ACCT 701 End of Chapter 6 Exam Questions and Answers
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Course
FIN701
Institution
FIN701
To compute net sales, sales discounts are added to, and sales returns and allowances are deducted from, gross sales. (T/F) - Answer-F
Under perpetual inventory procedure, the Merchandise Inventory account is debited for each purchase and credited for each sale. (T/F) - Answer-T
Purchase disco...
ACCT 701 End of Chapter 6 Exam
Questions and Answers
To compute net sales, sales discounts are added to, and sales returns and allowances
are deducted from, gross sales. (T/F) - Answer-F
Under perpetual inventory procedure, the Merchandise Inventory account is debited for
each purchase and credited for each sale. (T/F) - Answer-T
Purchase discounts and purchase returns and allowances are recorded in contra
accounts to the Purchases account. (T/F) - Answer-T
In taking a physical inventory, consigned goods delivered to another party who attempts
to sell the goods are not included in the ending inventory of the company that sent the
goods. (T/F) - Answer-F
A classified income statement consists of only two categories of items, revenues and
expenses. (T/F) - Answer-F
A seller sold merchandise which has a list price of USD 4,000 on account, giving a trade
discount of 20 per cent. The entry on the books of the seller is:
a. Accounts Receivable 3,200
Trade Discounts 800
Sales 4,000
b. Accounts Receivable 4,000
Sales 4,000
c. Accounts Receivable 3,200
Trade Discounts 800
Sales 4,000
d. Accounts Receivable 3,200
Sales 3,200 - Answer-D
X Company began the accounting period with USD 60,000 of merchandise, and net
cost of purchases was USD 240,000. A physical inventory showed USD 72,000 of
merchandise unsold at the end of the period. The cost of goods sold of Y Company for
the period is:
a. USD 300,000.
b. USD 228,000.
c. USD 252,000.
d. USD 168,000.
e. None of the above. - Answer-B
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