Question 1

Multiple-step income statements:

Accepted Answer

A) Are required by the FASB and IASB. 
B) Contain more detail than a simple listing of revenues and expenses. 
C) Are required for the periodic inventory system. 
D) List cost of goods sold as an operating expense. 
E) Are only used in perpetual inventory systems. 
A) Are required by the FASB and IASB. 
B) Contain more detail than a simple listing of revenues and expenses. 
C) Are required for the periodic inventory system. 
D) List cost of goods sold as an operating expense. 
E) Are only used in perpetual inventory systems.

Question 2

The gross margin ratio is also called the gross profit ratio.

Accepted Answer

A) True 
 B)False

Question 3

Morgan,Inc.uses a perpetual inventory system and the net method of recording purchases.On May 12,a merchandise purchase of $15,000 was made on credit,2/10,n/30.The journal entry to record this purchase is:

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|l|}
\hline \text { Accounts Payable } & 15,000 & \
\hline \text { Merchandise Inventory } & & 15,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|l|}
\hline \text { Accounts Payable } & 15,000 & \
\hline \text { Merchandise Inventory } & & 15,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$

Question 4

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 8,it paid the full amount due.Assuming the company uses the gross method to record purchases,the journal entry to record the cash paid on July 8 is:

Accepted Answer

A) Debit Accounts Payable,$1,800; Credit Merchandise Inventory,$36; Credit Cash,$1,764. 
B) Debit Accounts Payable,$1,568; Credit Cash,$1,568. 
C) Debit Accounts Payable,$1,600; Credit Merchandise Inventory,$32; Credit Cash,$1,568. 
D) Debit Accounts Payable,$1,568; Debit Merchandise Inventory,$32; Credit Cash,$1,600. 
E) Debit Accounts Payable,$1,600; Credit Cash,$1,600. 
A) Debit Accounts Payable,$1,800; Credit Merchandise Inventory,$36; Credit Cash,$1,764. 
B) Debit Accounts Payable,$1,568; Credit Cash,$1,568. 
C) Debit Accounts Payable,$1,600; Credit Merchandise Inventory,$32; Credit Cash,$1,568. 
D) Debit Accounts Payable,$1,568; Debit Merchandise Inventory,$32; Credit Cash,$1,600. 
E) Debit Accounts Payable,$1,600; Credit Cash,$1,600.

Question 5

Beginning inventory plus net purchases equals merchandise available for sale.

Accepted Answer

A) True 
 B)False

Question 6

In a perpetual inventory system,Cost of Goods Sold is debited during the closing process.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following accounts would be closed at the end of the accounting period with a debit?

Accepted Answer

A) Sales Discounts. 
B) Sales Returns and Allowances. 
C) Cost of Goods Sold. 
D) Operating Expenses. 
E) Sales. 
A) Sales Discounts. 
B) Sales Returns and Allowances. 
C) Cost of Goods Sold. 
D) Operating Expenses. 
E) Sales.

Question 8

A company purchased $10,000 of merchandise on January 5 with terms 2/10,n/30.On January 7,it returned $1,200 worth of merchandise.On January 28,it paid the full amount due.Assuming the company uses a perpetual inventory system,and records purchases using the gross method,the correct journal entry to record the payment on January 28 is:

Accepted Answer

A) Debit Merchandise Inventory $8,800; credit Cash $8,800. 
B) Debit Cash $1,600; credit Accounts Payable $1,600. 
C) Debit Accounts Payable $10,000; credit Merchandise Inventory $200; credit Cash $9,800 
D) Debit Accounts Payable $8,800; credit Cash $8,800. 
E) Debit Accounts Payable $8,624; credit Cash $8,624. 
A) Debit Merchandise Inventory $8,800; credit Cash $8,800. 
B) Debit Cash $1,600; credit Accounts Payable $1,600. 
C) Debit Accounts Payable $10,000; credit Merchandise Inventory $200; credit Cash $9,800 
D) Debit Accounts Payable $8,800; credit Cash $8,800. 
E) Debit Accounts Payable $8,624; credit Cash $8,624.

Question 9

On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Johnson uses the periodic inventory system and the net method of accounting for purchases.Johnson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Johnson makes on September 18 is:

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Purchases } & 5,684 & \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 4,000 & \
\hline \text { Merchandise inventory } & & 80 \
\hline \text { Cash } & & 3,920 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 5,800 & \
\hline \text { Purchases discounts } & & 116 \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 5,684 & \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 5,684 & \
\hline \text { Purchases discounts } & 116 & \
\hline \text { Accounts payable } & & 5,800 \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Purchases } & 5,684 & \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 4,000 & \
\hline \text { Merchandise inventory } & & 80 \
\hline \text { Cash } & & 3,920 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 5,800 & \
\hline \text { Purchases discounts } & & 116 \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 5,684 & \
\hline \text { Cash } & & 5,684 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 5,684 & \
\hline \text { Purchases discounts } & 116 & \
\hline \text { Accounts payable } & & 5,800 \
\hline
\end{array}$

Question 10

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 8,it paid the full amount due.The amount of the cash paid on July 8 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 11

A company reported the following information for the month of July:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 50,475 \
\hline \text { Sales discounts } & 1,23 \
\hline \text { Sales returns and allowances } & 2,840 \
\hline \text { Cost of goods sold } & 33,975 \
\hline
\end{array}$$ Required: Calculate this company's gross profit.

Accepted Answer

The answer of A company reported the following information for...

Question 12

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 13

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases FOB shipping point in the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 14

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited during the closing process.

Accepted Answer

A) True 
 B)False

Question 15

FOB ________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business.The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.

Accepted Answer

The answer of FOB ________ means ownership of goods transfers...

Question 16

Either the gross method or net method may be used to record sales with cash discounts,but the gross method requires a period-end adjusting entry to estimate expected future sales discounts taken.

Accepted Answer

A) True 
 B)False

Question 17

Describe the difference(s)between the periodic and the perpetual inventory accounting systems.

Accepted Answer

Under a perpetual system each purchase,p

Question 18

Under the ________ inventory accounting system,each purchase,purchase return and allowance,purchase discount,and transportation-in transaction is recorded in a separate temporary account.

Accepted Answer

The answer of Under the ________ inventory accounting system,each purchase,purchase...

Question 19

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of

Question 20

An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:

Accepted Answer

A) Sales discounts. 
B) Trade discounts. 
C) Purchases discounts. 
D) Discounts lost. 
E) Discounts earned. 
A) Sales discounts. 
B) Trade discounts. 
C) Purchases discounts. 
D) Discounts lost. 
E) Discounts earned.

Multiple-step income statements:

The gross margin ratio is also called the gross profit ratio.

Morgan,Inc.uses a perpetual inventory system and the net method of recording purchases.On May 12,a merchandise purchase of $15,000 was made on credit,2/10,n/30.The journal entry to record this purchase is:

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 8,it paid the full amount due.Assuming the company uses the gross method to record purchases,the journal entry to record the cash paid on July 8 is:

Beginning inventory plus net purchases equals merchandise available for sale.

In a perpetual inventory system,Cost of Goods Sold is debited during the closing process.

Which of the following accounts would be closed at the end of the accounting period with a debit?

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 8,it paid the full amount due.The amount of the cash paid on July 8 equals:

A company reported the following information for the month of July: Sales \ 50,475 Sales discounts 1,23 Sales returns and allowances 2,840 Cost of goods sold 33,975 Required: Calculate this company's gross profit.

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.

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases FOB shipping point in the Merchandise Inventory account.

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited during the closing process.

FOB ________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business.The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.

Either the gross method or net method may be used to record sales with cash discounts,but the gross method requires a period-end adjusting entry to estimate expected future sales discounts taken.

Describe the difference(s)between the periodic and the perpetual inventory accounting systems.

Under the ________ inventory accounting system,each purchase,purchase return and allowance,purchase discount,and transportation-in transaction is recorded in a separate temporary account.

Distinguish between selling expenses and general and administrative expenses.

An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:

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

Multiple-step income statements:

The gross margin ratio is also called the gross profit ratio.

Morgan,Inc.uses a perpetual inventory system and the net method of recording purchases.On May 12,a merchandise purchase of $15,000 was made on credit,2/10,n/30.The journal entry to record this purchase is:

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 8,it paid the full amount due.Assuming the company uses the gross method to record purchases,the journal entry to record the cash paid on July 8 is:

Beginning inventory plus net purchases equals merchandise available for sale.

In a perpetual inventory system,Cost of Goods Sold is debited during the closing process.

Which of the following accounts would be closed at the end of the accounting period with a debit?

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 8,it paid the full amount due.The amount of the cash paid on July 8 equals:

A company reported the following information for the month of July: Sales \ 50,475 Sales discounts 1,23 Sales returns and allowances 2,840 Cost of goods sold 33,975 Required: Calculate this company's gross profit.

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.

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases FOB shipping point in the Merchandise Inventory account.

Sales Discounts and Sales Returns and Allowances are contra revenue accounts that are debited during the closing process.

FOB ________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business.The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.

Either the gross method or net method may be used to record sales with cash discounts,but the gross method requires a period-end adjusting entry to estimate expected future sales discounts taken.

Describe the difference(s)between the periodic and the perpetual inventory accounting systems.

Under the ________ inventory accounting system,each purchase,purchase return and allowance,purchase discount,and transportation-in transaction is recorded in a separate temporary account.

Distinguish between selling expenses and general and administrative expenses.

An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:

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