Journal Entry, Perpetual Inventory System, Balance Sheet, Revenue, Financial Accounting
The key terms in this Financial Accounting course include Catering Services, Journal Entry, Prepaid, Balance Sheet, Unearned Catering Revenue, Accounts Receivable, Cash, Sales Account, Principles, Assumptions and Constraints, Weighted-Average, Perpetual Inventory System, Cost of Goods Sold
ABC Catering received $980 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.
| Unearned Catering Revenue | 980 | |
| Catering Revenue | 980 |
| Cash | 980 | |
| Accounts Receivable | 980 |
| Cash | 980 | |
| Unearned Catering Revenue | 980 |
- Correct
| Cash | 980 | |
| Catering Revenue | 980 |
| Accounts Receivable | 980 | |
| Catering Revenue | 980 |
A $16 credit to Sales was posted as a $160 credit. By what amount is the Sales account in error?
$160 understated.
$144 overstated.
Correct
$160 overstated.
$16 understated.
$144 understated.
Explanation
$160 – 16 = $144
Identifying principles, assumptions and constraints
Identify the following terms/phrases as either an accounting: (a) principle, (b) assumption, or (c) constraint.
| 1. | Expense recognition | principle |
| 2. | Full disclosure | principle |
| 3. | Business entity | assumptions |
| 4. | Benefit exceeds cost | constraint |
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
| August 2 | 16 units were purchased at $7 per unit. |
| August 18 | 21 units were purchased at $9 per unit. |
| August 29 | 18 units were sold. |
What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)
$130.00
$189.00
$301.00
$132.50
$146.52
Explanation
Average cost = [(16 * $7) + (21 * $9)]/37 units = $8.14/unit
Cost of sale = 18 units * $8.14/unit = $146.52
ABC Catering received $980 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.
| Unearned Catering Revenue | 980 | |
| Catering Revenue | 980 |
| Cash | 980 | |
| Accounts Receivable | 980 |
| Cash | 980 | |
| Unearned Catering Revenue | 980 |
- Correct
| Cash | 980 | |
| Catering Revenue | 980 |
| Accounts Receivable | 980 | |
| Catering Revenue | 980 |
A $16 credit to Sales was posted as a $160 credit. By what amount is the Sales account in error?
$160 understated.
$144 overstated.
Correct
$160 overstated.
$16 understated.
$144 understated.
Explanation
$160 – 16 = $144
Identifying principles, assumptions and constraints
Identify the following terms/phrases as either an accounting: (a) principle, (b) assumption, or (c) constraint.
| 1. | Expense recognition | principle |
| 2. | Full disclosure | principle |
| 3. | Business entity | assumptions |
| 4. | Benefit exceeds cost | constraint |
Marquis Company uses a weighted-average perpetual inventory system and has the following purchases and sales:
| August 2 | 16 units were purchased at $7 per unit. |
| August 18 | 21 units were purchased at $9 per unit. |
| August 29 | 18 units were sold. |
What is the amount of the cost of goods sold for this sale? (Round average cost per unit to 2 decimal places.)
$130.00
$189.00
$301.00
$132.50
$146.52
Explanation
Average cost = [(16 * $7) + (21 * $9)]/37 units = $8.14/unit
Cost of sale = 18 units * $8.14/unit = $146.52