Accounting: Inventory and Gross Profit Quiz
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Questions and Answers

Which inventory system uses computer software to keep a running record of inventory on hand?

  • Cost of goods sold inventory system
  • Hybrid inventory system
  • Perpetual inventory system (correct)
  • Periodic inventory system

    • What is the purpose of management accounting?

  • Identifying, measuring, and analyzing information
  • Helping managers fulfill organizational objectives (correct)
  • Producing information for external stakeholders
  • Supporting financial reporting requirements

    • When does an unfavorable variance occur on a performance report?

  • The actual cost is less than the budgeted cost
  • The actual revenue is greater than the budgeted revenue
  • The actual revenue is less than the budgeted revenue (correct)
  • The actual profit is greater than the budgeted profit

    • Who is the primary user of performance reports for planning and controlling operations?

    <p>Operating managers</p> Signup and view all the answers

    Which statement correctly represents the rules of debits and credits?

    <p>An asset is increased by a credit</p> Signup and view all the answers

    What is the first step in recording a transaction in the journal?

    <p>Specifying each account affected by the transaction</p> Signup and view all the answers

    Which account represents the cost of inventory that is still on hand?

    <p>Inventory, a current asset</p> Signup and view all the answers

    What is another term for gross profit?

    <p>Gross margin</p> Signup and view all the answers

    Which two accounts appear on a merchandising company's financial statements but not on a service company's?

    <p>Cost of goods sold and inventory</p> Signup and view all the answers

    Sales revenue is based on the ___ of the inventory, while cost of goods sold is based on the ___ of the inventory.

    <p>Sale price; cost</p> Signup and view all the answers

    What is the correct order of items on the income statement?

    <p>Sales revenue, cost of goods sold, gross profit, operating expenses</p> Signup and view all the answers

    Which statement about a periodic inventory system is true?

    <p>All of the above</p> Signup and view all the answers

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