Question 1

Inventory is reported as a long-term asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Income from operations appears on

Accepted Answer

A)  both a multiple-step and a single-step income statement. 
B)  neither a multiple-step nor a single-step income statement. 
C)  a single-step income statement. 
D)  a multiple-step income statement. 
A)  both a multiple-step and a single-step income statement. 
B)  neither a multiple-step nor a single-step income statement. 
C)  a single-step income statement. 
D)  a multiple-step income statement.

Question 3

Freight terms of FOB Destination means that the seller pays the freight costs.

Accepted Answer

A) True 
 B)False

Question 4

The use of IFRS results in more transactions affecting

Accepted Answer

A)  net income but not other comprehensive income. 
B)  other comprehensive income, but not net income. 
C)  but net income and other comprehensive income. 
D)  neither net income nor other comprehensive income. 
A)  net income but not other comprehensive income. 
B)  other comprehensive income, but not net income. 
C)  but net income and other comprehensive income. 
D)  neither net income nor other comprehensive income.

Question 5

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

A)  on a daily basis. 
B)  on a monthly basis. 
C)  on an annual basis. 
D)  with each sale. 
A)  on a daily basis. 
B)  on a monthly basis. 
C)  on an annual basis. 
D)  with each sale.

Question 6

Sales revenues are usually considered recognized when

Accepted Answer

A)  cash is received from credit sales. 
B)  an order is received. 
C)  goods have been transferred from the seller to the buyer. 
D)  adjusting entries are made. 
A)  cash is received from credit sales. 
B)  an order is received. 
C)  goods have been transferred from the seller to the buyer. 
D)  adjusting entries are made.

Question 7

In the balance sheet, ending inventory is reported

Accepted Answer

A)  in current assets immediately following accounts receivable. 
B)  in current assets immediately following prepaid expenses. 
C)  in current assets immediately following cash. 
D)  under property, plant, and equipment. 
A)  in current assets immediately following accounts receivable. 
B)  in current assets immediately following prepaid expenses. 
C)  in current assets immediately following cash. 
D)  under property, plant, and equipment.

Question 8

With respect to the income statement,

Accepted Answer

A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit. 
A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit.

Question 9

Conrad Company reported the following balances at June 30, 2015: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 16,200 \
\text { Sales Returns and Allowances } & 600 \
\text { Sales Discounts } & 300 \
\text { Cost of Goods Sold } & 7,500
\end{array}$$ Net sales for the month is

Accepted Answer

A)  $7,800 
B)  $15,300. 
C)  $15,600. 
D)  $16,200. 
A)  $7,800 
B)  $15,300. 
C)  $15,600. 
D)  $16,200.

Question 10

Costner's Market recorded the following events involving a recent purchase of merchandise: Received goods for $40,000, terms 2/10, n/30.
Returned $800 of the shipment for credit.
Paid $200 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory

Accepted Answer

A)  increased by $38,416. 
B)  increased by $38,612. 
C)  increased by $38,616. 
D)  increased by $39,400. 
A)  increased by $38,416. 
B)  increased by $38,612. 
C)  increased by $38,616. 
D)  increased by $39,400.

Question 11

A sales discount does not

Accepted Answer

A)  provide the purchaser with a cash saving. 
B)  reduce the amount of cash received from a credit sale. 
C)  increase a contra-revenue account. 
D)  increase an operating expense account. 
A)  provide the purchaser with a cash saving. 
B)  reduce the amount of cash received from a credit sale. 
C)  increase a contra-revenue account. 
D)  increase an operating expense account.

Question 12

Cobb Company's accounting records show the following at the year ending on December 31, 2015: $$\begin{array} { l r } 
\text { Purchase Discounts } & \$ 11,200 \
\text { Freight - In } & 15,600 \
\text { Purchases } & 402,000 \
\text { Beginning Inventory } & 47,000 \
\text { Ending Inventory } & 57,600 \
\text { Purchase Returns } & 12,800
\end{array}$$ Using the periodic system, the cost of goods sold is

Accepted Answer

A)  $378,000. 
B)  $383,000. 
C)  $393,600. 
D)  $404,200. 
A)  $378,000. 
B)  $383,000. 
C)  $393,600. 
D)  $404,200.

Question 13

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Accepted Answer

A)  Inventory account. 
B)  Purchases account. 
C)  Supplies account. 
D)  Cost of Goods Sold account. 
A)  Inventory account. 
B)  Purchases account. 
C)  Supplies account. 
D)  Cost of Goods Sold account.

Question 14

The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are

Accepted Answer

A)  credit, credit, credit. 
B)  debit, credit, debit. 
C)  credit, debit, debit. 
D)  credit, debit, credit. 
A)  credit, credit, credit. 
B)  debit, credit, debit. 
C)  credit, debit, debit. 
D)  credit, debit, credit.

Question 15

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A)  $39,000 and $23,400. 
B)  $39,000 and $24,000. 
C)  $40,000 and $23,400. 
D)  $40,000 and $24,000. 
A)  $39,000 and $23,400. 
B)  $39,000 and $24,000. 
C)  $40,000 and $23,400. 
D)  $40,000 and $24,000.

Question 16

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Accepted Answer

A)  20% 
B)  24% 
C)  18% 
D)  36% 
A)  20% 
B)  24% 
C)  18% 
D)  36%

Question 17

Under IFRS, companies can choose which inventory system? $\quad$Perpetual $\quad$Periodic
a.$\quad$Yes  $\quad$$\quad$No
b.$\quad$Yes  $\quad$$\quad$Yes 
c.$\quad$No $\quad$$\quad$Yes 
d.$\quad$No$\quad$$\quad$ No IFRS.

Accepted Answer

The answer of Under IFRS, companies can choose which inventory...

Question 18

The primary source of revenue for a wholesaler is

Accepted Answer

A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns. 
A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns.

Question 19

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A)  $630 
B)  $720 
C)  $810 
D)  $882 
A)  $630 
B)  $720 
C)  $810 
D)  $882

Question 20

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

Accepted Answer

A) True 
 B)False

Inventory is reported as a long-term asset on the balance sheet.

Income from operations appears on

Freight terms of FOB Destination means that the seller pays the freight costs.

The use of IFRS results in more transactions affecting

In a perpetual inventory system, cost of goods sold is recorded

Sales revenues are usually considered recognized when

In the balance sheet, ending inventory is reported

With respect to the income statement,

Conrad Company reported the following balances at June 30, 2015: Sales Revenue \ 16,200 Sales Returns and Allowances 600 Sales Discounts 300 Cost of Goods Sold 7,500 Net sales for the month is

A sales discount does not

Cobb Company's accounting records show the following at the year ending on December 31, 2015: Purchase Discounts \ 11,200 Freight - In 15,600 Purchases 402,000 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns 12,800 Using the periodic system, the cost of goods sold is

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Under IFRS, companies can choose which inventory system? $\quad$ Perpetual $\quad$ Periodic a. $\quad$ Yes $\quad$ $\quad$ No b. $\quad$ Yes $\quad$ $\quad$ Yes c. $\quad$ No $\quad$ $\quad$ Yes d. $\quad$ No $\quad$ $\quad$ No IFRS.

The primary source of revenue for a wholesaler is

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

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

Inventory is reported as a long-term asset on the balance sheet.

Income from operations appears on

Freight terms of FOB Destination means that the seller pays the freight costs.

The use of IFRS results in more transactions affecting

In a perpetual inventory system, cost of goods sold is recorded

Sales revenues are usually considered recognized when

In the balance sheet, ending inventory is reported

With respect to the income statement,

Conrad Company reported the following balances at June 30, 2015: Sales Revenue \ 16,200 Sales Returns and Allowances 600 Sales Discounts 300 Cost of Goods Sold 7,500 Net sales for the month is

A sales discount does not

Cobb Company's accounting records show the following at the year ending on December 31, 2015: Purchase Discounts \ 11,200 Freight - In 15,600 Purchases 402,000 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns 12,800 Using the periodic system, the cost of goods sold is

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Under IFRS, companies can choose which inventory system? \quad Perpetual \quad Periodic a. \quad Yes \quad\quad No b. \quad Yes \quad\quad Yes c. \quad No \quad\quad Yes d. \quad No \quad\quad No IFRS.

The primary source of revenue for a wholesaler is

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

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

Under IFRS, companies can choose which inventory system? $\quad$ Perpetual $\quad$ Periodic a. $\quad$ Yes $\quad$ $\quad$ No b. $\quad$ Yes $\quad$ $\quad$ Yes c. $\quad$ No $\quad$ $\quad$ Yes d. $\quad$ No $\quad$ $\quad$ No IFRS.