ACC 201 Chapter 5

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20 Questions - Developed by: Karli - Developed on: - 6.767 taken

  • 1
    Retailers and wholesalers are both considered merchandisers
  • 2
    The steps in the accounting cycle are different for a merchandising company than for a service company
  • 3
    Sales minus operating expenses equals gross profit
  • 4
    Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs
  • 5
    A periodic inventory system requires a detailed inventory record of inventory items
  • 6
    Freight terms of FOB Destination means that the seller pays the freight costs
  • 7
    Freight costs incurred y the seller on outgoing merchandise are an operating expense to the seller
  • 8
    Sales revenues are earned during the period cash is collected from the buyer
  • 9
    The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts
  • 10
    The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned
  • 11
    Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly
  • 12
    To grant a customer a sales return, the seller credits Sales Returns and Allowances
  • 13
    A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end
  • 14
    For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account
  • 15
    A merchandising company has different types of adjusting entries than a service company
  • 16
    Non operating activities exclude revenues and expenses that result from secondary or auxiliary operations
  • 17
    Operating expense are different for merchandising and service enterprises
  • 18
    Net sales appears on both the multiple-step and single-step forms of an income statement
  • 19
    A multiple-step income statement provides users with more information about a company's income performance
  • 20
    The multiple-step form of income statement is easier to read than the single-step form

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