Figuring adjustments for merchandise inventory, unearned rent, supplies used, insurance expired, amortization expense, and salaries accrued.
1) What inventory method is used when the inventory balance is updated only at the end of the accounting period?
C) Net Income
D) Cost of Goods Sold
2) A characteristic of a perpetual inventory method is that
A) it keeps continual track of inventory.
B) it records units on hand at the beginning of the period.
C) it records units sold immediately.
D) All of these answers are correct.
3) When using a periodic inventory method, what account is increased when you buy merchandise inventory?
A) Cost of Goods Sold
B) Beginning Inventory
C) Ending Inventory
4) Cost of Goods Sold equals:
A) Beginning Inventory + Net Purchases + Freight-in + Ending Inventory.
B) Beginning Inventory - Net Purchases - Freight-in + Ending Inventory.
C) Beginning Inventory + Net Purchases + Freight-in - Ending Inventory.
D) Beginning Inventory - Net Purchases + Freight-in + Ending Inventory.
5) Net Income equals:
A) Net Sales - Cost of goods sold - Operating expenses.
B) Gross Profit - Operating expenses.
C) Sales - Sales Returns & Allowances - Sales Discount - Cost of goods sold - Operating Expenses.
D) All of the above are correct.
6) Ending inventory
A) increases Cost of Goods Sold.
B) decreases Cost of Goods Sold.
C) does not affect Cost of Goods Sold.
D) increases liabilities.
7) If gross profit exceeds operating expenses, the company
A) had a net loss.
B) broke even.
C) had a net income.
D) Not enough information given
8) Beginning inventory was $4,000, purchases totaled $12,000 and sales were $10,000. What is the ending inventory?
9) If $4,000 was the beginning inventory, purchases were $10,000 and sales were $7,000. How much was ending inventory last accounting period?
10) The first entry to adjust Merchandise Inventory includes
A) a debit to Merchandise Inventory.
B) a credit to Merchandise Inventory.
C) a credit to Income Summary.
D) None of these are correct.
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