ACC 290 Week 4 Practice Quiz

Question 1
 A service company's operating cycle is ordinarily shorter than that of a merchandising company.
The operating cycle of a merchandising company is ordinarily shorter than that of a service company.
 
Question 2
 
   Due to the turnover time of inventory, merchandising companies have an operating cycle that is longer than a service company.
The operating cycle of a merchandising company is ordinarily ___________________ that of a service firm.
 
Question 3
 
   The cost of having merchandise delivered to the store is part of the cost of getting the inventory ready to sell. All costs incurred to get inventory ready to sell are included as part of Inventory account with a debit.
Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200?
 
 
Question 4
 
   Sales Discounts is a contra account to Sales Revenue. It is reported on the income statement as a deduction from Sales Revenue.
 
Question 5
 
   Two entries are required. One will record the sale with a debit to cash and a credit to sales revenue. The second entry is to reduce the inventory; debit cost of goods sold and credit inventory.
Which statement is true when recording the sale of goods for cash in a perpetual inventory system?
 
 Question 6
 
  Sales less cost of goods sold equals gross profit. Subtracting operating expenses from gross profit equals net income.
Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold?
 
 
Question 7
 
   Cost of goods sold is subtracted from net sales to calculate gross profit.
Which one of the following will result in gross profit?
 
 
Question 8
 
   Under the periodic inventory system, cost of goods sold for the period is calculated by adding purchases for the period to the beginning inventory balance and subtracting the ending inventory balance.
Under what system is cost of goods sold determined at the end of an accounting period?
 
Question 9
 
   Net income ($15,000) divided by net sales ($75,000) equals profit margin of 20%.
Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and sales revenues total $95,000. How much is the profit margin?
 
Question 10
 
   Unlike the perpetual system, companies do not attempt to record the cost of merchandise sold on the date of the sale. At the end of the period, a physical inventory is taken to determine the cost of merchandise sold.
In a periodic inventory system, when is the cost of the merchandise sold determined?