Question 1

________ are the amounts and timing of payment from a buyer to a seller.

Accepted Answer

The answer of ________ are the amounts and timing of...

Question 2

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Accepted Answer

A) True 
 B)False

Question 3

A company had net sales of $545,000 and cost of goods sold of $345,000.Its gross margin equals $890,000.

Accepted Answer

A) True 
 B)False

Question 4

A merchandiser's classified balance sheet reports merchandise inventory as an investment.

Accepted Answer

A) True 
 B)False

Question 5

Purchase allowances refer to a price reduction (allowance)granted to a buyer of defective or unacceptable merchandise.

Accepted Answer

A) True 
 B)False

Question 6

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 16,it paid the full amount due.The correct journal entry to record the payment on August 16 is:

Accepted Answer

A) Debit Merchandise Inventory $8,250; credit Cash $8,250. 
B) Debit Cash $8,250; credit Accounts Payable $8,250. 
C) Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50. 
D) Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50. 
E) Debit Accounts Payable $8,167.50; credit Cash $8,167.50. 
A) Debit Merchandise Inventory $8,250; credit Cash $8,250. 
B) Debit Cash $8,250; credit Accounts Payable $8,250. 
C) Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50. 
D) Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50. 
E) Debit Accounts Payable $8,167.50; credit Cash $8,167.50.

Question 7

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Accepted Answer

A) True 
 B)False

Question 8

On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system and the net method of accounting for sales.On March 15,Babson returns some of the merchandise,which is not defective.The selling price of the returned merchandise is $600 and the cost of the merchandise returned is $350.The entry(ies)that Klein must make on March 15 is (are):

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Sales returns and allowances } & 588 & \
\hline \text { Accounts receivable } & & 588 \
\hline \text { Merchandise inventory } & 350 & \
\hline \text { Cost of goods sold } & & 350 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Sales returns and allowances } & 588 & \
\hline \text { Accounts receivable } & & 588 \
\hline \text { Merchandise inventory } & 343 & \
\hline \text { Cost of goods sold } & & 343 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 600 & \
\hline \text { Sales returns and allowances } & & 600 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 600 & \
\hline \text { Sales returns and allowances } & & 600 \
\hline \text { Cost of Goods Sold } & 350 & \
\hline \text { Merchandise inventory } & & 350 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Sales retums and allowances } & 350 & \
\hline \text { Accounts receivable } & & 350 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Sales returns and allowances } & 588 & \
\hline \text { Accounts receivable } & & 588 \
\hline \text { Merchandise inventory } & 350 & \
\hline \text { Cost of goods sold } & & 350 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Sales returns and allowances } & 588 & \
\hline \text { Accounts receivable } & & 588 \
\hline \text { Merchandise inventory } & 343 & \
\hline \text { Cost of goods sold } & & 343 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 600 & \
\hline \text { Sales returns and allowances } & & 600 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 600 & \
\hline \text { Sales returns and allowances } & & 600 \
\hline \text { Cost of Goods Sold } & 350 & \
\hline \text { Merchandise inventory } & & 350 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Sales retums and allowances } & 350 & \
\hline \text { Accounts receivable } & & 350 \
\hline
\end{array}$

Question 9

Inventory Returns Estimated,which reflects an adjustment to inventory for expected future returns,is a liability account reported in the balance sheet,usually under Current Liabilities.

Accepted Answer

A) True 
 B)False

Question 10

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.Ryan uses the periodic inventory system and the net method of accounting for sales.Johnson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Ryan makes on September 18 is:

Accepted Answer

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

Question 11

In a perpetual inventory system,the Merchandise Inventory account must be closed at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 12

Cost of goods sold is also called cost of sales.

Accepted Answer

A) True 
 B)False

Question 13

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.Ryan uses the periodic inventory system and the net method of accounting for sales.The journal entry or entries that Ryan will make on September 12 is (are):

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales } & 5,800 & \
\hline \text { Accourits receivable } & & 5,800 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourts receivable } & 5,684 & \
\hline \text { Sales } & & 5,684 \
\hline \text { Cost of goods sold } & 4,000 & \
\hline \text { Merchandise Irventory } & & 4,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourits receivable } & 5,800 & \
\hline \text { Sales } & & 5,800 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourts receivable } & 5,800 & \
\hline \text { Sales } & & 5,800 \
\hline \text { Cost of goods Sold } & 4,000 & \
\hline \text { Merchandise irventory } & & 4,000 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 5,684 & \
\hline \text { Sales } & & 5,684 \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales } & 5,800 & \
\hline \text { Accourits receivable } & & 5,800 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourts receivable } & 5,684 & \
\hline \text { Sales } & & 5,684 \
\hline \text { Cost of goods sold } & 4,000 & \
\hline \text { Merchandise Irventory } & & 4,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourits receivable } & 5,800 & \
\hline \text { Sales } & & 5,800 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accourts receivable } & 5,800 & \
\hline \text { Sales } & & 5,800 \
\hline \text { Cost of goods Sold } & 4,000 & \
\hline \text { Merchandise irventory } & & 4,000 \
\hline
\end{array}$$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 5,684 & \
\hline \text { Sales } & & 5,684 \
\hline
\end{array}$

Question 14

A seller usually prepares a ________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

Accepted Answer

The answer of A seller usually prepares a ________ to...

Question 15

The liquidity of a company can be measured using the current ratio and the ________,which only includes the most liquid current assets in its calculation.

Accepted Answer

The answer of The liquidity of a company can be...

Question 16

When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an operating expense.

Accepted Answer

A) True 
 B)False

Question 17

FOB destination means that the buyer accepts ownership when the goods arrive at the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 18

If goods are shipped FOB destination,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Accepted Answer

A) True 
 B)False

Question 19

Reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price is referred to as________.

Accepted Answer

The answer of Reductions in the selling price of merchandise...

Question 20

The credit terms 2/10,n/30 are interpreted as:

Accepted Answer

A) 2% cash discount if the amount is paid within 10 days,or the balance due in 30 days. 
B) 10% cash discount if the amount is paid within 2 days,or the balance due in 30 days. 
C) 30% discount if paid within 2 days. 
D) 30% discount if paid within 10 days. 
E) 2% discount if paid within 30 days. 
A) 2% cash discount if the amount is paid within 10 days,or the balance due in 30 days. 
B) 10% cash discount if the amount is paid within 2 days,or the balance due in 30 days. 
C) 30% discount if paid within 2 days. 
D) 30% discount if paid within 10 days. 
E) 2% discount if paid within 30 days.

________ are the amounts and timing of payment from a buyer to a seller.

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

A company had net sales of $545,000 and cost of goods sold of $345,000.Its gross margin equals $890,000.

A merchandiser's classified balance sheet reports merchandise inventory as an investment.

Purchase allowances refer to a price reduction (allowance)granted to a buyer of defective or unacceptable merchandise.

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Inventory Returns Estimated,which reflects an adjustment to inventory for expected future returns,is a liability account reported in the balance sheet,usually under Current Liabilities.

In a perpetual inventory system,the Merchandise Inventory account must be closed at the end of the accounting period.

Cost of goods sold is also called cost of sales.

A seller usually prepares a ________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

The liquidity of a company can be measured using the current ratio and the ________,which only includes the most liquid current assets in its calculation.

When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an operating expense.

FOB destination means that the buyer accepts ownership when the goods arrive at the buyer's place of business.

If goods are shipped FOB destination,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price is referred to as________.

The credit terms 2/10,n/30 are interpreted as:

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

________ are the amounts and timing of payment from a buyer to a seller.

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

A company had net sales of $545,000 and cost of goods sold of $345,000.Its gross margin equals $890,000.

A merchandiser's classified balance sheet reports merchandise inventory as an investment.

Purchase allowances refer to a price reduction (allowance)granted to a buyer of defective or unacceptable merchandise.

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Inventory Returns Estimated,which reflects an adjustment to inventory for expected future returns,is a liability account reported in the balance sheet,usually under Current Liabilities.

In a perpetual inventory system,the Merchandise Inventory account must be closed at the end of the accounting period.

Cost of goods sold is also called cost of sales.

A seller usually prepares a ________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

The liquidity of a company can be measured using the current ratio and the ________,which only includes the most liquid current assets in its calculation.

When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an operating expense.

FOB destination means that the buyer accepts ownership when the goods arrive at the buyer's place of business.

If goods are shipped FOB destination,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price is referred to as________.

The credit terms 2/10,n/30 are interpreted as:

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