Please answer the following questions, Thanks!
Instructions: 1. 4. wh Designate the best answer for each of the following questions. A credit memo could be issued by a seller to the customer to indicate that the a. customer should debit Accounts Payable. b. seller has credited Accounts Payable. c. customer should credit Accounts Receivable. d. none of the above. A quantity discount is used to encourage customers to a. purchase larger quantities of merchandise. b. pay for their purchases more quickly. c. purchase their merchandise at the beginning of the accounting cycle. d. pay for their purchases in cash rather than by cheque. periodic inventory system allows for the determination of cost of goods sold after each sale. traditionally has been used with low unit-value items. requires that detailed inventory records be kept. requires the use of a cost of goods sold account. ecsw> In accordance with the revenue recognition principle, sales revenues are recorded en a. earned, which typically occurs when the goods are transferred from the seller to the buyer. b. cash is received from the customer for items already delivered. c. an order is received from a customer with delivery of the product expected to take place within the next 30 days. d. the accountant determines which period's income statement "needs" more revenue. 5. Expenses that relate to such activities as personnel management, accounting, and store security generally should appear in a multiple-step income statement in the a. Cost of Goods Sold section. b. Administrative Expenses section. c. Non-operating section. d Selling Expenses section. 6. Which of the following accounts should appear in the Non-operating section of a multiple-step income statement? a. Freight Out b. Cost of Good Sold c. Sales Returns and Allowances d. Interest Expense 7. Freight terms of FOB shipping point mean that the a. buyer must bear the freight costs. b. seller must debit Freight Out. c. goods are placed free on board atthe buyer's place of business. d. seller must bear the freight costs. 8. With regard to accounting for a merchandising company versus a service enterprise, which of the following is false? a. Additional accounts and entries are typically required for a merchandising company. b. Both retail and wholesale enterprises generally use accounting techniques of a merchandising company. c. The process of measuring net income is conceptually different. d. There are just as many steps as in the accounting cycle for a merchandising company. 9. With regard to the accounts used to record freight costs in a periodic inventory system, a. Freight Out is add ed to Purchases. b. Freight Out's normal balance is a debit c. Freight In's normal balance is a credit. d. Freight In is a contra account to Sales. 10. The Sales Returns and Allowances account a. normally has a credit balance. should not be closed atthe end ofthe period. is a contra account to Accounts Receivable. is used by a merchandising company, but not a service enterprise. sale on account to a customer. return of goods originally purchased on account to the supplier. return of goods originally sold on account to a customer. d. purchase of goods on account from a supplier. b. c. d. 11. A credit memo is issued as evidence of a a. b. c. 12. Which of the following accounts is not included in the calculation of cost of goods sold in a periodic inventory system? a. Freight In D. Merchandise Inventory c. Purchase Returns and Allowances d. Freight Out 13. Internal control procedures and policies are designed to accomplish all of the following except a. the prevention and detection of errors. the safeguarding of assets. the protection of employees in hazardous positions. the enhancement of the accuracy and reliability of accounting records. 14. Which statement is false regarding the lower of cost and market (LCM) method of inventory? a. Market is usually defined as net realizable value. LCM is an example of the accounting concept of conservatism. LCM is normally applied to total inventory. All of the above are true regarding LCM. 15. Proponents of LIFO, as opposed to FIFO, point out that LIFO results in a lower cash flow in a period of deflation. a more current cost of goods sold. lower net income in a period of deflation. higher net income in periods of inflation. 16. Goods in transit should be included in the inventory of the buyer when the terms are FOB destination. buyer when the terms are FOB shipping point. transportation company when the terms are FOB shipping point. seller when the terms are FOB shipping point. 17. The ending inventory of Lindsey Company, which uses a periodic inventory system, was understated $5,000 on December 31, 2000, and overstated $3,000 on December 31, 2001. Because of these errors, 2001 net income was a overstated $3,000. overstated $8,000. C. understated $2,000. understated $8,000
