Question 1 (Multiple Choice Worth 3.

44 points)
Closing entries are made in order to terminate the business as an operating entity. so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts. in order to transfer net income (or loss) and owner's drawing to the owner's capital account. so that financial statements can be prepared.

Question 2 (True/False Worth 3.44 points)

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement. True False

Question 3 (Multiple Choice Worth 3.44 points)

Ethics are the standards of conduct by which one's actions are judged as right or wrong. honest or dishonest. fair or unfair. all of these.

Question 4 (Multiple Choice Worth 3.44 points)

Reese Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms? 20%

24% 36% 72%

Question 5 (True/False Worth 3.44 points)

Sales minus operating expenses equals gross profit. True False

Question 6 (True/False Worth 3.44 points)

Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement. True False

Question 7 (Multiple Choice Worth 3.44 points)

Monthly and quarterly time periods are called calendar periods. fiscal periods. interim periods. quarterly periods.

Question 8 (Multiple Choice Worth 3.44 points)

The consistent application of an inventory costing method is essential for conservatism.

accuracy. comparability. efficiency.

Question 9 (Multiple Choice Worth 3.44 points)

A company just starting business made the following four inventory purchases in June:

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is $2,100. $1,500. $575. $600.

Question 10 (Multiple Choice Worth 3.44 points)

Generally accepted accounting principles are income tax regulations of the Internal Revenue Service. standards that indicate how to report economic events. theories that are based on physical laws of the universe. principles that have been proven correct by academic researchers.

Question 11 (Multiple Choice Worth 3.44 points)

Sales revenue less cost of goods sold is called gross profit. net profit. net income. marginal income.

Question 12 (Multiple Choice Worth 3.44 points)

Which of the following are in accordance with generally accepted accounting principles? Accrual basis accounting Cash basis accounting Both accrual basis and cash basis accounting Neither accrual basis nor cash basis accounting

Question 13 (True/False Worth 3.44 points)

The cash basis of accounting is not in accordance with generally accepted accounting principles. True False

Question 14 (Multiple Choice Worth 3.44 points)

Inventory is reported in the financial statements at cost.

market. the higher-of-cost-or-market. the lower-of-cost-or-market.

Question 15 (Multiple Choice Worth 3.44 points)

Cost of goods sold is computed from the following equation: beginning inventory cost of goods purchased + ending inventory. sales cost of goods purchased + beginning inventory ending inventory. sales + gross profit ending inventory + beginning inventory. beginning inventory + cost of goods purchased ending inventory

Question 16 (True/False Worth 3.44 points)

The first-in, first-out (FIFO) inventory method results in an ending inventory valued at the most recent cost. True False

Question 17 (Multiple Choice Worth 3.44 points)

Sales revenues are usually considered earned when cash is received from credit sales. an order is received. goods have been transferred from the seller to the buyer. adjusting entries are made.

Question 18 (Multiple Choice Worth 3.44 points)

Ted's Used Cars uses the specific identification method of costing inventory. During March, Ted purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Ted determines that at March 31, the $9,750 car is still on hand. What is Teds gross profit for March? $5,250. $4,500. $750. $8,250.

Question 19 (True/False Worth 3.44 points)

A liability is classified as a current liability if the company is to pay it within the forthcoming year. True False

Question 20 (True/False Worth 3.44 points)

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold. True False

Question 21 (Multiple Choice Worth 3.44 points)

A merchandising company that sells directly to consumers is a retailer. wholesaler. broker. service company.

Question 22 (True/False Worth 3.44 points)

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs. True False

Question 23 (True/False Worth 3.44 points)

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%. True False

Question 24 (Multiple Choice Worth 3.44 points)

Income from operations is gross profit less financing expenses. operating expenses. other expenses and losses. other expenses.

Question 25 (True/False Worth 3.44 points)

The accounting cycle is usually shorter for a merchandising company than for a service company True False

Question 26 (True/False Worth 3.44 points)

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

True False

Question 27 (True/False Worth 3.44 points)

Operating expenses are similar for merchandising and service enterprises. True False

Question 28 (Multiple Choice Worth 3.44 points)

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has earned net income for the period. an error because debits do not equal credits. suffered a net loss for the period. to make an adjusting entry.

Question 29 (True/False Worth 3.44 points)

The accounting cycle begins at the start of a new accounting period. True False