Chapter 5 Question Review 11
th
edition 2
7. Cost of goods sold can be calculating by which of the following formulas?
a. Beginning Inventory + Net Purchases – Ending Inventory
b. Ending Inventory + Net Purchases – Beginning Inventory
c. Beginning Inventory + Sales – Ending Inventory
d. Ending Inventory + Sales – Beginning Inventory
8. The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a
a. debit to Sales Discounts for $36.
b. debit to Sales Revenue for $1,764.
c. credit to Accounts Receivable for $1,800.
d. credit to Sales Revenue for $1,800.
9. The entry to record the receipt of payment within the discount period on a sale of $10,000 with
terms of 3/15, n/60 will include a
a. credit to Sales Discounts for $300.
b. debit to Cash for $9,700.
c. credit to Accounts Receivable for $9,700.
d. credit to Sales Revenue for $10,000.
10. Under a perpetual inventory system
a. accounting records continuously disclose the amount of inventory.
b. increases in inventory resulting from purchases are debited to purchases.
c. there is no need for a year-end physical count.
d. the account purchase returns and allowances is credited when goods are returned to vendors.
11. A company using a perpetual inventory system that returns goods previously purchased on credit
would
a. debit Accounts Payable and credit Inventory.
b. debit Sales and credit Accounts Payable.
c. debit Cash and credit Accounts Payable.
d. debit Accounts Payable and credit Purchases.
12. In the credit terms of 3/15, n/60, the “15” represents the
a. number of days in the discount period.
b. full amount of the invoice.
c. number of days when the entire amount is due.
d. percent of the cash discount.
13. Under the perpetual system, cash freight costs incurred by the seller for the transporting of goods is
recorded in which account?
a. Freight Expense
b. Freight-In
c. Inventory
d. Freight-Out