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Financial Accounting Study Set 24
Quiz 7: Reporting and Interpreting Cost of Goods Sold and Inventory
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Question 101
Essay
"Toys 4 U" has reported the following information on their income statements for the years 2006 through 2010:
1. Compute the gross profit percentage for a. 2012 ________ b. 2011 ________ c. 2010 ________ d. 2009 ________ e. 2008 ________ 2. Has the gross profit ratio for "Toys 4 U" improved over time or worsened? Explain your reason.
Question 102
True/False
While sales discounts and credit card discounts can only be treated as contra revenues, sales returns and allowances are treated as either a contra revenue or a selling expense.
Question 103
Essay
Eddie Corporation uses the allowance method for estimating uncollectible accounts. Required: Prepare entries to record the following transactions:
Question 104
True/False
External auditors are usually employees of the company.
Question 105
True/False
Deposits in transit to the bank have not been recorded in the depositor's books but they have been recorded by the bank.
Question 106
True/False
Journal entries made to update the cash account, after a bank reconciliation has been prepared, should affect the "Bank Statement" part of the reconciliation rather than the "Depositor's Books" part of the reconciliation.
Question 107
Essay
A portion of the statement of earnings for Sun Company is shown below. Provide the missing account titles and amounts.
Question 108
True/False
Credit terms "2/10, n/30" mean that if payment is made in two days, a 10% discount will be given; if not paid within two days, the full invoice price will be due in thirty days.
Question 109
Essay
What are "cash equivalents"? Specifically where would they appear on the financial statements?
Question 110
True/False
An aging of trade accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the greater the probability that it will eventually be collected.