross profit of $325,000, and net income of $45,000. The company's cost of goods sold is...
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$425,000 (Sales - COGS = GP)
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The allowance for Doubtful Accounts will appear on the...
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Balance Sheet
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With available-for-sale securities, unrealized holding gains and losses are...
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Reported in the stockholders' equity section of the balance sheet
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Conservatism in the valuation of accounts receivable...
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Would prefer the allowance method over the direct write-off method
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The allowance for Doubtful Accounts represents...
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The difference between the face value of accounts receivable and the net realizable value of accounts receivable
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Inventory shrinkage is caused by...
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All of the above: Shoplifting, breakage, spoilage.
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The Mark-To-Market adjustment for investments classified as "available for sale" affects...
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Only the balance sheet
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A bank reconciliation explains the differences between...
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The balance per bank statement and the cash balance per the accounting records of the depositor
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An NSF check returned by the bank should be entered in the depositor's accounting records by a debit to...
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Accounts Receivable
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Accounts receivable appear in the balance sheet...
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As current assets, immediately after cash and cash equivalents
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The direct write-off method of recognizing uncollectible accounts expense...
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Records uncollectible accounts expense when individual accounts receivable are determined to be worthless
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When prices are increasing which inventory method will produce the highest cost of goods sold?
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LIFO: Last ones in first ones out
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Clark Company has used the same inventory method for many years. This is an example of which principle?
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Consistency
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In which of these three inventory cost flow assumptions is it important to determine the actual cost of a particular inventory item being sold in order to determine cost of goods sold?
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Specific Identification
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In a manufacturing company, the "just-in-time" concept of inventory management is best illustrated by...
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Receiving deliveries of materials from suppliers just before the materials are used in the production process
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The logic behind the lower-of-cost-or-market rule is...
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An asset is not worth more than it would cost the owner to replace it
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Goods in transit between the buyer and the seller belong to...
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The answer depends upon whether the goods were shipped F.O.B shipping point or F.O.B destination
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