Question 1

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles:  Which accounts would affect gross margin?

Accepted Answer

The answer of A company's chart of accounts includes, in...

Question 2

James Company experienced the following events during its first accounting period: (1)Purchased $10,000 of inventory on account under terms 1/10 n/30.(2)Returned $2,000 of the inventory purchased in Event 1(3)Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1 Immediately after the three events have been recognized, the balance in the inventory account is

Accepted Answer

The initial purchase was $10,000, and $2,000 was returned, leaving $8,000. Paying within the discount period gives a 1% discount on $8,000, which is $80. Therefore, the inventory balance is $8,000 - $80 = $7,920.

Question 3

Taha Company purchased $9,000 of inventory under terms FOB destination. Freight cost amounted to $300. The cost of inventory and freight were paid with cash. Which of the following shows how the recognition of this purchase, including freight costs if applicable, will affect Taha's financial statements?

Accepted Answer

The answer of Taha Company purchased $9,000 of inventory under...

Question 4

On April 1, Snell Company sold on account merchandise with a list price of $50,000. Payment terms were 3/10/n30. The receivable was collected from the customer on April 8. Considering only the collection of cash from the receivable, what effect will the transaction have on the company's statements?

Accepted Answer

The answer of On April 1, Snell Company sold on...

Question 5

A company using the perpetual inventory system paid cash for freight costs to purchase merchandise. Which of the following reflects the effects of this event on the financial statements?

Accepted Answer

Option B reflects the effects of paying cash for freight costs to purchase merchandise in the perpetual inventory system. The merchandise inventory account increases by the amount of the merchandise purchased, while the cash account decreases by the amount paid for the freight costs. This transaction does not affect the company's revenues or expenses.

Question 6

Faust Company uses the perpetual inventory system. Faust sold goods that cost $5,600 for $9,200. The sale was made on account. What is the net effect of the sale on the company's financial statements?(Consider the effects of both parts of this event.)

Accepted Answer

The sale increases accounts receivable (an asset) by $9,200 and decreases inventory (an asset) by $5,600, resulting in a net increase in total assets of $3,600.

Question 7

Middleton Company uses the perpetual inventory system. The company purchased an item of inventory for $150 and sold the item to a customer for $270. How will the sale affect the company's Inventory account?

Accepted Answer

The sale of the inventory item will result in a decrease in the inventory account by the cost of the item, which is $150. Therefore, the correct answer is B.

Question 8

James Company experienced the following events during its first accounting period.(1)Purchased $10,000 of inventory on account under terms 1/10 n/30.(2)Returned $2,000 of the inventory purchased in Event 1.(3)Paid the remaining balance in account payable for the inventory purchased in Event 1.If the Company pays the account payable after the discount period has expired, how much cash will be required to settle the liability?

Accepted Answer

- The cost of inventory purchased in Event 1 is $10,000.
- The return of inventory in Event 2 reduces the cost to $8,000.
- If the Company pays after the discount period has expired, it will not be eligible for the 1% discount, and therefore will have to pay the full amount of $8,000.
- Therefore, $8,000 in cash will be required to settle the liability.

Question 9

Taylor Company purchased $9,000 of inventory under terms FOB shipping point. Freight cost amounted to $300. The cost of inventory and freight were paid with cash. Which of the following shows how the recognition of this purchase, including freight costs if applicable, will affect Taylor's financial statements?

Accepted Answer

The answer of Taylor Company purchased $9,000 of inventory under...

Question 10

Anchor Company sold merchandise with a cost of $560 to a customer for $890 on account. Due to an error, neither part of the related two-part transaction was recorded in the accounting records. What effect will the failure to make the necessary entries have on the company's financial statements?

Accepted Answer

The failure to record the transaction will result in an understatement of both total assets and total stockholders' equity. This is because the transaction would have increased both the accounts receivable (an asset) and retained earnings (a stockholders' equity account), but without recording it, these accounts are not reflecting the actual values.

Question 11

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles:  Which accounts would appear on the balance sheet?

Accepted Answer

The answer of A company's chart of accounts includes, in...

Question 12

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles:  Which accounts would appear on the income statement?

Accepted Answer

The answer of A company's chart of accounts includes, in...

Question 13

When using a perpetual inventory system, which of the following events is an asset use transaction?

Accepted Answer

Paying cash for transportation-out decreases assets (cash)and decreases stockholders' equity (retained earnings).Transportation-out is a period cost,which increases expenses and decreases net income.

Question 14

At the end of its Year 1 accounting period, Voss Company had a $35,000 balance in its inventory account. Even so, when the company took a physical count of the inventory, it found only $34,300 of inventory on hand. Which of the following shows how recognizing the inventory shrinkage will affect the Company's financial statements?

Accepted Answer

The answer of At the end of its Year 1...

Question 15

James Company experienced the following events during its first accounting period:(1)Purchased $10,000 of inventory on account under terms 1/10 n/30.(2)Returned $2,000 of the inventory purchased in Event 1.(3)Paid the remaining balance in account payable for the inventory purchased in Event 1.Based on this information, which of the following shows how the recognition of the cash discount (Event 1)will affect the Company's financial statements?

Accepted Answer

The answer of James Company experienced the following events during...

Question 16

What is the effect of recording the purchase of inventory on account under the perpetual inventory system?

Accepted Answer

The answer of What is the effect of recording the...

Question 17

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles:  Which accounts would affect operating income?

Accepted Answer

Operating income is usually calculated by subtracting operating expenses from operating revenues. Therefore, the accounts that would affect operating income are those related to operating revenues (typically recognized in accounts numbered 3) and operating expenses (typically recognized in accounts numbered 4 and 7), along with any other accounts with expenses or revenues directly related to the company's operations (such as account number 9). Choice C includes all of these account numbers.

Question 18

Middleton Company uses the perpetual inventory system. The company purchased an item of inventory for $130 and sold the item to a customer for $200. How will the sale affect the company's Inventory account?

Accepted Answer

Under the perpetual inventory system, the cost of goods sold is recorded at the time of sale, and the corresponding amount is deducted from the inventory account. Therefore, the sale of $200 will increase the company's revenue and decrease the inventory account by the amount of cost of goods sold, which is $130.

Question 19

A company using the perpetual inventory system paid cash for a transportation-in cost. Which of the following choices reflects the effects of this event on the financial statements?

Accepted Answer

The answer of A company using the perpetual inventory system...

Question 20

James Company experienced the following events during its first accounting period:(1)Purchased $10,000 of inventory on account under terms 1/10 n/30.(2)Returned $2,000 of the inventory purchased in Event 1.(3)Paid the remaining balance in account payable for the inventory purchased in Event 1.Based on this information, which of the following shows how paying off the account payable (Event 3)will affect the Company's financial statements?

Accepted Answer

The answer of James Company experienced the following events during...

Quiz 4: Accounting for Merchandising Businesses

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles: Which accounts would affect gross margin?

On April 1, Snell Company sold on account merchandise with a list price of $50,000. Payment terms were 3/10/n30. The receivable was collected from the customer on April 8. Considering only the collection of cash from the receivable, what effect will the transaction have on the company's statements?

A company using the perpetual inventory system paid cash for freight costs to purchase merchandise. Which of the following reflects the effects of this event on the financial statements?

Faust Company uses the perpetual inventory system. Faust sold goods that cost $5,600 for $9,200. The sale was made on account. What is the net effect of the sale on the company's financial statements?(Consider the effects of both parts of this event.)

Middleton Company uses the perpetual inventory system. The company purchased an item of inventory for $150 and sold the item to a customer for $270. How will the sale affect the company's Inventory account?

Anchor Company sold merchandise with a cost of $560 to a customer for $890 on account. Due to an error, neither part of the related two-part transaction was recorded in the accounting records. What effect will the failure to make the necessary entries have on the company's financial statements?

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles: Which accounts would appear on the balance sheet?

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles: Which accounts would appear on the income statement?

When using a perpetual inventory system, which of the following events is an asset use transaction?

What is the effect of recording the purchase of inventory on account under the perpetual inventory system?

A company's chart of accounts includes, in part, the following account numbers and corresponding account titles: Which accounts would affect operating income?

Middleton Company uses the perpetual inventory system. The company purchased an item of inventory for $130 and sold the item to a customer for $200. How will the sale affect the company's Inventory account?

A company using the perpetual inventory system paid cash for a transportation-in cost. Which of the following choices reflects the effects of this event on the financial statements?