Multiple Choice Questions

accounting records continuously disclose the amount of inventory
  • wholesalers
  • retained earnings statement
  • All of these answers are correct.
  • Under a perpetual inventory system
Who is responsible for the freight cost when the terms are FOB destination?
  • Cost of Goods Sold
  • the buyer
  • cash sales
  • the seller
Which of the following accounts has a normal debit balance?
  • Selling Expense
  • gross profit
  • accounting equation
  • Inventory
The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a
  • retained earnings statement
  • single-step statement
  • accounting equation
  • Selling Expense
Which of the following accounts usually has a debit balance?
  • gross profit
  • accounting equation
  • Selling Expense
  • inventory
Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?
  • accounting equation
  • Selling Expense
  • single-step statement
  • inventory
What type of company would normally offer trade discounts to its customers?
  • inventory
  • wholesalers
  • gross profit
  • accounting equation
What is the term applied to the excess of sales over the cost of goods sold?
  • inventory
  • wholesalers
  • gross profit
  • All of these answers are correct.
When comparing a retail business to a service business, the financial statement that changes the least is the
  • retained earnings statement
  • accounting equation
  • single-step statement
  • All of these answers are correct.
Who is responsible for the freight costs when the terms are FOB shipping point?
  • Purchases
  • the seller
  • cash sales
  • the buyer
Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a
  • Purchases
  • credit to Inventory
  • Cost of Goods Sold
  • cash sales
Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as
  • the seller
  • cash sales
  • Purchases
  • the buyer
When the perpetual inventory system is used, the inventory sold is debited to
  • the seller
  • Cost of Goods Sold
  • credit to Inventory
  • Purchases
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Multiple Choice Questions
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