1) The two main inventory accounting systems are

A purchase and sale.

B cash and accrual.

C perpetual and periodic.

D returns and allowances.

2) What type of income statement reports both gross profit and operating income?

A multi-step income statement

B trial income statement

C single-step income statement

D subtotal income statement

3) The inventory account shows an ending balance of $20,500. An actual count of inventory reveals $20,100 of inventory on hand. The adjusting entry involves

A debit to inventory for $400.

B credit to cost of goods sold for $20,100.

C debit to cost of goods sold for $400.

D credit to inventory for $20,500.

4) Which subtotals appear on a multi-step income statement but do not appear on a single-step income statement?

A gross profit and income from operations

B cost of goods sold and net income

C operating expenses and net income

D net sales and cost of goods sold

5) The income summary account has a $25,000 debit balance after closing the revenue and expense accounts. This balance is closed to the

A sales revenue account.

B owner's withdrawals account.

C cost of goods sold account.

D owner's capital account.

6) The income summary account has a $25,000 debit balance after closing the revenue and expense accounts. This balance is closed to the

A sales revenue account.

B owner's withdrawals account.

C cost of goods sold account.

D owner's capital account.

7) The inventory account shows an ending balance of $20,800. An actual count of inventory reveals $21,200 of inventory on hand. The adjusting entry involves

A credit to inventory for $20,500.

B credit to cost of goods sold for $20,100.

C debit to cost of goods sold for $400.

D debit to inventory for $400.

8) If an income statement reports both gross profit and operating income, which type of income statement format is used?

A single-step

B multi-step

C trial

D subtotal