Question
QUESTION 1 Merchandise inventory was mistakenly understated in the current year. What is the effect of this error on the current year's financial statements? Assets
QUESTION 1
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Merchandise inventory was mistakenly understated in the current year. What is the effect of this error on the current year's financial statements?
Assets on the balance sheet are understated.
Cost of goods sold is understated.
Gross profit is overstated.
Net income is overstated.
1 points
QUESTION 2
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A company uses the perpetual inventory system and reports the following data. Units sold were 15 and 30 units remain in ending inventory. What is the cost of ending inventory under the first-in, first-out (FIFO) method?
Date
Activity
Units/Cost
Sales
Cost Available for Sale
Cost of Goods Sold
Ending Inventory
Dec. 7
Purchase
10 units @ $ 3 = $ 30
Dec. 14
Purchase
20 units @ $ 6 = $120
Dec. 15
Sale
15 units @ $10 = $150
Dec. 31
Purchase
15 units @ $ 7 = $105
Totals
?
?
?
?
$160
$165
$180
$195
1 points
QUESTION 3
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What journal entry does a company make to record a cash investment by the owner in exchange for common stock?
Debits Cash and credits Common Stock
Debits Cash and credits Dividends
Debits Common Stock and credits Cash
Debits Dividends and credits Cash
1 points
QUESTION 4
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Revenues are $80,000, expenses are $60,000, and dividends are $30,000. What is net income or net loss?
$10,000 net loss
$20,000 net income
$30,000 net loss
$50,000 net income
1 points
QUESTION 5
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What financial statement reports a company's financial position by listing the types and amounts of assets, liabilities, and equity at a point in time?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Retained Earnings
1 points
QUESTION 6
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What are the resources a business owns and controls called?
Assets
Expenses
Equity
Liabilities
1 points
QUESTION 7
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Temporary accounts closed at the end of an accounting period include which of the following?
Assets, dividends, expenses
Assets, liabilities, common stock, retained earnings
Common stock, liabilities, retained earnings, revenues
Dividends, expenses, income summary, revenues
1 points
QUESTION 8
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Which of the following is the correct entry for closing a company expense accounts?
Debit Common Stock for total expenses and credit each expense account for its balance
Debit each expense account for its balance and credit Income Summary for total expenses
Debit each expense account for its balance and credit Retained Earnings for total revenues
Debit Income Summary for total expenses and credit each expense account for its balance
1 points
QUESTION 9
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What inventory system continually updates accounting records for merchandising transactions during the period?
gross profit method
periodic method
perpetual method
retail method
1 points
QUESTION 10
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A company sells merchandise to a customer for $1,000 with terms 2/10, n/30 on January 1. What amount of cash will the merchandiser receive if the customer pays within the discount period?
$800
$980
$1,020
$1,200
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