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WorksheetsFABM1_Quiz1
Total questions: 10
Worksheet time: 5mins
1. What is the final step in completing the accounting cycle for a merchandising business?
2. What is the purpose of preparing closing entries in the accounting cycle of a merchandising business?
3. Why is it important to complete the accounting cycle in a merchandising business?
4. KATAKAWAN Company purchased inventory worth 10,000 on credit. They later returned 2,000 worth of inventory to the supplier. How would you record the transaction in the accounting cycle?
Debit Accounts Payable 8,000, Credit Inventory 8,000.
Debit Inventory 10,000, Credit Account Receivable 10,000;
Debit Cash 2,000, Credit Inventory 2,000
5. A merchandising business mistakenly recorded a purchase of inventory as an expense. How would this error impact the financial statements during the accounting cycle?
Net income would be overstated, and assets would be understated
Net income would be understated, and liabilities would be overstated
Net income would be overstated, and liabilities would be understated
Net income would be understated, and assets would be overstated
6. FERNANDEZ Company made the following adjustments at the end of the accounting period: (1) accrued salaries expense of 2,500, (2) depreciation expense of 1,200, and (3) prepaid insurance that expired, amounting to 800. Create the necessary adjusting entries for each adjustment.
Debit Salaries Expense 2,500, Credit Salaries Payable 2,500
Debit Depreciation Expense 1,200, Credit Accumulated Depreciation 1,200
Debit Insurance Expense 800, Credit Prepaid Insurance 800
Debit Salaries Payable 2,500, Credit Salaries Expense 2,500
Debit Accumulated Depreciation 1,200, Credit Depreciation Expense 1,200
Debit Prepaid Insurance 800, Credit Insurance Expense 800
Debit Salaries Expense 2,500, Credit Cash 2,500
Debit Accumulated Depreciation 1,200, Credit Depreciation Expense 1,200
Debit Prepaid Insurance 800, Credit Cash 800
Debit Salaries Payable 2,500, Credit Salaries Expense 2,500
Debit Accumulated Depreciation 1,200, Credit Depreciation Expense 1,200
Debit Prepaid Insurance 800, Credit Insurance Expense 800
7. Which of the following is included in the calculation of Gross Profit in the Statement of Cost of Goods Sold?
Income taxes
8. What is the purpose of the Statement of Cost of Goods Sold and Gross Profit in financial reporting?
To analyze the efficiency of production and inventory management
9. Company A had a beginning inventory of 50,000, purchases of 100,000, and an ending inventory of 60,000. The net sales for the period were 200,000. Calculate the cost of goods sold and the gross profit for Company A.
Cost of Goods Sold: 80,000, Gross Profit: 120,000
Cost of Goods Sold: 90,000, Gross Profit: 110,000
Cost of Goods Sold: 100,000, Gross Profit: 100,000
Cost of Goods Sold: 70,000, Gross Profit: 130,000
10. Company HAANMAILAKO had a cost of goods sold of 150,000 and net sales of 200,000. Calculate the gross profit margin and evaluate its impact on the company's profitability.
