51 the purchasing agent of superb service co wants to know the dollar amount of inve 4295399
51.The purchasing agent of Superb Service Co. wants to know the dollar amount of inventory purchased on account during the year from a particular supplier. This information can be found most easily in Superb Service's:
A.Inventory subsidiary ledger.
B.Accounts payable controlling account.
C.Inventory controlling account.
D.Accounts payable subsidiary ledger.
52.Sutton Supplies reports net sales of $3,750,000, net income of $375,000, and gross profit of $900,000. The company's cost of goods sold is:
$3,750,000 – $900,000 = $2,850,000
53.VanRoy Supplies reports net sales of $1,750,000, net income of $175,000, and gross profit of $300,000. The company's cost of goods sold is:
$1,750,000 – $300,000 = $1,450,000
54.Which of the following appears in the income statement of a merchandising business, but not in the income statement of a business that renders only services?
D.Income tax expense.
55.Cumberland, Inc. has applied to its bank for a loan. The bank asks Cumberland's controller about the total amount of the company's accounts receivable. Assuming that all accounting records are up-to-date, the controller can best answer this question by referring to:
A.The Income Statement.
B.The Accounts Receivable control account.
C.The Accounts Receivable subsidiary ledger.
D.Last year's Balance Sheet.
56.The Cost of Goods Sold account is closed by:
A.Debiting Cost of Goods Sold and crediting Income Summary.
B.Debiting Cost of Goods Sold and crediting Retained Earnings.
C.Debiting Income Summary and crediting Cost of Goods Sold.
D.Debiting Retained Earnings and crediting Cost of Goods Sold.
57.Under the perpetual inventory system which journal entry would indicate a purchase of merchandise?
A.Debit, Inventory and credit, Cash.
B.Debit, Purchases and credit, Cash.
C.Debit, Costs of Goods Sold and credit, Inventory.
D.Debit, Inventory and credit, Cost of Goods Sold.
58.In a perpetual inventory system:
A.Merchandising transactions are recorded as they occur.
B.No effort is made to record the Cost of Goods Sold until year-end.
C.Entries are made in the Cost of Goods Sold account whenever merchandise is purchased or sold.
D.The need for ever taking physical inventory is eliminated.
59.In a perpetual inventory system, two entries usually are made to record each sales transaction. The purposes of these entries are best described as follows:
A.One entry recognizes the sales revenue, and the other recognizes the cost of goods sold.
B.One entry records the purchase of the merchandise, and the other records the sale.
C.One entry records the cost of goods sold, and the other reduces the balance in the Inventory account.
D.One entry updates the general ledger, and the other updates the subsidiary ledgers.
60.Hicksville's Department Store uses a perpetual inventory system. At year-end, the balance in the Inventory control account is $1,200,000. Assuming that the inventory records have been maintained properly, a year-end physical inventory:
B.Is needed to establish the ending inventory, as the $1,200,000 balance in the Inventory control account represents the beginning inventory.
C.Probably will indicate more than $1,200,000 in merchandise on hand.
D.Probably will indicate less than $1,200,000 in merchandise on hand.