Question 1

Sales less sales discounts,less sales returns and allowances equals:

Accepted Answer

A) Net purchases. 
B) Cost of goods sold. 
C) Net sales. 
D) Gross profit. 
E) Net income. 
A) Net purchases. 
B) Cost of goods sold. 
C) Net sales. 
D) Gross profit. 
E) Net income.

Question 2

A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:

Accepted Answer

A) $209,000 and $191,470 
B) $191,470 and $209,000 
C) $525,470 and $227,000 
D) $227,000 and $525,470 
E) $734,000 and $191,470 
A) $209,000 and $191,470 
B) $191,470 and $209,000 
C) $525,470 and $227,000 
D) $227,000 and $525,470 
E) $734,000 and $191,470

Question 3

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

Accepted Answer

A) True 
 B)False

Question 4

The gross margin ratio is defined as gross margin divided by net sales.

Accepted Answer

A) True 
 B)False

Question 5

The year-end adjusted trial balance of Gordon Produce for the current year,is shown below:
GORDON PRODUCE
Adjusted Trial Balance
December 31
   Prepare closing entries at December 31 for the current year.

Accepted Answer

The answer of The year-end adjusted trial balance of Gordon...

Question 6

All of the following statements regarding sales returns and allowances are true except:

Accepted Answer

A) A reduction in the selling price because of damaged merchandise is included in sales returns and allowances. 
B) There is no relationship between sales returns and allowances and the possibility of lost future sales. 
C) Sales returns and allowances are recorded in a separate contra-revenue account. 
D) Sales returns and allowances are rarely disclosed in published financial statements. 
E) Sales returns and allowances are closed to the Income Summary account. 
A) A reduction in the selling price because of damaged merchandise is included in sales returns and allowances. 
B) There is no relationship between sales returns and allowances and the possibility of lost future sales. 
C) Sales returns and allowances are recorded in a separate contra-revenue account. 
D) Sales returns and allowances are rarely disclosed in published financial statements. 
E) Sales returns and allowances are closed to the Income Summary account.

Question 7

Sales discounts has a normal debit balance because it decreases Sales,which has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 8

The following information refers to Percy's Records and its competitors in the music store business.
 $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { l } 
\text { Current } \
\text { Ratio }
\end{array} & \begin{array} { l } 
\text { Quick } \
\text { Ratio }
\end{array} \
\hline \text { Percy's Records } & 2.0 & 0.95 \
\hline \text { Tewel CDs } & 1.5 & 1.00 \
\hline \text { Rudy's Raps } & 1.8 & 1.20 \
\hline \text { Marvin's Jazz } & 1.9 & 0.80 \
\hline \text { Industry Average } & 2.0 & 1.00 \
\hline
\end{array}$$ Required:
Comment on the relative liquidity positions of these companies.

Accepted Answer

Both Jewel CDs and Rudy's Raps have acce

Question 9

The following statements regarding gross profit are true except:

Accepted Answer

A) Gross profit is also called gross margin. 
B) Gross profit less other operating expenses equals income from operations. 
C) Gross profit is not reported on the multiple-step income statement. 
D) Gross profit must cover all operating expenses to yield a return for the owner(s)of the business. 
E) Gross profit equals net sales less cost of goods sold. 
A) Gross profit is also called gross margin. 
B) Gross profit less other operating expenses equals income from operations. 
C) Gross profit is not reported on the multiple-step income statement. 
D) Gross profit must cover all operating expenses to yield a return for the owner(s)of the business. 
E) Gross profit equals net sales less cost of goods sold.

Question 10

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system and the gross method of recording invoices.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 11

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Accepted Answer

A) Merchandise Inventory 
B) Sales 
C) Sales Returns and Allowances 
D) Accounts Payable 
E) Purchases 
A) Merchandise Inventory 
B) Sales 
C) Sales Returns and Allowances 
D) Accounts Payable 
E) Purchases

Question 13

If a company sells merchandise with credit terms 2/10 n/30,the credit period is 30 days and the discount period is 10 days.

Accepted Answer

A) True 
 B)False

Question 14

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Accepted Answer

The answer of ________ can benefit a seller by decreasing...

Question 15

A common rule of thumb is that a company's acid-test ratio should have a value near or higher than 1 to conclude that a company is unlikely to face near-term liquidity problems.

Accepted Answer

A) True 
 B)False

Question 16

A ________ inventory system updates the accounting record for inventory only at the end of an accounting period.

Accepted Answer

The answer of A ________ inventory system updates the accounting...

Question 17

Craig's Snowboards uses the perpetual inventory system and the gross method of accounting for sales,and had the following sales transactions during June:
   Prepare the journal entries that Craig's Snowboards must make to record these transactions.

Accepted Answer

The answer of Craig's Snowboards uses the perpetual inventory system...

Question 18

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.The amount of the cash paid on July 28 equals:

Accepted Answer

A) $200. 
B) $1,564. 
C) $1,568. 
D) $1,600. 
E) $1,800. 
A) $200. 
B) $1,564. 
C) $1,568. 
D) $1,600. 
E) $1,800.

Question 19

The acid-test ratio:

Accepted Answer

A) Is also called the quick ratio. 
B) Measures profitability. 
C) Measures inventory turnover. 
D) Is generally greater than the current ratio. 
E) Measures return on assets. 
A) Is also called the quick ratio. 
B) Measures profitability. 
C) Measures inventory turnover. 
D) Is generally greater than the current ratio. 
E) Measures return on assets.

Question 20

The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of goods available for sale and the cost of goods sold.

Accepted Answer

A) True 
 B)False

Sales less sales discounts,less sales returns and allowances equals:

A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

The gross margin ratio is defined as gross margin divided by net sales.

The year-end adjusted trial balance of Gordon Produce for the current year,is shown below: GORDON PRODUCE Adjusted Trial Balance December 31 Prepare closing entries at December 31 for the current year.

All of the following statements regarding sales returns and allowances are true except:

Sales discounts has a normal debit balance because it decreases Sales,which has a normal credit balance.

The following statements regarding gross profit are true except:

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system and the gross method of recording invoices.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

If a company sells merchandise with credit terms 2/10 n/30,the credit period is 30 days and the discount period is 10 days.

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

A common rule of thumb is that a company's acid-test ratio should have a value near or higher than 1 to conclude that a company is unlikely to face near-term liquidity problems.

A ________ inventory system updates the accounting record for inventory only at the end of an accounting period.

Craig's Snowboards uses the perpetual inventory system and the gross method of accounting for sales,and had the following sales transactions during June: Prepare the journal entries that Craig's Snowboards must make to record these transactions.

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.The amount of the cash paid on July 28 equals:

The acid-test ratio:

The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of goods available for sale and the cost of goods sold.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 4: Reporting and Analyzing Merchandising Operations

Sales less sales discounts,less sales returns and allowances equals:

A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

The gross margin ratio is defined as gross margin divided by net sales.

The year-end adjusted trial balance of Gordon Produce for the current year,is shown below: GORDON PRODUCE Adjusted Trial Balance December 31 Prepare closing entries at December 31 for the current year.

All of the following statements regarding sales returns and allowances are true except:

Sales discounts has a normal debit balance because it decreases Sales,which has a normal credit balance.

The following statements regarding gross profit are true except:

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system and the gross method of recording invoices.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

If a company sells merchandise with credit terms 2/10 n/30,the credit period is 30 days and the discount period is 10 days.

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

A common rule of thumb is that a company's acid-test ratio should have a value near or higher than 1 to conclude that a company is unlikely to face near-term liquidity problems.

A ________ inventory system updates the accounting record for inventory only at the end of an accounting period.

Craig's Snowboards uses the perpetual inventory system and the gross method of accounting for sales,and had the following sales transactions during June: Prepare the journal entries that Craig's Snowboards must make to record these transactions.

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.The amount of the cash paid on July 28 equals:

The acid-test ratio:

The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of goods available for sale and the cost of goods sold.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters