6. ----------- Is an asset account that is used only for goods purchased that the business owns and intends to resell to customers.

1. Materiality Concept
2. Perpetual Inventory System
3. Merchandise Inventory account
4. Cash Basis Accounting

7. At May 1, 2017, Deitrich Company had beginning inventory consisting of 300 units with a unit cost of 3.50. During May, the company purchased inventory as follows:

600 units at 3.50

900 units at 4.00

The company sold 1,500 units during the month for 6 per unit. Deitrich uses the average-cost method. The average cost per unit for May is

1. 3.50.
2. 3.75.
3. 3.80.
4. 4.00.

8. ----------- An inventory system that keeps a running computerized record of merchandise

1. Perpetual Inventory System
2. Merchandise Inventory account
3. Cash Basis Accounting
4. Accrual Basis Accounting

9. Revenue is earned when the business has ________.

1. entered into an agreement with the customer about the goods or services to be delivered
2. prepared a journal entry to record revenue
3. received cash from the customer before goods or services are delivered
4. delivered a good or service to the customer

10. The goal of reporting realistic figures and never overstating assets or net income applies to the ________.

1. materiality concept
2. conservatism principle
3. disclosure principle
4. consistency principle

11. ABC Company earned revenues of $19,000 and incurred expenses of $4,000. The company declared and paid cash dividends of $1,500. What is the balance in the Income Summary account after closing net income or loss to the Retained Earnings account?

1. debit balance of $19,000
2. credit balance of $4,000
3. credit balance of $15,000
4. balance of $0

12. An invoice of $600 for merchandise purchased is showing 3/15, n/30 as terms of credit. If the invoice is paid on or before the fifteenth day, the amount to be paid is ________.

1. $582
2. $600
3. $618
4. $621