Question 1(1 point)

A company shows the following balances:

Sales$1,000,000

Sales returns and allowances250,000

Cost of goods sold600,000

Operating expenses75,000

.

What is the company's profit margin?

Question 1 options:

30%

10%

7.5%

15%

Question 2(1 point)

A company buys merchandise costing $25,000 with terms of 2/10 n/30. The adjustment to the Merchandise Inventory account, assuming the discount is taken, will be

Question 2 options:

$0.

$300.

$500.

$250.

Question 3(1 point)

GST/HST paid on the purchase of inventory is

Question 3 options:

recorded as an operating expense on the income statement.

recorded as additional freight costs and included in the calculation of the cost of goods sold.

an additional cost that must be absorbed by the merchandise company.

not included in inventory because it is recoverable.

Question 4(1 point)

Freight costs incurred by the seller on outgoing merchandise are recorded as

a.

b.

c.

d.

Question 4 options:

freight out.

freight-in.

merchandise inventory.

cost of goods sold.

Question 5(1 point)

FOB means

Question 5 options:

Free on board.

Free on buyer.

Freight on back order.

Freight on board.

Question 6(1 point)

Sales revenues are usually considered earned when

a.

b.

c.

d.

Question 6 options:

an order is received.

cash is received from credit sales.

goods have been transferred from the seller to the buyer.

adjusting entries are made.

Question 7(1 point)

If a customer agrees to keep merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Question 7 options:

contra asset.

return.

allowance.

discount.

Question 8(1 point)

The detailed individual data from the inventory subsidiary ledger are summarized in the

Question 8 options:

gross profit.

accounts payable control account.

cost of goods sold.

merchandise inventory control account.

Question 9(1 point)

Under a perpetual inventory system, the following entry would be made to record the purchase of inventory on account:

Question 9 options:

Purchasesxxx

Accounts Payablexxx

Merchandise Inventoryxxx

Accounts Payablexxx

Merchandise Inventoryxxx

Accounts Receivablexxx

Cost of Goods Soldxxx

Accounts Payablexxx

Question 10(1 point)

Tidnish Company sells merchandise on account for $2,400 to Upper Cape Company. Upper Cape Company returns $800 (cost $500) of merchandise that was damaged, along with a cheque to settle the account. What entry does Tidnish Company make upon receipt of the cheque?

Question 10 options:

Cash1,568

Sales Returns and Allowances832

Accounts Receivable2,400

Cash1600

Accounts Receivable1600

Cash2,400

Sales Returns and Allowances800

Accounts Receivable1600

Cash1,600

Sales Returns and Allowances800

Inventory500

Accounts Receivable2,400

Cost of Goods Sold500

Question 11(1 point)

When using a perpetual inventory system, the adjusting entry required when merchandise inventory records do NOT agree with the physical count

Question 11 options:

requires reporting a gain when actual is lower than records.

requires reporting a loss when actual is higher than records.

has no effect on Cost of Goods Sold.

has an effect on Cost of Goods Sold.

Question 12(1 point)

If sales have decreased in the past 5 years and the cost of goods sold value remains the same each year, this will create

Question 12 options:

an increase in gross profit margin.

an increase in profit margin.

a decrease in cost of goods sold.

a decrease in gross profit margin.

Question 13(1 point)

In a perpetual inventory system, cost of goods sold is recorded

Question 13 options:

at the end of the accounting period.

with each sale.

on an annual basis.

on a daily basis.

Question 14(1 point)

Using a perpetual inventory system, the respective normal account balances of Merchandise Inventory, Sales Returns and Allowances, and Cost of Goods Sold are

Question 14 options:

credit, credit, credit.

debit, debit, credit.

debit, debit, debit.

debit, credit, credit.

Question 15(1 point)

Wright Company recently made a $10,000 purchase from a major supplier. Shipping costs were $200, terms FOB shipping point. To record this purchase, Wright Company will need to debit the

Question 15 options:

Cost of Goods Sold account for $10,200.

Merchandise Inventory account for $10,000.

Cost of Goods Sold account for $200.

Merchandise Inventory account for $10,200.

Question 16(1 point)

The Saint John River Company received $630 on account from a customer. The transaction was erroneously recorded as a debit to Cash of $360 and a credit to Accounts Payable, $360. The correcting entry is

a.

b.

c.

d.

Question 16 options:

Accounts Payable360

Accounts Receivable360

Accounts Payable360

Cash270

Accounts Receivable630

Accounts Payable360

Cash360

Accounts Receivable630

Cash630

Question 17(1 point)

The two optional steps in the accounting cycle are preparing

Question 17 options:

a post-closing trial balance and reversing entries.

an adjusted trial balance and a post-closing trial balance.

reversing entries and a work sheet.

a work sheet and post-closing trial balances.

Question 18(1 point)

A correcting entry

Question 18 options:

may involve any combination of accounts.

is a required step in the accounting cycle.

must involve one balance sheet account and one income statement account.

is another name for a closing entry.

Question 19(1 point)

After closing entries are posted, the balance in the owner's capital account in the ledger will be equal to

Question 19 options:

the amount of the owner's capital reported on the balance sheet.

the beginning owner's capital reported on the statement of owner's equity.

the profit (or loss) for the period.

zero.

Question 20(1 point)

A lawyer collected $860 of legal fees in advance. He erroneously debited Cash for $680 and credited Accounts Receivable for $680. The correcting entry is

a.

b.

c.

d.

Question 20 options:

Cash860

Legal Fees Earned860

Cash180

Accounts Receivable180

Cash680

Accounts Receivable180

Unearned Legal Fees860

Cash180

Accounts Receivable680

Unearned Legal Fees860

Question 21(1 point)

The purpose of the post-closing trial balance is to

Question 21 options:

ensure that all adjusting entries were made.

prove the equality of the income statement account balances that are carried forward into the next accounting period.

prove the equality of the balance sheet account balances that are carried forward into the next accounting period.

list all the balance sheet accounts in alphabetical order for easy reference.

Question 22(1 point)

Which of the following is an example of a temporary account that will be closed to Income Summary at the end of the accounting period?

Question 22 options:

Accumulated Depreciation

Land

Accounts Payable

Service Revenue

Question 23(1 point)

Which of the following is a true statement about closing the books of a proprietorship?

Question 23 options:

Only revenues and expenses are closed to the Income Summary account.

Expenses are closed to the owner's drawings account.

Only revenues are closed to the Income Summary account.

Revenues, expenses, and the owner's drawings account are closed to the Income Summary account.

Question 24(1 point)

The owner's capital account is

Question 24 options:

a temporary account.

closed to the owner's drawings account at the end of the accounting period.

a permanent account.

closed to the Income Summary account at the end of the accounting period.

Question 25(1 point)

An intangible asset

a.

b.

c.

d.

Question 25 options:

derives its value from the rights and privileges it provides the owner.

is never amortized because it has an indefinite life.

cannot be classified on the balance sheet because it lacks physical substance.

is a liability because it has no physical substance.