ACG 2021 MIDTERM QUESTIONS WITH COMPLETE ANSWERS

The two main inventory accounting systems are the
A.
perpetual and periodic.
B.
purchase and sale.
C.
returns and allowances.
D.
cash and accrual.


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perpetual and periodic.




T accounts:

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1. assets: debit goes up, credit goes down
2. liabilities: debit goes down, credit goes up
3. equity: debit goes up, credit goes down




Holds that fair market value should not be used over actual costs


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cost principle




HOW ARE SALES OF MERCHANDISE INVENTORY RECORDED IN A PERPETUAL
INVENTORY SYSTEM?


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1. record sales revenue and cash/accounts receivable
2. record COGS and merchandise inventory




Calculates a​weighted-average cost based on the cost of goods available for sale
and the number of units available.


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weighted-average

,b. The company records furniture at its cost of​$9,000, not its market value of​$13,000:


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the cost principle




Weighted average equation:


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=cost of goods available for sale/ # of units available




Which of the following accounts would be closed at the end of the year using the
perpetual inventory​system?
A.
Cost of Goods Sold
B.
Merchandise Inventory
C.
Accounts Receivable
D.
Accounts Payable


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Cost of goods sold

, Treats the oldest inventory purchases as the first units sold.


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FIFO




Which of the following accounts is a​liability?
A.
Accounts Receivable
B.
Service Revenue
C.
Unearned Revenue
D.
Prepaid Rent Expense


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unearned revenue




FOB shipping point:


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The buyer (owner of the goods while in transit) usually pays the freight.




Adjusting Entries: 2 categories