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Exam (elaborations)

Financial Accounting Exam 2 Questions With Correct Answers

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  • Course
  • Financial Accounting
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  • Financial Accounting

Financial Accounting Exam 2 Questions With Correct Answers Inventory - answerMerchandise that the company intends to sell to its customers Merchandising Companies - answerCompanies that sell, but not manufacture, merchandise to customers; wholesale and retail companies such as Wal-Mart, Nieman ...

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  • October 16, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Financial Accounting
  • Financial Accounting
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sirjoel
©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM



Financial Accounting Exam 2 Questions
With Correct Answers


Inventory - answer✔Merchandise that the company intends to sell to its customers


Merchandising Companies - answer✔Companies that sell, but not manufacture, merchandise to

customers; wholesale and retail companies such as Wal-Mart, Nieman Marcus


Manufacturing Companies - answer✔Create merchandise from underlying raw materials; Exxon

and Boeing


Service Companies - answer✔Provide services to customers; law firms, consulting companies


True - answer✔Accounting for inventories is important because it can have a material effect on

both the BALANCE SHEET (ENDING INVENTORY) and the INCOME STATEMENT

(COST OF GOODS SOLD)


Gross Sales Revenue - answer✔Measures the value of inventory delivered to, and billed to,

customers, often referred to as the "invoice value"

, ©SIRJOEL EXAM SOLUTIONS
12/3/2024 11:27AM


Sales Returns and Allowances - answer✔Contra-revenue account used to record customer

refunds or credits given to their accounts. Represents a reduction of sales revenue for the return

of (or allowance granted for) unsatisfactory goods


Sales Discounts - answer✔Contra-revenue account used to record discounts given to customers

for early payment of their account


Freight-Out - answer✔Transportation cost paid by the seller on merchandise deliverd to the

customer; this is a selling expense, not a contra-revenue account; not included in net sales


Net Sales - answer✔Gross Sales less all contra-revenue accounts (sales returns and allowances

and sales discounts)


Gross Purchase Cost - answer✔Measures the cost of inventory acquired as billed to the company

by the supplier


Purchase Returns and Allowances - answer✔Account used to record the decrease of the purchase

cost for the return of (or allowance granted for) unsatisfactory goods purchased


Purchase Discounts - answer✔Account used to record the decrease of the purchase cost for

discounts granted by the supplier for early payment of account payable


Freight-In - answer✔Account used to record the increase in the purchase cost of inventory due to

transportation costs paid by the buying company; included in net purchases

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