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Exercises Chapter 6

Questionnaire:

1. What type of assets are included in the Inventory?

2. What are the fundamental differences in the income statement of a service company and a trade company?

3. List the five main differences between the trade companies and the business services.

4. Explain the two systems inventory record that exist in commercial enterprises.

5. Describe two ways in which the perpetual and periodic systems differ in the development of inventory records.

6. List what is the formula for the cost of goods sold.

7. What are the differences in cost of goods sold section of the income statement when the systems of periodic and perpetual inventories are used?

8. Why there is no cost of sales account for a service company?

9. Make a summary of the discount rates offered on purchases in companies.

10. What are the additional costs that must be part of the product cost?

11. What effect can have negative returns on sales for a company?

12. What are trade discounts offered by some companies?

13. What is the difference in the registration of a trade off and one of early payment?

14. What is the classification of income and expenses must be made in the income statement of commercial enterprises?

15. What types of expenses are related to administrative expenses?

16. What is the nature of sales returns account?

True or false?    

Answer true or false; if false, explain why.

1. The standard accounting features three registration systems operations related to the inventory: Periodic, Perpetual and Average.

2. In the Perpetual inventory system sales accounts, banks and operating expenses are used.

3. In a Perpetual inventory system accounts like purchases, shipping on purchases and returns on purchases are used.

4. In the Perpetual system, the account “Returns on purchases” is related to the Inventory.

5. In the Periodic inventory system, the balance of goods in existence is updated.

6. The initial inventory of a period is the ending inventory of the previous period.

7. The Sales Discounts account is a compensatory expense account.

8. When the account Returns on sales increased, the Cost of goods sold in the income statement increases.

9. With increasing account sales discounts, net sales decrease.

10. Import taxes are part of the product cost.

Choose the correct answer:

1. It is a shipping cost paid by the seller or buyer, as agreed:

a) Import.

b) Freight.

c) Gasoline.

d) Packaging.

2. It occurs when a company reduces its price list:

a) Cash discount.

b) Excess inventory.

c) Commercial discount.

d) Statement of changes in financial position.

3. The name of the boarding agreements that exist in accounting is:

a) FOB shipping point and FOB destination point.

b) Convention shipments between companies.

c) FOB point of exit and entry point.

d) LAB marketing point and end point.

4. On this account the additional costs of purchased goods are recorded when a perpetual inventory system is used:

a) Freight on purchases.

b) Additional Freight.

c) Charge transport.

d) None of the above.

5. In this agreement shipment of goods the seller accepts the buyer pays shipping costs:

a) FOB destination.

b) FOB shipping point.

c) FOB point of arrival.

d) LAB exit point.

6. It is an expense incurred to cover risks during transportation of goods

a) Expenditure of gasoline.

b) Import expenditure.

c) Maintenance expenditure.

d) Insurance.

7. This cost is incurred if it is a product that comes from another country:

a) Cost of transportation.

b) Import Tax.

c) Income from purchase.

d) Cost of marketing.

8. The merchandise inventory account is classified in:

a) Fixed Assets.

b) Intangible Assets.

c) Current assets.

d) Active exhaustible.

9. It is obtained before lowering all other expenses of the period to arrive at net income:

a) Credit sales.

b) Earnings before taxes.

c) Net sales.

d) Gross Profit.

10. These accounts are used to determine the cost of goods sold:

a) Inventories, purchases and discounts on purchases.

b) Sales, inventory and returns.

c) Purchasing, inventory and banks.

d) Freight, discounts and suppliers.

11. The sum of these concepts is what is known as net purchases:

a) Purchases.

b) Freight on purchases.

c) Discounts, rebates and returns on purchases.

d) Inventories.

e) Only a), b) and c).

12. This account does not appear on the balance sheet of service companies is one of the most important for companies engaged in the sale of goods:

a) Purchases.

b) Sales.

c) Cost of sales.

d) Inventories.

e) All of the above.

13. This account is used to record purchases of items intended to be sold as part of normal business operations:

a) Purchases.

b) Sales.

c) Inventories.

d) Cost of goods sold.

e) None of the above.

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