# Periodic Inventory – Financial Accounting Fundamentals Quiz

### 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.

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:

• Correct

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.

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:

• Correct

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