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. | Cash | Credit |
| b. | Accounts Receivable | Credit |
| c. | Note Receivable | Credit |
| d. | Prepaid Insurance | Credit |
| e. | Prepaid Rent | Credit |
| f. | Service Fees Earned | Debit |
| g. | Prepaid Parking | Credit |
| h. | Supplies | Credit |
| i. | Interest Revenue | Debit |
| j. | Store Equipment | Credit |
| k. | Office Supplies | Credit |
| l. | Salaries Payable | Debit |
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:
| Sales | 7,100 | |
| Accounts receivable | 7,100 |
| Sales | 7,100 | |
| Accounts receivable | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 7,100 | |
| Sales | 7,100 |
- Correct
| Accounts receivable | 7,100 | |
| Sales | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 5,300 | |
| 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. | Cash | Credit |
| b. | Accounts Receivable | Credit |
| c. | Note Receivable | Credit |
| d. | Prepaid Insurance | Credit |
| e. | Prepaid Rent | Credit |
| f. | Service Fees Earned | Debit |
| g. | Prepaid Parking | Credit |
| h. | Supplies | Credit |
| i. | Interest Revenue | Debit |
| j. | Store Equipment | Credit |
| k. | Office Supplies | Credit |
| l. | Salaries Payable | Debit |
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:
| Sales | 7,100 | |
| Accounts receivable | 7,100 |
| Sales | 7,100 | |
| Accounts receivable | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 7,100 | |
| Sales | 7,100 |
- Correct
| Accounts receivable | 7,100 | |
| Sales | 7,100 | |
| Cost of goods sold | 5,300 | |
| Merchandise Inventory | 5,300 |
| Accounts receivable | 5,300 | |
| Sales | 5,300 |