Name: ______Date: ______
1. / Costs included in the Merchandise Inventory account can include:A) / Invoice price minus any discount.
B) / Freight-in.
C) / Storage.
D) / Insurance.
E) / All of the above.
2. / The inventory turnover ratio is calculated as:
A) / Cost of goods sold divided by average merchandise inventory.
B) / Sales divided by cost of goods sold.
C) / Ending inventory divided by cost of goods sold.
D) / Cost of goods sold divided by ending inventory.
E) / Cost of goods sold divided by ending inventory times 365.
3. / Source documents:
A) / Are input devices.
B) / Provide the basic information processed by an accounting system.
C) / Cannot be electronic files.
D) / Store processed information for future use.
E) / All of the above.
4. / A subsidiary ledger that contains a separate account for each supplier (creditor) to the company is a(n):
A) / Controlling account.
B) / Accounts receivable ledger.
C) / Accounts payable ledger.
D) / General ledger.
E) / Special journal.
)
The Sun Company completed the following sales and cash receipts transactions during the first week of December. The Sun Company uses the periodic inventory system.a. Use the sales journal and the cash receipts journal to record these transactions.
b. Prepare a schedule of accounts receivable. There were no accounts receivable at December 1.
1. / When closing entries are made:
A) / All ledger accounts are closed to start the new accounting period.
B) / All temporary accounts are closed but not the permanent accounts.
C) / All real accounts are closed but not the nominal accounts.
D) / All permanent accounts are closed but not the nominal accounts.
E) / All balance sheet accounts are closed.
2. / The usual order for the asset section of a classified balance sheet is:
A) / Current assets, prepaid expenses, long-term investments, intangible assets.
B) / Long-term investments, current assets, plant assets, intangible assets.
C) / Current assets, long-term investments, plant assets, intangible assets.
D) / Intangible assets, current assets, long-term investments, plant assets.
E) / Plant assets, intangible assets, long-term investments, current assets.
3. / The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the:
A) / Income Summary account.
B) / Closing account.
C) / Balance column account.
D) / Contra account.
E) / Nominal account.
4. / The Income Summary account is used:
A) / To adjust and update asset and liability accounts.
B) / To close the revenue and expense accounts.
C) / To determine the appropriate withdrawal amount.
D) / To replace the income statement under certain circumstances.
E) / To replace the capital account in some businesses.
5. / Merchandise inventory:
A) / Is a long-term asset.
B) / Is a current asset.
C) / Includes supplies.
D) / Is classified with investments on the balance sheet.
E) / Must be sold within one month.
6. / The current period's ending inventory is:
A) / The next period's beginning inventory.
B) / The current period's cost of goods sold.
C) / The prior period's beginning inventory.
D) / The current period's net purchases.
E) / The current period's beginning inventory.
7. / The credit terms 2/10, n/30 are interpreted as:
A) / 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days.
B) / 10% cash discount if the amount is paid within 2 days, with balance due in 30 days.
C) / 30% discount if paid within 2 days.
D) / 30% discount if paid within 10 days.
E) / 2% discount if paid within 30 days.
8. / Merchandise inventory includes:
A) / All goods owned by a company and held for sale.
B) / All goods in transit.
C) / All goods on consignment.
D) / Only damaged goods.
E) / All of the above.
9. / Physical counts of inventory:
A) / Are not necessary under the perpetual system.
B) / Are necessary to measure and adjust for inventory shrinkage.
C) / Must be taken at least once a month.
D) / Requires the use of hand-held portable computers.
E) / Are not necessary under the cost-to benefit constraint.
10. / A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?
A) / $395.
B) / $410.
C) / $450.
D) / $510.
E) / $520.
Problem #1 ( 25 points )
The summary amounts below appear in the Income Statement and Balance Sheet columns of a company's December 31 work sheet. Prepare the necessary closing entries.Problem #2 ( 25 points )
12. / Roller Blade Company uses the perpetual inventory system and had the following transactions during October:Prepare journal entries to record each of the preceding transactions.