92.The cost of the transportation of inventory purchased:
A. Are expensed in the current period.
B. Increases income.
C. Becomes part of the cost of inventory.
D. Reduces the sales price.
93.To arrive at net sales:
A. Add sales discounts to sales.
B. Subtract the cost of goods sold from the sales price.
C. Subtract sales returns and sales discounts from sales.
D. Subtract accounts receivable from sales.
94.The Sales Returns and Allowances account is debited when:
A. Merchandise is returned to a supplier.
B. Merchandise is returned by a customer.
C. Payment is made to a supplier within the discount period.
D. An account receivable is collected within the discount period.
95.All of the following accounts normally have debit balances
except:
A. Transportation-in.
B. Cost of Goods Sold.
C. Sales Returns & Allowances.
D. Purchase Returns & Allowances.
96.If sales discounts are shown as a separate item in financial statements, they should be shown as a(n):
A. Deduction from accounts receivable.
B. Deduction from gross sales revenue.
C. Operating expense.
D. Current liability.
97.Regal Artworks Co. records purchases net of all available purchase discounts. If the company makes payment after the discount has expired, the entry to record the payment should include a:
A. Debit to Purchase Discounts Lost.
B. Credit to Purchase Discounts Lost.
C. Debit to Sales Discounts.
D. Credit to Sales Discounts.
98.Bernice Beverages is not satisfied with the quality of merchandise purchased from Reade Supplies. If Reade Supplies agrees to settle this matter by granting Bernice Beverages a sales allowance, Bernice Beverages will:
A. Return the entire shipment to Reade Supplies and receive a full refund.
B. Return only that portion of the merchandise that it is unable to sell within the discount period.
C. Keep the merchandise, but pay a reduced purchase price.
D. Keep the merchandise and sell it at a reduced sales price.
99.The basic purpose of offering customers cash discounts such as 2/10, n/30 is to:
A. Increase sales.
B. Reduce net sales.
C. Speed up the collection of accounts receivable.
D. Focus management's attention upon customers that fail to take advantage of all available cash discounts.
100.When making sales, the sales taxes received are:
A. Revenue.
B. A liability.
C. An expense if incurred.
D. A reduction in inventory value.
101.Emerald Co. uses a perpetual inventory system and records purchases of merchandise at net cost. The company recently purchased 200 compact discs at an invoice price of $6,000 and terms of 2/10, n/30. Half of these discs had been mislabeled and were returned immediately to the supplier. The journal entry to record payment of this invoice after the discount period has expired will include a:
A. Debit to Inventory for $3,000.
B. Credit to Cash for $3,000.
C. Debit to an expense account for $60.
D. Credit to Cash for $2,940.