ACC 201 Practice Exam Flashcards
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cost of good solds
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. Gross profit is calculated as the difference between net sales revenue and ________.
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purchase returns
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On January 21, 2014, Bessant Inc. received merchandise from Mullies Inc. On that date, it found a few of these goods to be damaged. On January 22, it returned the damaged goods to the seller. Such returns will be treated as ________ by Bessant.
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Subtracting sales returns and sales discounts from sales.
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Net sales are calculated by
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sales less (sales discounts and sales returns and allowances) less cost of merchandise sold
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Gross profit is equal to:
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debit Cash; credit Merchandise Inventory
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When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry
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a sales discount
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As an incentive for customers to pay their accounts promptly, a business may offer its customers
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FOB shipping point
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Under which of the following terms will the buyer be required to pay transportation costs?
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when an account is determined to be worthless
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Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
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free on born
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fob
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LIFO method
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In general, which inventory cost method closely matches cost of merchandise sold with the current cost of purchasing merchandise?
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lifo
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When prices are increasing which inventory method will produce the highest cost of goods sold?
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net income is understated
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Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?
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total estimated uncollectible accounts as of the end of the year
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On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
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debit Notes Receivable for the face value of the note.
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When a company receives an interest-bearing note receivable, it will
