$$\text{Cost of Goods Sold} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory}$$

Question 1

Which formula correctly calculates Net Sales?

Accepted Answer

Net Sales = Gross Sales - Sales Returns & Allowances - Sales Discounts

Question 2

A company has Gross Sales of $$50, Sales Returns & Allowances of 10$$, and Sales Discounts of $5. What is the Net Sales?

Accepted Answer

$35

Question 3

When merchandise is sold on account, which accounts are affected in the sales journal?

Accepted Answer

Accounts Receivable (Dr), Sales (Cr), Inventory (Cr), Cost of Goods Sold (Dr)

Question 4

If a customer returns merchandise, which journal is used to record the transaction?

Accepted Answer

General Journal

Question 5

A company sold $$200 of merchandise on account (invoice #801) with a cost of inventory of 150. $$What is the correct journal entry?

Accepted Answer

Accounts Receivable (Dr) $$200; Sales (Cr) 200$$; Inventory (Cr) $$150; Cost of Goods Sold (Dr) 150$$

Question 6

Which account number corresponds to Inventory in Karen’s Delivery Service’s sales journal?

Accepted Answer

#115

Question 7

If a company offers sales terms of 2/10, n/30, what does this mean?

Accepted Answer

A 2% discount is available if payment is made within 10 days; otherwise, the net amount is due in 30 days.

Question 8

Which journal would you use to record the depreciation of computer equipment?

Accepted Answer

General Journal

Question 9

Art’s Clothing Company sold inventory valued at $4,950 during April. Where is this information found?

Accepted Answer

In the 'Cost of Goods Sold Dr., Inventory Cr.' column of the Sales Journal

Question 10

Hal’s Clothing Company owes Art’s Clothing Company $800 after April’s transactions. Where is this amount recorded?

Accepted Answer

Accounts Receivable Subsidiary Ledger under Hal’s Clothing Company

Question 11

A company sold merchandise for cash to Ree Co., invoice number 1 for $50. Which journal should this transaction be recorded in?

Accepted Answer

Cash Receipts Journal

Question 12

Which of the following is the correct formula for Cost of Goods Sold?

Accepted Answer

$$	ext{Cost of Goods Sold} = 	ext{Beginning Inventory} + 	ext{Purchases} - 	ext{Ending Inventory}$$

Question 13

If a company posts totals from the sales journal at the end of the month, where are these posted?

Accepted Answer

To the General Ledger

Question 14

A company sold $$300 of merchandise on account (invoice #802) with a cost of inventory of 225. $$What is the gross profit for this transaction?

Accepted Answer

$75

Question 15

Which journal is used to record the collection of accounts receivable?

Accepted Answer

Cash Receipts Journal

Question 16

A company issued a credit memo for $25 to Flynn Co. for defective merchandise. Which journals and ledgers are affected?

Accepted Answer

General Journal, Subsidiary Ledger, and General Ledger

Question 17

If a company hopes to collect $6,500 from all its customers, where is this amount stored as a single figure?

Accepted Answer

Accounts Receivable Control Account

Question 18

Which of the following transactions would be recorded in the Sales Journal?

Accepted Answer

Sales of inventory on account

Question 19

A company sold $$250 of merchandise on account (invoice #806) with a cost of inventory of 187.50. $$What is the journal entry for the cost side?

Accepted Answer

Cost of Goods Sold (Dr) $$187.50; Inventory (Cr) 187.50$$

Question 20

Which ledger provides details about individual customer balances?

Accepted Answer

Accounts Receivable Subsidiary Ledger

Step-by-Step Guidance for Financial Accounting Sales and Journal Transactions

Study Guide - Practice Questions