True False A physical inventory need not be

True / False • A physical inventory need not be taken periodically in a perpetual inventory system. – False • The terms 1/10, n/60 means that a 1 percent discount is allowed on payments made more than ten days but less than 60 days after the invoice date. – False

True / False • A company is more likely to know the amount of inventory on hand at any time if it uses the periodic system than if it uses the perpetual system. – False • The ending inventory of one period automatically becomes the beginning inventory of the following period. – True

True / False • If a company's stock is publicly traded, is it a requirement that the earnings per share appear on the income statement? – True • Are the notes to the financial statements considered to be an integral part of the financial statements? – True • Is it acceptable that some of the expenses reported on the income statement be estimates? – True

• Assuming that net purchases were $300, 000 during the year and that ending inventory was $4, 000 more than the beginning inventory of $60, 000, how much was cost of goods sold? – $236, 000 – $244, 000 – $296, 000 – $304, 000 – $364, 000

• Ignoring income taxes, a net loss results when operating expenses exceed – cost of goods sold. – gross profit. – purchases. – cost of goods available for sale. – sales.

• A sale on April 20 with terms of n/10 eom is due to be collected by – April 30. – May 10. – May 20. – May 31.

• The income statement balances reflect a – POINT in time – PERIOD of time • Amounts earned by a company in its main operating activities are – revenues – gains

• A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a(n) – expense – gain – loss – revenue

• On December 1 a company borrowed $100, 000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What should the company report on its income statement for December? – nothing – Interest Expense of $1, 000

• Under the accrual basis of accounting, revenues are recognized in the accounting period in which – cash is received – revenues are earned

• Net Sales minus the Cost of Goods Sold equals – gross profit – income from operations – net income

• The combination of Selling Expenses and Administrative Expenses is referred to as – general expenses – operating expenses – total expenses

• Which basis of accounting best measures profitability? – accrual basis – cash basis

• Gross Profit minus Operating Expenses is best defined as – net income – net sales – operating income

• When an entire division of a company is eliminated, it is referred to as a(n) – discontinued operation – extraordinary item – change in accounting principle

• A gain or loss that is unusual in nature and infrequent in occurrence is a(n) – discontinued operation – extraordinary item – change in accounting principle

• When a company changes its book depreciation from an accelerated method to the straight-line method, it is considered to be a(n) – discontinued operation – extraordinary item – change in accounting principle