Question 1

Cost of Goods Sold (COGS):

Accepted Answer

Cost is recognized as an expense when merchandise is sold

Question 2

Gross Profit:

Accepted Answer

Sales-COGS; profit before deducting operating expenses

Question 3

Purchase Transactions- Cash:

Accepted Answer

D: Inventory, C: Cash

Question 4

Perpetual Inventory System:

Accepted Answer

A physical count is performed periodically to ensure books are correct; adjustments are booked for differences

Question 5

Periodic Inventory System:

Accepted Answer

the inventory is booked to the physical count at the end of the accounting period

Question 6

Purchase Transactions- Credit:

Accepted Answer

D: Inventory, C: Accounts Payable

Question 7

"2/10, n/30":

Accepted Answer

read as “2% discount if paid within 10 days, net amount due within 30 days"

Question 8

Journal Invoice and Payment at the End of the Discount Period:

Accepted Answer

1. D: Inventory, C: Accounts Payable; 2. D: Accounts Payable, C: Cash and or Inventory

Question 9

Journal Paying the Invoice:

Accepted Answer

D: Accounts Payable. C: Cash

Question 10

Journal Return of Inventory:

Accepted Answer

D: Accounts Payable, C: Inventory

Question 11

Purchase Returns and Allowances:

Accepted Answer

1. D: Inventory, C: Accounts Payable; 2. D: Accounts Payable, C: Inventory; 3. D: Accounts Payable, C: Inventory and or Cash (I-AP x Discount, AP-Answer)

Question 12

Cash Sales- Sales Entry:

Accepted Answer

D: Cash, C: Sales

Question 13

Cash Sales- Inventory Entry:

Accepted Answer

D: COGS, C: Inventory

Question 14

Cash Sales- Fees:

Accepted Answer

D: Credit Card Expense, C: Cash

Question 15

Sales on Account:

Accepted Answer

D: Accounts Receivable, C: Sales; D: COGS, C: Inventory

Question 16

Sales on Account Receipt:

Accepted Answer

D: Cash, C: Accounts Receivable

Question 17

Inventory Shrinkage:

Accepted Answer

Difference when the physical inventory on hand at the end of the accounting
period is usually less than the balance of inventory

Question 18

Selling Expenses:

Accepted Answer

Incurred directly in the selling of merchandise

Question 19

Administrative Expenses:

Accepted Answer

Incurred in the administration or general operations of the business

Question 20

Operating Income:

Accepted Answer

Gross Profit-Operating Expenses (Selling+Administrative)

Question 21

Other Revenue:

Accepted Answer

revenue from sources other than the primary operating activity of a business

Question 22

Other Expense:

Accepted Answer

expense that cannot be traced directly to the normal operations of the business

Question 23

Single-Step Income Statement:

Accepted Answer

Revenues: Sales, Rent (etc.) Revenue, everything else expenses

Question 24

Asset Turnover Ratio:

Accepted Answer

Sales/Average Total Assets

Question 25

FIFO:

Accepted Answer

Cost flow in order which costs were incurred

Question 26

LIFO:

Accepted Answer

Cost flow in reverse order which costs were incurred

Question 27

Weighted Average Cost:

Accepted Answer

Cost flow is an average of the cost

Question 28

Lower Cost or Market (LCM):

Accepted Answer

If the market value is lower than the purchase cost (used to value the inventory)

Question 29

Net Realizable Value:

Accepted Answer

Estimated Selling Price - Direct Costs of Disposal

Question 30

Ending Inventory Overstated:

Accepted Answer

Gross Proft, Net Income, Balance Sheet: Overstated; COGS: Understated

Question 31

Ending Inventory Understated:

Accepted Answer

Gross Profit, Net Income, Balance Sheet: Understated; COGS: Overstated

Question 32

Inventory Turnover:

Accepted Answer

COGS/Average Inventory

Question 33

Days' Sales in Inventory:

Accepted Answer

Average Inventory/Average COGS

Question 34

Sarbanes Oxley Act:

Accepted Answer

Purpose is to maintain public confidence and trust in the financial reporting of companies

Question 35

Credit Memo:

Accepted Answer

Increases in Liability; EFT deposits, notes receivable collections, loan proceeds, interest earned, bank errors

Question 36

Debit Memo:

Accepted Answer

Decreases in Liability; EFT payments, service charges, NSF checks, bank errors

Question 37

Bank Reconciliation:

Accepted Answer

difference between the cash balance reported on the bank statement and the balance of the cash account in the ledger

Question 38

Bank Section:

Accepted Answer

begins with the cash balance according to the bank statement and ends with the adjusted balance

Question 39

Company Section:

Accepted Answer

begins with the cash balance according to the company’s records and ends with the adjusted balance

Question 40

Cash Balance According to Bank Statement:

Accepted Answer

Add: Deposits in Transit, Deduct: Outstanding Checks

Question 41

Cash Balance According to Company:

Accepted Answer

Add: Notes Collected by Bank, Deduct: NSF Checks and or Service Charges

Question 42

Journal Bank Reconciliation:

Accepted Answer

1. D: Cash, C: Notes Receivable and or Interest Revenue; 2. D: Accounts Receivable, Misc Expense, Accounts Payable, C: Cash

Question 43

Days Cash on Hand:

Accepted Answer

Cash and Short Term Investments/Daily Cash Operating Expenses

"Know" box contains:
Time elapsed:
Retries:

Exam 3 Acc