Question 1

Freight costs paid by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A)  in the selling expense of the buyer. 
B)  in operating expenses for the seller. 
C)  to the cost of goods sold of the seller. 
D)  to a contra-revenue account of the seller. 
A)  in the selling expense of the buyer. 
B)  in operating expenses for the seller. 
C)  to the cost of goods sold of the seller. 
D)  to a contra-revenue account of the seller.

Question 2

The sales revenue section of an income statement for a retailer would not include

Accepted Answer

A)  Sales discounts. 
B)  Sales revenue. 
C)  Net sales. 
D)  Cost of goods sold. 
A)  Sales discounts. 
B)  Sales revenue. 
C)  Net sales. 
D)  Cost of goods sold.

Question 3

Kate Company uses a perpetual inventory system and purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:
A) There is no entry on Kate's books for this transaction.
b. Freight Expense$\quad$$\quad$500
$\quad$Cash$\quad$$\quad$500
c. Freight-Out$\quad$$\quad$500
$\quad$Cash$\quad$$\quad$500
d. Inventory$\quad$$\quad$500
$\quad$Cash$\quad$$\quad$500

Accepted Answer

The answer of Kate Company uses a perpetual inventory system...

Question 4

Arquette Company's financial information is presented below. $\begin{array}{lrlr}
\text { Sales Revenue } & \$ ? ? ? ? & \text { Cost of Goods Sold } & 540,000 \
\text { Sales Returns and Allowances } & 40,000 & \text { Gross Profit } & ? ? ? ? \
\text { Net Sales } & 900,000 & &
\end{array}$

$\text { The missing amounts above are: }$
$\text { Sales Revenue\quad\quad Gross Profit }$
a.$\$ 940,000 \quad\quad\quad\quad \$ 360,000$
b.$\$ 860,000 \quad\quad\quad\quad \$ 360,000$
c.$\$ 940,000 \quad\quad\quad\quad \$ 420,000$
d.$\$ 860,000 \quad\quad\quad\quad \$ 420,000$

Accepted Answer

The answer of Arquette Company's financial information is presented below....

Question 5

Which of the following would not be classified as a contra account?

Accepted Answer

A)  Inventory 
B)  Sales Returns and Allowances 
C)  Accumulated Depreciation 
D)  Sales Discounts 
A)  Inventory 
B)  Sales Returns and Allowances 
C)  Accumulated Depreciation 
D)  Sales Discounts

Question 6

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Sales Returns and Allowances 
B)  Sales Discounts 
C)  Sales Revenue 
D)  Selling Expense 
A)  Sales Returns and Allowances 
B)  Sales Discounts 
C)  Sales Revenue 
D)  Selling Expense

Question 8

Income from operations will always result if

Accepted Answer

A)  the cost of goods sold exceeds operating expenses. 
B)  revenues exceed cost of goods sold. 
C)  revenues exceed operating expenses. 
D)  gross profit exceeds operating expenses. 
A)  the cost of goods sold exceeds operating expenses. 
B)  revenues exceed cost of goods sold. 
C)  revenues exceed operating expenses. 
D)  gross profit exceeds operating expenses.

Question 9

A sales invoice is a source document that

Accepted Answer

A)  provides support for goods purchased for resale. 
B)  provides evidence of incurred operating expenses. 
C)  provides evidence of credit sales. 
D)  serves only as a customer receipt. 
A)  provides support for goods purchased for resale. 
B)  provides evidence of incurred operating expenses. 
C)  provides evidence of credit sales. 
D)  serves only as a customer receipt.

Question 10

When the physical count of Rosanna Company inventory had a cost of $4,350 at year end and the unadjusted balance in Inventory was $4,500, Rosanna will have to make the following entry: a.$\begin{array}{lr}
\text {Cost of Goods Sold }\quad&150\
\text {Inventory }&&150\
\end{array}$

b.$\begin{array}{lr}
\text { Inventory}&150\
\text {Cost of Goods Sold }\quad&&150\
\end{array}$

c.$\begin{array}{lr}
\text {Income Summary }\quad\quad&150\
\text {Inventory }&&150\
\end{array}$

d.$\begin{array}{lr}
\text {Cost of Goods Sold }&4,500\
\text {Inventory }&&4,500\
\end{array}$

Accepted Answer

The answer of When the physical count of Rosanna Company...

Question 11

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Accepted Answer

A) True 
 B)False

Question 12

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Accepted Answer

A) True 
 B)False

Question 13

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Accepted Answer

A)  25%. 
B)  35%. 
C)  65%. 
D)  100%. 
A)  25%. 
B)  35%. 
C)  65%. 
D)  100%.

Question 14

On July 9, Sheb Company sells goods on credit to Wooley Company for $5,000, terms 1/10, n/60. Sheb receives payment on July 18. The entry by Sheb on July 18 is: a. 
$\begin{array}{lrr}
  \text {Cash  } &5,000\
 \text { Accounts Receivable } &&5,000\
\end{array}$

b. 
$\begin{array}{lrr}
  \text {Cash  } &5,000\
 \text {Sales Discounts  } &&50\
 \text { Accounts Receivable } &&4,950\
\end{array}$

c. 
$\begin{array}{lrr}
  \text { Cash } &4,950\
 \text { Sales Discounts } &50\
 \text { Accounts Receivable } &&5,000\
\end{array}$

d.
$\begin{array}{lrr}
  \text {  Cash} &5,050\
 \text {  Sales Discounts} &&50\
 \text {  Accounts Receivable} &&5,000\
\end{array}$

Accepted Answer

The answer of On July 9, Sheb Company sells goods...

Question 15

Gross profit for a merchandiser is net sales minus

Accepted Answer

A)  operating expenses. 
B)  cost of goods sold. 
C)  sales discounts. 
D)  cost of goods available for sale. 
A)  operating expenses. 
B)  cost of goods sold. 
C)  sales discounts. 
D)  cost of goods available for sale.

Question 16

In a worksheet for a merchandising company, Inventory would appear in the

Accepted Answer

A)  trial balance and adjusted trial balance columns only. 
B)  trial balance and balance sheet columns only. 
C)  trial balance, adjusted trial balance, and balance sheet columns. 
D)  trial balance, adjusted trial balance, and income statement columns. 
A)  trial balance and adjusted trial balance columns only. 
B)  trial balance and balance sheet columns only. 
C)  trial balance, adjusted trial balance, and balance sheet columns. 
D)  trial balance, adjusted trial balance, and income statement columns.

Question 17

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Accepted Answer

A)  $1,750 
B)  $2,000 
C)  $2,250 
D)  $2,450 
A)  $1,750 
B)  $2,000 
C)  $2,250 
D)  $2,450

Question 18

Which of the following accounts is not closed to Income Summary?

Accepted Answer

A)  Cost of Goods Sold 
B)  Inventory 
C)  Sales Revenue 
D)  Sales Discounts 
A)  Cost of Goods Sold 
B)  Inventory 
C)  Sales Revenue 
D)  Sales Discounts

Question 19

A merchandising company has different types of adjusting entries than a service company.

Accepted Answer

A) True 
 B)False

Question 20

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

Accepted Answer

A)  Inventory. 
B)  Purchase Discounts. 
C)  Purchase Allowance. 
D)  Sales Discounts. 
A)  Inventory. 
B)  Purchase Discounts. 
C)  Purchase Allowance. 
D)  Sales Discounts.

Freight costs paid by a seller on merchandise sold to customers will cause an increase

The sales revenue section of an income statement for a retailer would not include

Which of the following would not be classified as a contra account?

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Which of the following accounts has a normal credit balance?

Income from operations will always result if

A sales invoice is a source document that

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Gross profit for a merchandiser is net sales minus

In a worksheet for a merchandising company, Inventory would appear in the

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Which of the following accounts is not closed to Income Summary?

A merchandising company has different types of adjusting entries than a service company.

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

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

Freight costs paid by a seller on merchandise sold to customers will cause an increase

The sales revenue section of an income statement for a retailer would not include

Which of the following would not be classified as a contra account?

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Which of the following accounts has a normal credit balance?

Income from operations will always result if

A sales invoice is a source document that

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Gross profit for a merchandiser is net sales minus

In a worksheet for a merchandising company, Inventory would appear in the

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Which of the following accounts is not closed to Income Summary?

A merchandising company has different types of adjusting entries than a service company.

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

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