Accounting Quiz

Wal-Mart is a prime example of which type organization:

• merchandising company

• manufacturing company

• service organization

• limited partnership

A purchaser, dissatisfied with merchandise received, may return the goods to the seller for credit. This transaction is known by the seller as a:

• sales return

• purchase return

• sales allowance

• purchase allowance

Freight costs incurred by the seller on outgoing merchandise are considered:

• operating expenses to the seller

• part of merchandise inventory

• part of purchases

• part of cost of goods sold

Under the perpetual inventory system, purchases of merchandise for sale are recorded in an account called:

• purchases

• cost of goods sold

• inventory

• finished goods

The income statement of a merchandising company contains the following unique features:

• sales revenue, work in process, and operating expenses

• sales revenue, work in process and gross profit

• sales revenue, finished goods, and net income

• sales revenue, cost of goods sold, and gross profit

Sales returns and allowances and sales discounts are:

• sales accounts

• liability accounts

• expense accounts

• contra revenue accounts

If a sales invoice shows credit terms of 2/10, n/30, the discount period is:

• 10 days

• 2 days

• 30 days

• cannot be determined from the information given

The revenue recognition principle requires that sales revenues be recognized:

• when cash is received

• when the merchandise is ordered

• when the goods are transferred from the seller to the buyer

• none of these answer choices are correct

In a periodic inventory system, the cost of goods sold is determined:

• at the end of the accounting period

• each time a sale occurs

• each time a purchase occurs

• none of these answer choices are correct