BF140 Quiz 1 Review

According to the _____ concept, revenue is paired with the expenses that were incurred to generate this revenue. 

An _____ transaction cannot be an adjusting entry because adjusting entries always involve revenue or expense accounts. 

An item for which a company has expended resources should be classified as an ____until it has been consumed. After that it has to be recorded as an expense. 

If goods are delivered “FOB destination”, the seller is responsible for the freight costs which are called
_______

To record the bank service charge, the following journal entry has to be made: ______ is debited, Cash is credited. 

Accurate financial reporting requires that expenses be recorded in the same fiscal period in which the expenses contribute to earning revenue. Which accounting concept is this?

A company reported the following results: Total assets – $100,000; Current assets – $80,000; Net Income – $20,000; Gross Income – $40,000. Which of the following is the company’s return-on-assets ratio?

• 0.5

• 0.3

• 0.2

• 1.5

After closing on December 31, Year 1, Briciola Co. had $15,000 of assets, $10,000 of liabilities, and $3,000 of common stock. During Year 2, Briciola Co. earned $2,000 of revenue and incurred $1,500 of expense. Briciola Co. closes its books each year on December 31. Which of the following refers to the balance in the Retained Earnings account as of December 31, Year 2? 

• 2000

• 4000

• 1000

• 12,500

Assume the Cost of Goods Sold is $200,000. Inventory balance is reported $15,000 at the beginning of the accounting period and $25,000 at the end of the period. Which of the following is the inventory turnover? 

• 8

• 10

• 100

• 5000

The credit terms 2/10, n/30 are interpreted as what? 

• 10% cash discount if the amount is paid within 2 days, or the balance due in 30 days

• 30% cash discount if the amount is paid within 5 days, or the balance due in 90 days

• 4% cash discount if the amount is paid within 10 days, or the balance due in 60 days

• 2% cash discount if the amount is paid within 10 days, or the balance due in 30 days