1. Gross profit will result if: a. sales are greater than expenses b. sales are greater than cost of goods sold. c. operating expenses exceed gross margin. d. operating expenses exceed cost of goods sold. 2. Revenue accounts that normally have a credit balance include: a. Sales Revenue b. Sales Returns and Allowances c. Sales Discounts d. All of the above 3. You sold $2,100 of merchandise on credit on June 13, terms 2/10,net/30. A return of $100 is granted on June 16h. The amount received as payment in full on June 23 is: a. $2,058 b. $2,000 c. $1,960 d. $1,958 4. You bought a Ferrari in L.A. and it is being shipped to you here in OKC via the Acme Shipping Company, Acme Shipping assumes no responsibility for losses during shipping. Your invoice from the dealership reads "FOB shipping point", and the car is stolen on the way here. Who has legal title and bears the financial loss for the car? a. The dealership in Los Angeles b. Ferrari North America c. The dealership's insurance company d. You 5. One of your long-time clients calls you up and tells you your current shipment of goods to them is not up to the standards they expect from you. As this is the first time this client has complained, and the goods you shipped him came from a new vendor you just started using, you tell him that you will knock 50% off his bill and he can keep the goods. Part of the journal entry to record this transaction will include: a. a debit to Sales Revenue. b. a debit to Sales Returns and Allowances. c. a debit to Merchandise Inventory. d. a debit to Accounts Receivable. 6. XYZ Company had sales of $100,000, sales returns of $3,500, sales allowances of $1,500, sales discounts of $3,000, operating expenses of $25,000 and cost of goods sold of $42,000. What is your gross profit? a. $50,000 b. $51.500 c. $54,500 d. $58,000 7. Which of the following is a contra account? a. Income Summary b. Cost of Goods Sold c. Sales Discounts d. Depreciation Expense 8. Your company purchased merchandise inventory for $10,000 on January 27. Terms are "4/7, net 30". After returning $500 worth of the merchandise on January 29, you pay your bill on February 1. What amount will be paid? a. $9,600 c. $9,300 b. $9,500 d. $9,120 9. Purposes for recording sales discounts and sales returns & allowances include: a. To use as a measurement of customer satisfaction with items sold. b. To determine the impact on profits from promotional sales. c. To monitor price reductions due to damaged or defective merchandise sold. d. All of the above are good reasons for recording discounts, and returns & allowances