Periodic Inventory – Financial Accounting Fundamentals Quiz

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Periodic Inventory - Financial Accounting Fundamentals Quiz
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Periodic Inventory, Financial Accounting, Assets, Liabilities, Equity Week 1 Quiz

The key terms in this Financial Accounting course include, Financial Accounting, Assets, Liabilities, Equity, Net Income, Return on Assets, Average Assets, Journal Entry, Credit, Debit, Normal Balance, Periodic Inventory System, Credit Terms, Accounts Receivable, Cost of Goods Sold,


If assets are $111,000 and liabilities are $38,000, then equity equals:

$38,000.

$73,000.

$111,000.

$149,000.

$260,000.

Explanation

Assets = Liabilities + Equity
$111,000 = $38,000 + Equity; Equity = $73,000



Speedy has net income of $29,955, and assets at the beginning of the year of $211,000. Assets at the end of the year total $257,000. Compute its return on assets.

11.7%.

12.8%.

14.2%.

10.7%.

16.4%.

Explanation

Return on Assets = Net Income/Average Assets
Or Return on Assets = $29,955/[($211,000 + $257,000)/2]
Return on Assets = $29,955/$234,000 = 0.128 = 12.8%


Linking debit or credit with normal balance

Indicate whether a debit or credit decreases the normal balance of each of the following accounts.

Decrease Normal Balance
a.CashCredit
b.Accounts ReceivableCredit
c.Note ReceivableCredit
d.Prepaid InsuranceCredit
e.Prepaid RentCredit
f.Service Fees EarnedDebit
g.Prepaid ParkingCredit
h.SuppliesCredit
i.Interest RevenueDebit
j.Store EquipmentCredit
k.Office SuppliesCredit
l.Salaries PayableDebit

On September 12, Vander Company sold merchandise in the amount of $7,100 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,300. Vander uses the periodic inventory system and the gross method of accounting for sales. The journal entry or entries that Vander will make on September 12 is:

Sales7,100 
Accounts receivable 7,100
Sales7,100 
Accounts receivable 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable7,100 
Sales 7,100
  • Correct
Accounts receivable7,100 
Sales 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable5,300 
Sales 5,300

If assets are $111,000 and liabilities are $38,000, then equity equals:

$38,000.

$73,000.

$111,000.

$149,000.

$260,000.

Explanation

Assets = Liabilities + Equity
$111,000 = $38,000 + Equity; Equity = $73,000



Speedy has net income of $29,955, and assets at the beginning of the year of $211,000. Assets at the end of the year total $257,000. Compute its return on assets.

11.7%.

12.8%.

14.2%.

10.7%.

16.4%.

Explanation

Return on Assets = Net Income/Average Assets
Or Return on Assets = $29,955/[($211,000 + $257,000)/2]
Return on Assets = $29,955/$234,000 = 0.128 = 12.8%


Linking debit or credit with normal balance

Indicate whether a debit or credit decreases the normal balance of each of the following accounts.

Decrease Normal Balance
a.CashCredit
b.Accounts ReceivableCredit
c.Note ReceivableCredit
d.Prepaid InsuranceCredit
e.Prepaid RentCredit
f.Service Fees EarnedDebit
g.Prepaid ParkingCredit
h.SuppliesCredit
i.Interest RevenueDebit
j.Store EquipmentCredit
k.Office SuppliesCredit
l.Salaries PayableDebit

On September 12, Vander Company sold merchandise in the amount of $7,100 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,300. Vander uses the periodic inventory system and the gross method of accounting for sales. The journal entry or entries that Vander will make on September 12 is:

Sales7,100 
Accounts receivable 7,100
Sales7,100 
Accounts receivable 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable7,100 
Sales 7,100
  • Correct
Accounts receivable7,100 
Sales 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable5,300 
Sales 5,300

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