Question 1

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Accepted Answer

A) True 
 B)False

Question 2

Beginning inventory plus net purchases is:

Accepted Answer

A) Cost of goods sold. 
B) Merchandise (goods) available for sale. 
C) Ending inventory. 
D) Sales. 
E) Shown on the balance sheet. 
A) Cost of goods sold. 
B) Merchandise (goods) available for sale. 
C) Ending inventory. 
D) Sales. 
E) Shown on the balance sheet.

Question 3

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Accepted Answer

A) True 
 B)False

Question 4

Juniper Company, Inc. uses a perpetual inventory system. 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 5

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Accepted Answer

A) True 
 B)False

Question 6

Cost of goods sold is also called cost of sales.

Accepted Answer

A) True 
 B)False

Question 7

On March 12, Klein Company, Inc. 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. Babson pays the invoice on March 17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:

Accepted Answer

A) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,800 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$$ 
B) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 4,500 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline 
\end{array}$$ 
C) $$\begin{array} { | l | r | r | } 
\hline  \text { Cash } & 7,644 & \
\hline \text { Sales discounts } & 156 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$$ 
D) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,644 & \
\hline \text { Accounts receivable } & & 7,644 \
\hline
\end{array}$$ 
E) $$\begin{array} { | l | r | r | } 
\hline \hline \text { Cash } & 4,410 & \
\hline \text { Sales discounts } & 90 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline
\end{array}$$ 
A) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,800 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$$ 
B) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 4,500 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline 
\end{array}$$ 
C) $$\begin{array} { | l | r | r | } 
\hline  \text { Cash } & 7,644 & \
\hline \text { Sales discounts } & 156 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$$ 
D) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,644 & \
\hline \text { Accounts receivable } & & 7,644 \
\hline
\end{array}$$ 
E) $$\begin{array} { | l | r | r | } 
\hline \hline \text { Cash } & 4,410 & \
\hline \text { Sales discounts } & 90 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline
\end{array}$$

Question 8

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of

Question 9

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Accepted Answer

A) True 
 B)False

Question 12

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

Accepted Answer

A) 12.2% 
B) 16.2% 
C) 18.9% 
D) 24.3% 
E) 24.5% 
A) 12.2% 
B) 16.2% 
C) 18.9% 
D) 24.3% 
E) 24.5%

Question 13

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 14

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Accepted Answer

A) True 
 B)False

Question 15

Cost of Goods Sold is debited to close the account during the closing process.

Accepted Answer

A) True 
 B)False

Question 16

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 17

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

Accepted Answer

A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20. 
A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20.

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 correct journal entry to record the merchandise return on July 7 is:

Accepted Answer

A) Debit Merchandise Inventory $1,600; credit Cash $1,600. 
B) Debit Merchandise Inventory $200; credit Accounts Payable $200. 
C) Debit Merchandise Inventory $200; credit Sales Returns $200. 
D) Debit Accounts Payable $200; credit Merchandise Inventory $200. 
E) Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. 
A) Debit Merchandise Inventory $1,600; credit Cash $1,600. 
B) Debit Merchandise Inventory $200; credit Accounts Payable $200. 
C) Debit Merchandise Inventory $200; credit Sales Returns $200. 
D) Debit Accounts Payable $200; credit Merchandise Inventory $200. 
E) Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

Question 19

Beginning inventory plus net purchases equals merchandise available for sale.

Accepted Answer

A) True 
 B)False

Question 20

Quick assets include cash and cash equivalents, inventory, and current receivables.

Accepted Answer

A) True 
 B)False

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Beginning inventory plus net purchases is:

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Juniper Company, Inc. uses a perpetual inventory system. 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:

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Cost of goods sold is also called cost of sales.

Distinguish between selling expenses and general and administrative expenses.

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

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

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Cost of Goods Sold is debited to close the account during the closing process.

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

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

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 correct journal entry to record the merchandise return on July 7 is:

Beginning inventory plus net purchases equals merchandise available for sale.

Quick assets include cash and cash equivalents, inventory, and current receivables.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters

Exam 4: Accounting for Merchandising Operations

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Beginning inventory plus net purchases is:

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Juniper Company, Inc. uses a perpetual inventory system. 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:

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Cost of goods sold is also called cost of sales.

Distinguish between selling expenses and general and administrative expenses.

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

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

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Cost of Goods Sold is debited to close the account during the closing process.

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

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

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 correct journal entry to record the merchandise return on July 7 is:

Beginning inventory plus net purchases equals merchandise available for sale.

Quick assets include cash and cash equivalents, inventory, and current receivables.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters