Question 58 1 points Save

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

True

False

Question 59 1 points Save

Where are selling and administrative expenses found on the multi-step income statement?

Before gross profit

After sales and before gross profit

After net income and before expenses

After gross profit

Question 60 1 points Save

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Gross profit

Income from operations

Net income

Gross sales

Question 61 1 points Save

If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are

consigned.

n/30.

FOB shipping point.

FOB destination.

Question 62 1 points Save

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

True

False

Question 63 1 points Save

Which of the following accounts is a contra account to Sales?

Accounts Payable

Sales Returns and Allowances

Accounts Receivable

Interest Revenue

Question 64 1 points Save

When merchandise that was sold is returned, the seller decreases accounts payable.

True

False

Question 65 1 points Save

A. Bonds Company

The following is a single-step income statement for the A. Bonds Company:

A. Bonds Company

Income Statement

For the Year Ended December 31, 2010

Revenues:

Net Sales $250,000

Interest Income 17,500

Total Revenues $267,500

Expenses:

Cost of Goods Sold $ 50,000

Selling Expenses 20,000

General and Administrative Expenses 27,500

Interest Expense 12,500

Income Tax Expense 39,000

Total Expenses 149,000

Net Income $118,500

Refer to A. Bonds Company. If the income statement were prepared in a multiple-step format, gross profit would be

$217,500.

$127,500.

$101,000.

$152,500.

Question 66 1 points Save

In a multiple-step income statement, sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales.

True

False

Question 67 1 points Save

Using a perpetual inventory system, the return of merchandise purchased on account includes a(n)

increase in Sales.

increase in Merchandise Inventory.

decrease in Merchandise Inventory.

decrease in Sales.

Question 68 1 points Save

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.

True

False

Question 69 1 points Save

Under the perpetual inventory system, the cost of merchandise sold is recorded when sales are made.

True

False

Question 70 1 points Save

The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.

True

False

Question 71 1 points Save

A sales invoice included the following information: merchandise price, $5,000; terms 1/10, n/eom. Assuming that a credit for merchandise returned of $600 is granted prior to payment, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

$4,656

$4,400

$4,356

$4,950

Question 72 1 points Save

When merchandise that was sold on account is returned, which accounts are affected?

Cash, accounts receivable, cost of goods sold, and sales returns

Sales returns, accounts receivable, merchandise inventory, and cost of goods sold

Sales returns, accounts receivable, purchases, and cost of goods sold

Sales returns, accounts receivable, purchases, and merchandise inventory

Question 73 1 points Save

Which of the following accounts will NOT be found in the Cost of Merchandise Sold section on the income statement?

Purchases

Transportation In

Sales Returns and Allowances

Merchandise Inventory

Question 74 1 points Save

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 10 days after the invoice date to take advantage of the cash discount.

True

False

Question 75 1 points Save

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

Selling expense

Miscellaneous expense

Administrative expense

Other expense

Question 76 1 points Save

The payment of $15,000 for expenses was recorded by Spears Co. as an increase in cash of $15,000 and a decrease in retained earnings of $15,000. What is the effect of this error on the accounting equation?

Total assets will exceed total liabilities and stockholders' equity by $15,000.

Total assets will exceed total liabilities and stockholders' equity by $30,000.

Total assets will be less than total liabilities and stockholders' equity by $30,000.

The error will not affect the accounting equation.

Question 77 1 points Save

The payment of a liability

decreases assets and stockholders' equity.

increases assets and decreases liabilities.

decreases assets and increases liabilities.

decreases assets and decreases liabilities.

Question 78 1 points Save

Declaring and paying cash dividends affects which balance sheet accounts?

Cash only

Stockholders' equity only

Cash and stockholders' equity

Cash and capital stock

Question 79 1 points Save

Stockholders