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ACC 201

. Gross profit is calculated as the difference between net sales revenue and ________.
cost of good solds
On January 21, 2014, Bessant Inc. received merchandise from Mullies Inc. On that date, it found a few of these goods to be damaged. On January 22, it returned the damaged goods to the seller. Such returns will be treated as ________ by Bessant.
purchase returns
Net sales are calculated by
Subtracting sales returns and sales discounts from sales.
Gross profit is equal to:
sales less (sales discounts and sales returns and allowances) less cost of merchandise sold
When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry
debit Cash; credit Merchandise Inventory
As an incentive for customers to pay their accounts promptly, a business may offer its customers
a sales discount
Under which of the following terms will the buyer be required to pay transportation costs?
FOB shipping point
Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debited
when an account is determined to be worthless
free on born
In general, which inventory cost method closely matches cost of merchandise sold with the current cost of purchasing merchandise?
LIFO method
When prices are increasing which inventory method will produce the highest cost of goods sold?
Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?
net income is understated
On the balance sheet, the amount shown for the Allowance for Doubtful Accounts is equal to the
total estimated uncollectible accounts as of the end of the year
When a company receives an interest-bearing note receivable, it will
debit Notes Receivable for the face value of the note.

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