Financial Accounting[4 marks]What determines the proper account classification of freight chargeson new equipment purchases?a) Company's shipping department policyb) Whether freight is prepaid or collectc) Nature of the equipment purchasedd) Capitalize as part of equipment cost

a) Company's shipping department policyThis is incorrect.There is no internal shipping policy of the…

Answered: Financial Accounting [4 marks] What…

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter12: Financial Statements, Closing Entries, And Reversing Entries

Section: Chapter Questions

Problem 5A

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Who bears the freight when the terms of sale are (a) FOB shipping point, (b) FOB destination?
Which statement and where on the statement is freight-out recorded? Why is it recorded there?
Where should goods in transit that where recently purchased f.o.b. destination be included on the balance sheet? A) Accounts payable. B) Inventory C) Equipment D) Not the balance sheet
7.Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account? a. Freight Expense b. Freight-Out c. Freight-In d. Inventory
Which of the following accounts is an example of a contra-asset?A) Cost of Goods Sold B)Sales Discounts C) Purchases D) Deferred Revenue E) LIFO Reserve
When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with which of the following entries (assuming the exchange was considered to have commercial substance)? a.debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Exchange of Machinery b.debit Cash and Machinery; credit Accumulated Depreciation and Machinery c.debit Machinery and Accumulated Depreciation; credit Machinery and Cash d.debit Cash and Machinery; credit Accumulated Depreciation
3 In accounting for consignment sales, sales revenue and the related cost of goods sold should be recognized by the Group of answer choices Consignor when the goods are shipped to the consignee Consignee when cash is received from the customer Consignor when notification is received that the consignee has sold the goods Consignor when the goods are shipped to the third party
Which amongst the following would not form part of cost of equipment? a. Freight charges b. Equipment license c. Cost of installation of the equipment d. Sales tax paid
Which of the following statements regarding freight costs is true? a. FOB destination means that transportation charges are paid by the buyer. Ob. Under FOB shipping point, the buyer owns the inventory as soon as it is shipped and should count it in inventory. c. When the terms are FOB shipping point, the freight-in account is not used in recording the purchase. Od. Under FOB destination, the buyer owns the inventory as soon as it is shipped and should count it in inventory.
Given the following information for C & J, Inc. identify where the items will be classified (asset or expense, or not reported) and on which financial statement the items will reported (income statement, balance sheet, or N/A). Cost Item Research and Development Prepaid Expenses Cost of Goods Sold Selling, General and Administrative Inventory Opportunity Cost Classification Asset Expense Not Reported Financial Statement
Which of the following statements is correct? Group of answer choices A)Revenue is recognized at the time of shipment when goods are shipped FOB destination. B)Sales returns and allowances are reported as operating expenses on an income statement. C)Revenue is recorded when title and risks of ownership transfer to the buyer. D)Sales discounts are reported as operating expenses on an income statement.
On a classified balance sheet, merchandise inventory is classified as O a. a long-term investment. O b. a current asset. O c. an intangible asset. O d. property, plant, and equipment.

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Financial Accounting [4 marks] What determines the proper account classification of freight charges on new equipment purchases? a) Company's shipping department policy b) Whether freight is prepaid or collect c) Nature of the equipment purchased d) Capitalize as part of equipment cost