Multiple choice

1. When a merchandiser sells on account, which of the following is not needed to record the transaction?

A. Cash

B. Cost of goods sold

C. Accounts receivable

D. Inventory

2. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal entry to record this purchase for Meranda under a perpetual inventory system is

A. debit Inventory; credit Accounts Payable—Meranda.

B. debit Accounts Payable-Ashley; credit Inventory.

C. debit Inventory; credit Accounts Payable—Ashley.

D. debit Inventory; credit Cash.

3. If current assets decrease and current liabilities increase, the current ratio

A. decreases.

B. remains the same.

C. will change based on the change in total assets.

D. increases.

4. Net sales times the historical gross profit percentage yields the estimated

A. gross profit.

B. beginning inventory.

C. ending inventory.

D. cost of goods sold.