When sales are made with a right of return, the company_ а. should recognize revenue for the full sales price
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- Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.The following information is taken from a companys records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?Match each defınition with the term that best describes it. An income measure that includes gains and [ Choose ] [Choose ] Sales revenue (Sales) Expenses incurred in the process of earning sales revenue. losses that are excluded from the determination of net income. An account that is offset against a revenue Contra revenue account account on the income statement. Cost of goods sold Periodic inventory system FOB destination The total cost of merchandise sold during the Comprehensive income FOB shipping point Perpetual inventory system period. An inventory system under which the [ Choose ] company does not keep detailed inventory records throughout the accounting period but determines the cost of goods sold only at the end of an accounting period. An inventory system under which the [ Choose ] company keeps detailed records of the cost of each inventory purchase and sale, and the records continuously show the inventory that should be on hand. The primary source of revenue in a [ Choose…
- Sales Revenue is a(n) Multiple Choice O account and asset; Sales Discounts revenue: Sales Returns and Allowances revenue; Cost of Goods Sold liability; Gross Profit is an expense account.Which of the following statements about merchandisingactivities is true? (More than one answer may be correct.)a. As inventory is purchased, the Inventory Expenseaccount is debited and Cash (or Accounts Payable) iscredited.b. Inventory is recorded as an asset when it is firstpurchased. c. As inventory is sold, its cost is transferred from the bal-ance sheet to the income statement. d. As inventory is sold, its cost is transferred from theincome statement to the balance sheet.Which of the following statements is correct? Group of answer choices A)Revenue is recognized at the time of shipment when goods are shipped FOB destination. B)Sales returns and allowances are reported as operating expenses on an income statement. C)Revenue is recorded when title and risks of ownership transfer to the buyer. D)Sales discounts are reported as operating expenses on an income statement.
- Assume that a perpetual inventory system using the NET METHOD is in use. Which of the following statements regarding the journal entries prepared is correct? A) When a customer returns inventory, the seller debits Customer Refunds Payable. B) Shipping costs associated with sales with terms FOB, destination should be included in Cost of Merchandise Inventory. C) When a company receives payment from a customer for a sale, Cash is debited and Accounts Payable is credited. D) When a company sells merchandise with terms 2/10, n 30, the company will credit Merchandise Inventory for the amount of the discount of 2 percent of sales. Why is the answer A and not D?Using a perpetual inventory system, the sale of inventory on account would be recorded as a. Debit Cost of Goods Sold; credit Inventory. b. Debit Inventory; credit Sales Revenue. c. Debit Accounts Receivable; credit Sales Revenue. d. Both a. and c. are correct.A seller recognizes the amount of returns from right to return sales as a/an ________. Group of answer choices expense revenue asset liability
- Which of the following accounts is an example of a contra-asset?A) Cost of Goods Sold B)Sales Discounts C) Purchases D) Deferred Revenue E) LIFO ReserveIn accounting for by-products, when the by-products are sold for more than the estimated sales value, the difference is: a. credited to Gain or Loss on Sale of By-Product b. debited to Gain or Loss on Sale of By-Product c. immaterial, so not recorded. d. credited to By-Product Inventory.The primary purpose for using an inventory cost flowassumption is to:a. Parallel the physical flow of units of merchandise.b. Offset against revenue an appropriate cost of goodssold.c. Minimize income taxes.d. Maximize the reported amount of net income.
