MIDTERMS THEORY
In normal manual accounting cycle, financial statements are prepared before the adjusting entries are posted.
True
Adjusting entries affect permanent and real accounts.
False
Current liabilities are paid with cash or wuth goods and services within 6 months or the entry's operating cycle if it is shorter.
False
Operating cycle of a business is the same as the accounting cycle.
False
Integrated inventory systems are integrated with accounts receivable and sales.
True
A company's gross margin ratio has decreased over the last 3 years. Management should be oleased that profitability is improving.
False
A physical count of the inventory should be taken at least once a year, only when using the periodic inventory.
True
Adjusted Trial Balance columns are optional in a worksheet.
True
A wholesaler is a middleman that buys products and sells them to consumers
False
Another term for the cost of goods sold is the cost of merchandise available for sale
False
Trade discount is available only to those who desire barter with goods rather than dealung with money.
False
When merchandise inventory is purchased with credit terms of 2/10, n/60 the discount period is 60 days from the date of the invoice
False
Merchandise purchased on June 14 with credit terms of 2/10, n/30 must be paid sooner than with credit terms of n/eom.
False
In perpetual, transportation charges are only recorded by a debit to the Mechandise Inventory account.
True
When a return of merchandise requires the buyer to notify the seller of the reduction in the invoice due to the return, the memo sent by the buyer is called debit memorandum.
True
Supplementary record is a register of information outside the usual accounting records.
True
Shrinkage is the term used for inventory losses that occur as a result of shoplifting or deterioration.
True
Income statement formal that shows intermediate totals between sales and net income and detailed computations of net sales and cost of goods sold is called classified multi-step income statement.
True
Sales discounts have normal debit dalance
True
Acid-test ratio is sometimes called quick ratio.
True
The acid-test ratio gives investirs and other interested parties a better idea than the current ratio of how well the company can oay off its obligations that are due in the very near future.
False
Merchandise inventory is included in acid test ratio than current ratio calculation.
True