Chapter 5 Self Study

Which of the following statements about a periodic inventory system is true?

Companies determine cost of goods sold only at the end of the accounting period.

Which of the following items does not result in an adjustment in the merchandise inventory account under a perpetual system?

Payment of freight costs for goods shipped to a customer.

Which sales accounts normally have a debit balance?

c) Both a) and b).

A credit sale of $750 is made on June 13, terms 2/10, n/30, on which a return of $50 is granted on June 16. What amount is received as payment in full on June 23?

686

To record the sale of goods for cash in a perpetual inventory system:

two journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and reduction of inventory.

Gross profit will result if:

sales revenues are greater than cost of goods sold.

If sales revenues are $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, what is the gross profit?

$90,000.

The income statement for a merchandising company shows each of these features except:

All of these are present.

If beginning inventory is $60,000, cost of goods purchased is $380,000, and ending inventory is $50,000, what is cost of goods sold under a periodic system?

$390,000.

Arbor Corporation had reported the following amounts at December 31, 2010: Sales $184,000; ending inventory $11,600; beginning inventory $17,200; purchases $60,400; purchases discounts $3,000; purchase returns and allowances $1,100; freight-in $600; freig

$74,100.

Which of the following would affect the gross profit rate? (Assume sales remain constant.)

An increase in cost of goods sold.

The gross profit rate is equal to:

net sales minus cost of goods sold, divided by net sales.

Which factor would not affect the gross profit rate?

An increase in the cost of heating the store.

During the year ended December 31, 2010, State Street Corporation had the following results: Sales $267,000; cost of goods sold $107,000; net income $92,400; operating expenses $55,400; net cash provided by operating activities $108,950. What was the comp

34.6%.

When goods are purchased for resale by a company using a periodic inventory system:

purchases on account are debited to Purchases.