Basic Accounting Ice Breaking 1

What is meant by a trading company?

• A company that produces its own products for sale

• A company that buys finished goods and resells them without further processing

• A company that provides financial services

• A company that produces raw materials into finished goods

The inventory recording system that records every purchase and sale transaction of merchandise in real-time is called?

• Periodic system

• Perpetual system

• Cash system

• Temporary account system

Which account is used to record the purchase of merchandise using the perpetual method?

• Merchandise Inventory

• Selling Expense

• Accounts Receivable

• Accounts Payable

In a periodic inventory system, how do you record the sale of merchandise?

• Debit Inventory Account, Credit Sales Account

• Debit Sales Expense Account, Credit Cash Account

• Debit Accounts Receivable, Credit Sales Account

• Debit Sales Account, Credit Sales Expense Account

What is meant by Cost of Goods Sold (COGS)?

• The selling price of goods to customers

• The cost incurred to purchase goods that are resold

• The revenue received from the sale of goods

• Discounts given to customers

The journal used to record the purchase of merchandise on credit is?

• Debit Accounts Payable, Credit Purchases

• Debit Purchases, Credit Cash

• Debit Purchases, Credit Accounts Payable

• Debit Sales, Credit Accounts Payable

Which account is credited when merchandise is returned by a customer?

• Sales

• Sales Return

• Purchase Return

• Merchandise Inventory

What is meant by FOB Destination in a sales transaction?

• The goods become the buyer's property when shipped from the seller's warehouse

• The goods remain the seller's property until they arrive at the buyer's location

• The buyer bears all shipping costs

• The goods become the buyer's property when confirmed by the seller

Which account is credited when the company makes a cash sale of merchandise?

• Cash

• Sales

• Inventory

• Selling Expense

An example of a trading company is

• Laundry

• Taxi

• Medicine distributor

• Accounting firm