2023 Question 1 Distinguish between cost of goods sold and operating expenses describe the nature of these two items and their | Assignments Online

Question 1

Distinguish between cost of goods sold and operating expenses, describe the nature of these two items and their placement on the income statement.

 

 

 

Question 2

The periodic and the perpetual inventory systems are two methods that companies use to account for inventories. Briefly describe the major features of each system and explain why a physical inventory is necessary under both systems

1. Merchandise inventory:
A) is a long-term asset.
B)is a current asset.
C) includes supplies.
D) is classified with investments on the balance sheet.
E) Must be sold within one month.

2. The credit terms 2/10, n/30 are interpreted as:
A) 2% cash discount if the amount is paid within 10 days, with the balance due in 30 days.
B) 10% cash discount if the amount is paid within 2 days, with the balance due in 30 days.
C) 30% discount if paid within 2 days.
D) 30% discount if paid within 10 days.
E) 2% discount if paid within 30 days.

3. On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:
A)Sales…………………………5,800
       Sales receivable ………….       5,800
B)Sales…………………………5,800
       Accounts Receivable………..       5,800
Cost of goods sold……………..4,000
       Merchandise inventory………       4,000
C)Accounts Receivable…………….5,800
       Sales…………………….       5,800
D)Accounts Receivable…………….5,800
       Sales…………………….       5,800
Cost of Good Sold………………4,000
       Merchandise Inventory………       4,000
E)Accounts Receivable…………….4,000
       Sales…………………….       4,000

1. On October 1, Whaley Company sold merchandise in the amount of $5,800 to Lee Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Whaley uses the perpetual inventory system. Lee pays the invoice on October 8, and takes the appropriate discount. The journal entry that Whaley makes on October 8 is:
A)Cash………………………….5,800
      Accounts Receivable…………       5,800
B)Cash………………………….4,000
      Accounts Receivable…………       4,000
C)Cash………………………….3,920
Sales Discount…………………   80
      Accounts Receivable…………       4,000
D)Cash………………………….5,684
      Accounts Receivable…………       5,684
E)Cash………………………….5,684
Sales Discount………………… 116
      Accounts Receivable…………       5,800

2. Acceptable inventory costing methods include:
A)LIFO method.
B)FIFO method.
C)Lower of cost or market method.
D)A & B.
E)A, B, & C.

3) A company had inventory on November 1 of 5 units at a cost of $20 each. On November 2, they purchased 10 units at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?
A)$304
B)$296
C)$288
D)$280
E)$276

1. A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 12 units that were sold?
A)$120.
B)$124.
C)$128.
D)$130.
E)$140

2. Generally accepted accounting principles require that the inventory of a company be reported at:
A)Market value.
B)Historical Cost.
C)Lower of cost or market.
D)Replacement cost.
E)Retail value.

3. The special journals of many accounting systems include the:
A)Sales journal.
B)Purchases journal.
C)Cash receipts journal.
D)Cash disbursements journal.
E)All of the above.

1. The four necessary elements of accounting information systems are:
A)Control, accountability, relevance, and flexibility.
B)Historical cost, relevance, compatibility, and cost-benefit.
C)Control, relevance, compatibility, and safety.
D)Control, relevance, compatibility, and cost-benefit.
E)Control, compatibility, flexibility, and cost-benefit.

2. The flexibility principle of accounting information systems require that the:
A)Benefits from an activity outweigh the costs of the activity.
B)System report useful, understandable, timely, and pertinent information for effective decision making.
C)System aid managers in controlling and monitoring business activities.
D)System adapt to changes in the company, business environment, and needs of decision makers at low cost.
E)System conform with a company’s activities, personnel, and structure.

 

3. Hardware includes:
A)Bar-code readers.
B)Printers.
C)Software.
D)Ledgers.
E)All of the above.