Which of the following is subtracted from net sales to determine gross profit?
(A)Mark one answer:
(B)Cost of goods sold
(D)Both cost of goods sold and expenses
(E)Cost of goods sold, expenses, and taxes
One purpose of GAAP is to provide _____ between accounting periods.
Correct Answer: E
Jenny's Bakery recently delivered a bad batch of cakes to a local restaurant. Jenny quickly refunded the cost of the cakes to the restaurant. Her accountant made a _____ to her Refunds of Sales account for this transaction:
(A)note (B)debit (C)credit (D)cost adjustment (E)deposit
Correct Answer: B
In the statement of owner’s equity, owner’s equity or capital is calculated using: Mark one answer:
(A)Gross income (B)The positive or negative cash flow figure from the statement of cash flows (C)Assets (D)Total income from operating activities (E)Net income
Correct Answer: E
More CPA Exam Questions
- 1If an exempt organization is a corporation, the tax on unrelated business taxable income is
- 2Cartman's Cats has $1,000,000 in assets after purchasing Big Bertha's Birds, along with $500,000 in liabilities. It has 500 shares capital stock outstanding. What is the book value of each share of stock? Mark one answer:
- 3Jim's Jeans is being sued by a former employee for $100,000. The employee is claiming age discrimination. She is twenty-four and was terminated when Jim decided that he wanted all employees to be over the age of sixty-five. Jim's attorney has told him that the employee has a strong case and will probably win. How does this impact Jim's accounting records? Mark one answer:
- 4On July 1, Year 5, Eagle Corp. issued 600 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, Year 5 and mature on April 1, Year 15. Interest is payable semiannually on April 1 and October 1. What amount did Eagle receive from the bond issuance?
- 5King, CPA, was engaged to audit the financial statements of Newton Company after its fiscal year had ended. King neither observed the inventory count nor confirmed the receivables by direct communication with debtors, but was satisfied concerning both after applying alternative procedures.King’s auditor’s report most likely contained a(n)