Basic Accounting Reviewer PDF

Basic Accounting 1. The Periodic Inventory System is used most commonly by companies that sell C a. High-priced, high-volume merchandise b. High-priced, low-volume merchandise c. Low-priced, high-volume merchandise d. Low-priced, low-volume merchandise 2. Which ac...

Basic Accounting 1. The Periodic Inventory System is used most commonly by companies that sell C a. High-priced, high-volume merchandise b. High-priced, low-volume merchandise c. Low-priced, high-volume merchandise d. Low-priced, low-volume merchandise 2. Which account does a merchandiser, but not a service entity, use? D a. Sales b. Inventory c. Cost of Goods Sold d. All of the above 3. The two main inventory accounting system are the following C a. Purchases and Sales b. Returns and Allowances c. Periodic and Perpetual d. Cash and Accrual 4. This is the shipping term if the buyer shoulders the shipping costs C a. FOB Destination b. Trade discounts c. FOB Shipping Point d. Purchase Order 5. This is an authorization made by the buyer to the seller to deliver the merchandise as detailed in the form B a. Invoice b. Purchase Order c. Purchase Requisition d. Official Receipt 6. This earns income by buying and selling goods B a. Merchandise Inventory b. Merchandising Company c. Perpetual Inventory d. Periodic Inventory 7. This is continuous records are kept of the quantity C a. Periodic Inventory b. Merchandise Inventory c. Perpetual Inventory d. Merchandise Company 8. This inventory not yet sold is counted periodically D a. Merchandise b. Perpetual Inventory c. Merchandise Inventory d. Periodic Inventory 9. What is the operating cycle of merchandising business? B a. Purchasing merchandise, account receivables and cash b. Purchasing merchandise, selling the merchandise and collecting payment c. Purchasing merchandise, collecting payment and selling the merchandise d. None of the above 10. Under, Perpetual Inventory System, the entry to record a purchase return would include a credit to C a. Accounts Payable b. Cost of Goods Sold c. Merchandise Inventory d. Purchases Returns and Allowances 11. A buyer received an invoice for P6,000 dated June 10, If the terms are 2/10, n/30, and the buyer paid the invoice within the discount period, what amount will the seller receive? B a. P6,000 b. P5,880 c. P120 d. P4,800 12. The Purchase discount account is a contra account to B a. Account Payable b. Purchases c. Sales d. Sales discount 13. The account that appears in the chart of accounts for merchandising entity but not for a service entity is D a. Account Receivable b. Accumulated Depreciation c. Advertising Expense d. Sales Returns and Allowances 14. When the sellers advances the transportation costs and terms of sale are FOB Shipping Point, the seller records the payment of the transportation costs by debiting B a. Account Payable b. Account Receivable c. Sales d. Transportation In 15. The excess of net sales over the cost of goods sold is called A a. Gross Profit b. Profit c. Merchandising Income d. Operating Profit 16. The basic differences between the financial statements of a merchandising entity and a service entity include the Cost of Goods Sold section of the income statement and the B a. Equity section of the balance sheet b. Inclusion of merchandise inventory on the balance sheet as a current asset c. Other income section of the income statemen d. Profit figure 17. After all adjusting are posted, the balances of all asset, liability, income and expense accounts correspond exactly to the amounts in the A a. Financial Statements b. Post-Closing Trial Balance c. Unadjusted Trial Balance d. Worksheet Trial Balance 18. The Statement of Changes and Equity would not show A a. Revenues And Expenses b. The Owner’s Ending Capital Balance c. The Owner’s Initial Capital Balance d. The Owner’s Withdrawals for the period 19. These are transactions where the seller either accepts goods back from the buyer or grants a reduction in the purchase price so the buyer will keep the goods C a. Purchas Returns and Allowances b. Purchase Discounts c. Sales Returns and Allowances d. Sales Discounts 20. Under the Perpetual Inventory System, which of the following accounts would not be used? C a. Cost of Goods Sold b. Merchandise Inventory c. Purchases d. Sales 21. Merchandise Inventory becomes part of Cost of Goods Sold when an entity D a. Pays for the inventory b. Purchases the inventory c. Receives payment from the customers d. Sells the inventory 22. Which of the following is not considered an operating expense? C a. Interest Expense b. Advertising Expense c. Cost of Goods Sold d. Transportation Out 23. Which of the following terms does not mean the same as the others A a. Bottom Line b. Gross Profit c. Operating Profit d. Profit from Operations 24. Each of the following companies is a merchandising entity except a B a. Candy Store b. Car Wash c. Furniture Store d. Wholesale Parts Entity 25. This transportation arrangement passes ownership to the goods to the buyer only when buyer receives the merchandise D a. FOB Shipping Point b. Perpetual Inventory c. Periodic Inventory d. FOB Destination 26. What is the normal balance of Purchases? B a. Balance Sheet b. Debit c. Credit d. Income Statement 27. The journal entry for the purchase of inventory on account is A a. Debit – Inventory Credit – Accounts Payable b. Debit – Accounts Payable Credit - Inventory c. Debit – Inventory Credit – Account Receivable d. Debit – Inventory Credit – Cash 28. What is the normal balance of Sales Returns and Allowances? A a. Debit b. Balance Sheet c. Credit d. Income Statement 29. Under Periodic Inventory System, Sold Merchandise on account costing P8,000 for P10,000; terms were n/30: B a. Debit – Sales 10,000 Credit – Account Receivable 10,000 b. Debit – Account Receivable 10,000 Credit – Sales 10,000 c. Debit – Sales 8,000 Credit – Account Receivable 8,000 d. Debit – Account Receivable 8,000  Credit – Sales 8,000 30. Under Perpetual Inventory System, Returned merchandise costing P300 (part of the P6,000 purchase) C a. Debit – Accounts Payable 6,000 Credit – Inventory 6,000 b. Debit – Inventory 6,000 Credit – Accounts Payable 6,000 c. Debit – Accounts Payable 300 Credit – Inventory 300 d. Debit – Inventory 300 Credit – Account Payable 300 31. This system reduces the amount of clerical work B a. Merchandise System b. Periodic Inventory System c. Merchandise Inventory d. Perpetual Inventory System 32. This system responds to customers’ inquiries about the product availability D a. Merchandise System b. Periodic Inventory System c. Merchandise Inventory d. Perpetual Inventory System 33. What is he normal balance of expense? A a. Debit b. Credit c. Balance Sheet d. Income Statement 34. It is impossible to use cycle counting since there is no way to obtain accurate inventory counts in real time C a. Perpetual Inventory b. Merchandise Inventory c. Periodic Inventory d. None of the above 35. This accounts represents the reverse relationship of the accounts receivable. By accepting the goods or services, the buyer agrees to pay in the near future C a. Accounts Receivable b. Unearned Revnues c. Accounts Payable d. Current Liabilities 36. When business entity receives payment before delivering goods, the unearned revenue account is A a. Credited b. Debited c. Debited and credited d. Not affected 37. A credit entry decrease the balance of A a. Assets b. Income c. Liabilities d. Owner’s equity 38. Under Periodic Inventory Systems, Paid P200 freight on the P6,000; terms were FOB Shipping Point, the cash account is B a. Debited b. Credited c. Debited and Credited d. Not Affected 39. Under Perpetual Inventory Systems, Customer returned merchandise costing P400,had been sold on account for P500, the Merchandise Inventory account is C a. Debited and Credited b. Credited c. Debited d. Not Affected 40. Under this inventory System, both the sales amount and cost of goods sold amount are recorded when each item of merchandise is sold A a. Perpetual Inventory b. Merchandise Inventory c. Merchandise d. Periodic Inventory 41. The two main systems for accounting for merchandise are perpetual and periodic and the periodic inventory system requires recording the cost of each sale as it occurs. The statement is A a. The first statement is TRUE and the second statement is FALSE b. The first statement is FALSE and the second statement is TRUE c. The two statements are TRUE d. The two statements are FALSE 42. Freight terms are expressed as either FOB Shipping point or FOB destination. The FOB stand for Free on Board C a. The first statement is TRUE and the second statement is FALSE b. The first statement is FALSE and the second statement is TRUE c. The two statements are TRUE d. The two statements are FALSE 43. Under the perpetual inventory system, companies record purchases of merchandise for sale in the___________. B a. Accounts Payable b. Inventory account c. Account Receivable d. Sales 44. If the seller is to shoulder the cost of delivery, the term is stated as FOB Shipping Point. A  a. The Statement is False b. The statement is True c. None of the above 45. Sales Returns and Allowances is contra asset account to Sales Revenue. This means that it is offset against a revenue account on the income statement. B a. The first statement is TRUE and the second statement is FALSE b. The first statement is FALSE and the second statement is TRUE c. The two statements are TRUE d. The two statements are FALSE 46. The excess of Gross profit over the operating expense is called B a. Gross Profit b. Net Income c. Merchandising Income d. Operating Profit 47. The chart of account for a merchandising entity differs from that of a service entity B a. The Statement is False b. The statement is True c. None of the above 48. Under periodic Inventory System, Paid for merchandise purchased on account. The account payable is B a. Credited b. Debited c. Debited and Credited d. Not affected 49. Under Perpetual Inventory System, Paid for merchandise purchased on account. The cash is A a. Credited b. Debited c. Debited and Credited d. Not affected 50. The entry to record the return of goods from a customer would include a D a. Credit to sales b. Credit to Sales Returns and Allowances c. Debit to Sales d. Debit to Sales Returns and Allowances