Question

13) Beginning inventory plus purchases quals A) ending inventory B) net purchases C) cost of goods sold oods available for sale D frue? 14) Which of the following statements and the r e who is A) A periodic inventory system kes detailed inventory records of the inventory on hand throughout the period. B) A perpetual inventory system does nor track the change in the inventory account as a result of a sale C) A periodic inventory system does not track the cost of goods sold during the counting period. D) A perpetual inventory system does not ke physical count of inventory at the end of the accounting period. 15) Which inventory system records a change in cost of goods sold every time goods are sold or returned? A) FOB Destination. B) FOB Shipping Point. C) Perpetual D) Periodic. 16) Coranado Company purchases $70,000 of inventory from a wholesaler who allows 45 days to pay. In addition, the wholesaler offers a 3% discount if payment is made within 12 days. These payment terms would be expressed as: A) 0. 03/12, n/45. B) n/45, 3/12 C) 12/3, n/45. D) 3/12, n/45. E) 3/45, n/12. 17) Merchandisers record revenue when they: A) deliver goods and collect the cash from a customer. B) fulfill their performance obligations by transferring control of goods to a customer. C) receive the order to deliver goods to a customer. D) receive cash in advance from a customer. 18) The gross profit percentage: A) measures the percentage of profit earned on each dollar of sales. B) is an indication of how efficient management is in utilizing assets. C) is an indication of how well management is controlling expenses. D) measures how much cash is generated per dollar of sales.

Answer 1

13. Beginning inventory plus purchase equals goods available for sale.

Therefore, correct answer is (D).

14. The periodic system relies upon an occasional physical count of the inventory to determine the ending inventory balance and the cost of goods sold, while the perpetual system keeps continual track of inventory balances.

Therefore, correct answer is (C): A periodic inventory system does not track the cost of goods sold during the accounting period.

15. The perpetual system keeps continual track of inventory balances.

Therefore, correct answer is (C) Perpetual.

16. The correct answer is (D): 3/12, n/45.

This denotes that a discount of 3% will be given if the payment is done within 12 days from the date of sale. Otherwise, the amount need to be paid within 45 days from the date of sale.

17. The revenue recognition principle under GAAP stipulates that revenues are recognized when realized and earned, not necessarily when received.

Therefore, the correct answer is ,

(B) fulfill the performance obligations by transferring control of good to a customer.

18. Gross profit % = Gross profit/Sales*100.

Therefore, the correct answer is,

(A) measures the percentage of profit earned on each dollar of sales.