Question 1

Gross profit is a measure of the overall profitability of a company.

Accepted Answer

A) True 
 B)False  False

Question 2

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Accepted Answer

A)  $6,272 
B)  $6,400 
C)  $7,840 
D)  $7,872 
A)  $6,272 
B)  $6,400 
C)  $7,840 
D)  $7,872 A

Question 3

Gross profit rate is computed by dividing cost of goods sold by net sales.

Accepted Answer

A) True 
 B)False  False

Question 4

The basic accounting entries for merchandising are

Accepted Answer

A)  the same under GAAP and under IFRS. 
B)  required under GAAP but not under IFRS. 
C)  required under IFRS but not under GAAP. 
D)  required under IFRS with some differences as compared to GAAP. 
A)  the same under GAAP and under IFRS. 
B)  required under GAAP but not under IFRS. 
C)  required under IFRS but not under GAAP. 
D)  required under IFRS with some differences as compared to GAAP.

Question 5

A merchandising company using a perpetual system may record an adjusting entry by

Accepted Answer

A)  debiting Income Summary. 
B)  crediting Income Summary. 
C)  debiting Cost of Goods Sold. 
D)  debiting Sales Revenue. 
A)  debiting Income Summary. 
B)  crediting Income Summary. 
C)  debiting Cost of Goods Sold. 
D)  debiting Sales Revenue.

Question 6

After gross profit is calculated, operating expenses are deducted to determine

Accepted Answer

A)  gross margin. 
B)  net income. 
C)  gross profit on sales. 
D)  net margin. 
A)  gross margin. 
B)  net income. 
C)  gross profit on sales. 
D)  net margin.

Question 7

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

Accepted Answer

A) True 
 B)False

Question 8

During August, 2015, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's net income for August, 2015 is

Accepted Answer

A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000. 
A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000.

Question 9

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance. 
A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance.

Question 10

The Income statement is

Accepted Answer

A)  required under GAAP but not under IFRS. 
B)  required under IFRS in the same format as under GAAP. 
C)  required under IFRS but not under GAAP. 
D)  required under IFRS with some differences as compared to GAAP. 
A)  required under GAAP but not under IFRS. 
B)  required under IFRS in the same format as under GAAP. 
C)  required under IFRS but not under GAAP. 
D)  required under IFRS with some differences as compared to GAAP.

Question 11

Cost of goods sold is determined only at the end of the accounting period in

Accepted Answer

A)  a perpetual inventory system. 
B)  a periodic inventory system. 
C)  both a perpetual and a periodic inventory system. 
D)  neither a perpetual nor a periodic inventory system. 
A)  a perpetual inventory system. 
B)  a periodic inventory system. 
C)  both a perpetual and a periodic inventory system. 
D)  neither a perpetual nor a periodic inventory system.

Question 12

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Accepted Answer

A) True 
 B)False

Question 13

Financial information is presented below: $$\begin{array} { l r } 
\text { Operating Expenses } & \$ 90,000 \
\text { Sales Returns and Allowances } & 26,000 \
\text { Sales Discounts } & 12,000 \
\text { Sales } & 300,000 \
\text { Cost of Goods Sold } & 158,000
\end{array}$$ Gross profit would be

Accepted Answer

A)  $104,000. 
B)  $116,000. 
C)  $130,000. 
D)  $142,000. 
A)  $104,000. 
B)  $116,000. 
C)  $130,000. 
D)  $142,000.

Question 14

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Accepted Answer

A)  Accounts Payable. 
B)  Inventory. 
C)  Purchases. 
D)  Purchase Returns and Allowances. 
A)  Accounts Payable. 
B)  Inventory. 
C)  Purchases. 
D)  Purchase Returns and Allowances.

Question 15

Carter Company sells merchandise on account for $4,000 to Hannah Company with credit terms of 2/10, n/30. Hannah Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Carter Company make upon receipt of the check? a. 
$\begin{array}{lrr}
  \text { Cash } &3,400\
 \text {  Accounts Receivable} &&3,400\
\end{array}$

b. 
$\begin{array}{lrr}
  \text {Cash  } &3,332\
 \text {Sales Returns and Allowances  } &668\
\text { Accounts Receivable } &&4,000\
\end{array}$

c.
$\begin{array}{lrr}
  \text { Cash } &3,332\
 \text {Sales Returns and Allowances  } &600\
\text {Sales Discounts  } &68\
 \text { Accounts Receivable } &&4,000\
\end{array}$

d. 
$\begin{array}{lrr}
  \text { Cash } &3,920\
 \text { Sales Discounts } &80\
\text { Sales Returns and Allowances } &&600\
 \text { Accounts Receivable } &&3,400\
\end{array}$

Accepted Answer

The answer of Carter Company sells merchandise on account for...

Question 16

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 17

Goldblum Company has the following account balances: $\begin{array}{lr}
\text { Purchases } & \$ 96,000 \
\text { Sales Returns and Allowances } & 12,800 \
\text { Purchase Discounts } & 8,000 \
\text { Freight-In } & 6,000 \
\text { Delivery Expense } & 10,000
\end{array}$ The cost of goods purchased for the period is

Accepted Answer

A)  $80,800. 
B)  $88,000. 
C)  $94,000. 
D)  $104,000. 
A)  $80,800. 
B)  $88,000. 
C)  $94,000. 
D)  $104,000.

Question 18

The Sales Returns and Allowances account does not provide information to management about

Accepted Answer

A)  possible inferior merchandise. 
B)  the percentage of credit sales versus cash sales. 
C)  inefficiencies in filling orders. 
D)  errors in overbilling customers. 
A)  possible inferior merchandise. 
B)  the percentage of credit sales versus cash sales. 
C)  inefficiencies in filling orders. 
D)  errors in overbilling customers.

Question 19

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

Accepted Answer

A)  Accounts Payable. 
B)  Inventory. 
C)  Purchase Discounts. 
D)  Sales Discounts. 
A)  Accounts Payable. 
B)  Inventory. 
C)  Purchase Discounts. 
D)  Sales Discounts.

Question 20

An enterprise which sells goods to customers is known as a

Accepted Answer

A)  proprietorship. 
B)  corporation. 
C)  retailer. 
D)  service firm. 
A)  proprietorship. 
B)  corporation. 
C)  retailer. 
D)  service firm.

Gross profit is a measure of the overall profitability of a company.

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Gross profit rate is computed by dividing cost of goods sold by net sales.

The basic accounting entries for merchandising are

A merchandising company using a perpetual system may record an adjusting entry by

After gross profit is calculated, operating expenses are deducted to determine

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

The Income statement is

Cost of goods sold is determined only at the end of the accounting period in

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 26,000 Sales Discounts 12,000 Sales 300,000 Cost of Goods Sold 158,000 Gross profit would be

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Goldblum Company has the following account balances: Purchases \ 96,000 Sales Returns and Allowances 12,800 Purchase Discounts 8,000 Freight-In 6,000 Delivery Expense 10,000 The cost of goods purchased for the period is

The Sales Returns and Allowances account does not provide information to management about

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

An enterprise which sells goods to customers is known as a

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters

Exam 5: Accounting for Merchandising Operations

Gross profit is a measure of the overall profitability of a company.

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Gross profit rate is computed by dividing cost of goods sold by net sales.

The basic accounting entries for merchandising are

A merchandising company using a perpetual system may record an adjusting entry by

After gross profit is calculated, operating expenses are deducted to determine

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

The Income statement is

Cost of goods sold is determined only at the end of the accounting period in

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 26,000 Sales Discounts 12,000 Sales 300,000 Cost of Goods Sold 158,000 Gross profit would be

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Goldblum Company has the following account balances: Purchases \ 96,000 Sales Returns and Allowances 12,800 Purchase Discounts 8,000 Freight-In 6,000 Delivery Expense 10,000 The cost of goods purchased for the period is

The Sales Returns and Allowances account does not provide information to management about

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

An enterprise which sells goods to customers is known as a

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters