12 Questions
Which inventory system uses computer software to keep a running record of inventory on hand?
Perpetual inventory system
What is the purpose of management accounting?
Helping managers fulfill organizational objectives
When does an unfavorable variance occur on a performance report?
The actual revenue is less than the budgeted revenue
Who is the primary user of performance reports for planning and controlling operations?
Operating managers
Which statement correctly represents the rules of debits and credits?
An asset is increased by a credit
What is the first step in recording a transaction in the journal?
Specifying each account affected by the transaction
Which account represents the cost of inventory that is still on hand?
Inventory, a current asset
What is another term for gross profit?
Gross margin
Which two accounts appear on a merchandising company's financial statements but not on a service company's?
Cost of goods sold and inventory
Sales revenue is based on the ___ of the inventory, while cost of goods sold is based on the ___ of the inventory.
Sale price; cost
What is the correct order of items on the income statement?
Sales revenue, cost of goods sold, gross profit, operating expenses
Which statement about a periodic inventory system is true?
All of the above
Test your knowledge of accounting terminologies related to inventory, cost of goods sold, and gross profit. Identify the correct terms for different financial statement items.
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