Strayer ACC 556 Chapter 5 Quiz

Question 1

An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual inventory system.

Question 2

The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period.

Question 3

Sales allowances and Sales discounts are both designed to encourage customers to pay their accounts promptly.

Question 4

Freight-out appears as an operating expense in the income statement.

Question 5

With the periodic inventory system, goods available for sale must be calculated before the cost of goods sold.

Question 6

Merchandising companies that sell to retailers are known as

Question 7

The primary source of revenue for a wholesaler is

Question 8

Which of the following is a true statement about inventory systems?

Question 9

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

Question 10

Farwell Company purchased merchandise with an invoice price of $2,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

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Question 11

As the president of Harter Company, you notice that no discounts have been taken when settling accounts payables. What would be an acceptable explanation?

Question 12

A sales invoice is prepared when goods

Question 13

The Sales Returns and Allowances account does not provide information to management about

Question 14

The collection of a $700 account beyond the 2 percent discount period will result in a

Question 15

Which statement is incorrect?

Question 16

Multiple-step income statements show

Question 17

Financial information is presented below:
Operating expenses $ 28,000
Sales returns and allowances 7,000
Sales discounts 3,000
Sales revenue 150,000
Cost of goods sold 91,000

The gross profit rate would be

Question 18

What is the advantage of using the multiple-step income statement?

Question 19

Which of the following provides the best rationale regarding analysts’ views about the information value of the gross profit rate versus the gross profit amount?

Question 20

Match the items below by entering the appropriate code letter in the space provided.