ACCT 2301 Chapter 4 SB
A (periodic) inventory system can be described as an inventory system that updates the inventory
account only at the end of the (period).
A cash discount can be summarized as a discount given to (buyers) to encourage them to pay (earlier)
A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct
entries below. Close the income summary account; Close the dividends account; Close revenue
accounts; Close expense accounts
A purchase allowance can be described as: a reduction in the cost of defective or unacceptable
merchandise that a buyer acquires
A purchase return refers to merchandise a (buyer) purchased, but then returns to the (seller) for a
refund of the purchase price or reduction in the amount owed.
A sales return refers to merchandise that (customers) return to the (seller) after a sale for a refund of the
purchase price or reduction in the amount owed.
A single-step income statement can be identified by which of the following formats? It shows only one
total for all expenses
Compare the gross method of recording purchases versus the net method by completing the following
sentence. The gross method initially records the invoice at its gross amount (ignoring) the cash discount,
but the net method initially records the invoice at its net amount assuming that the cash discount (was)
taken.
Complete the following statement. Merchandise inventory that is still available for sale is considered
a(n) _____ and is reported on the _____ and merchandise that is sold during the period is considered
a(n) _____ and reported on the _____. Asset; Balance sheet; Expense; Income statement
Cost of goods sold is characterized by which of the following statements? Cost of goods sold is an
expense reported on the income statement; Cost of goods sold is used to figure gross profit; Cost of
goods sold is also called cost of sales; Cost of goods sold includes the expenses of buying and preparing
an item for sale
Determine which of the definitions below describes gross profit. The difference between net sales and
the cost of the goods sold
Determine which of the definitions on the right go with the entity on the left. Retailer—buys products
from manufacturers to wholesalers and sells them to consumers; Wholesaler—buys products from
manufacturers and sells them to retailers; Merchandiser—earns net income by using and selling
merchandise
Determine which statements below are correct regarding merchandise available for sale during a period.
Ending inventory + Cost of goods sold = Merchandise available for sale; Beginning inventory + Net
purchases = Merchandise available for sale
Dogs R US uses the perpetual inventory system to account for its merchandise. On May 1, it returned
$50 of merchandise due to a defect. Assuming that the purchase was originally bought on credit,