Question 1

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Accepted Answer

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

Question 2

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

Accepted Answer

A)  $0. 
B)  $10,000. 
C)  $24,000. 
D)  $46,000. 
A)  $0. 
B)  $10,000. 
C)  $24,000. 
D)  $46,000.

Question 3

At the beginning of September 2015, Stella Company reported Inventory of $8,000. During the month, the company made purchases of $35,600. At September 30, 2015, a physical count of inventory reported $8,400 on hand. Cost of goods sold for the month is

Accepted Answer

A)  $35,200. 
B)  $35,600. 
C)  $36,000. 
D)  $43,600. 
A)  $35,200. 
B)  $35,600. 
C)  $36,000. 
D)  $43,600.

Question 4

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

Accepted Answer

A)  $24,000. 
B)  $27,000. 
C)  $45,000. 
D)  $90,000. 
A)  $24,000. 
B)  $27,000. 
C)  $45,000. 
D)  $90,000.

Question 5

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Purchases 
B)  Sales Returns and Allowances 
C)  Freight-In 
D)  Purchase Discounts 
A)  Purchases 
B)  Sales Returns and Allowances 
C)  Freight-In 
D)  Purchase Discounts

Question 6

A credit granted to a customer for returned goods requires a debit to

Accepted Answer

A)  Sales Revenue and a credit to Cash. 
B)  Sales Returns and Allowances and a credit to Accounts Receivable. 
C)  Accounts Receivable and a credit to a contra-revenue account. 
D)  Cash and a credit to Sales Returns and Allowances. 
A)  Sales Revenue and a credit to Cash. 
B)  Sales Returns and Allowances and a credit to Accounts Receivable. 
C)  Accounts Receivable and a credit to a contra-revenue account. 
D)  Cash and a credit to Sales Returns and Allowances.

Question 7

Under a periodic inventory system, acquisition of merchandise is debited to the

Accepted Answer

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

Question 8

The following information is available for Dennehy Company: $$\begin{array} { l r l r } 
\text { Sales Revenue } & \$ 390,000 & \text { Freight-In } & \$ 30,000 \
\text { Ending Inventory } & 37,500 & \text { Purchase Returns and Allowances } & 15,000 \
\text { Purchases } & 270,000 & \text { Beginning Inventory } & 45,000
\end{array}$$ Dennehy's cost of goods sold is

Accepted Answer

A)  $262,500. 
B)  $285,000. 
C)  $292,500. 
D)  $345,000. 
A)  $262,500. 
B)  $285,000. 
C)  $292,500. 
D)  $345,000.

Question 9

The journal entry to record a return of merchandise purchased on account under a periodic inventory system would be

Accepted Answer

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

Question 10

Net sales is sales revenue less

Accepted Answer

A)  sales discounts. 
B)  sales returns. 
C)  sales returns and allowances. 
D)  sales discounts and sales returns and allowances. 
A)  sales discounts. 
B)  sales returns. 
C)  sales returns and allowances. 
D)  sales discounts and sales returns and allowances.

Question 11

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 gross profit 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 12

The steps in the accounting cycle are different for a merchandising company than for a service company.

Accepted Answer

A) True 
 B)False

Question 13

Financial information is presented below: $$\begin{array} { l r } 
\text { Operating Expenses } & \$ 90,000 \
\text { Sales Returns and Allowances } & 18,000 \
\text { Sales Discounts } & 12,000 \
\text { Sales Revenue } & 320,000 \
\text { Cost of Goods Sold } & 174,000
\end{array}$$ Gross profit would be

Accepted Answer

A)  $26,000. 
B)  $116,000. 
C)  $128,000. 
D)  $134,000. 
A)  $26,000. 
B)  $116,000. 
C)  $128,000. 
D)  $134,000.

Question 14

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

Accepted Answer

A)  Gross profit 
B)  Operating expenses 
C)  Sales revenues 
D)  Cost of goods sold 
A)  Gross profit 
B)  Operating expenses 
C)  Sales revenues 
D)  Cost of goods sold

Question 15

Operating expenses are different for merchandising and service enterprises.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following expressions is incorrect?

Accepted Answer

A)  Gross profit - operating expenses = net income 
B)  Sales revenue - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit 
A)  Gross profit - operating expenses = net income 
B)  Sales revenue - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit

Question 17

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Accepted Answer

A) True 
 B)False

Question 18

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

Accepted Answer

A) True 
 B)False

Question 19

The Inventory account balance appearing in a perpetual inventory worksheet represents the

Accepted Answer

A)  ending inventory. 
B)  beginning inventory. 
C)  cost of merchandise purchased. 
D)  cost of merchandise sold. 
A)  ending inventory. 
B)  beginning inventory. 
C)  cost of merchandise purchased. 
D)  cost of merchandise sold.

Question 20

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Accepted Answer

A)  a sales discount. 
B)  free delivery. 
C)  a sales allowance. 
D)  a sales return. 
A)  a sales discount. 
B)  free delivery. 
C)  a sales allowance. 
D)  a sales return.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

At the beginning of September 2015, Stella Company reported Inventory of $8,000. During the month, the company made purchases of $35,600. At September 30, 2015, a physical count of inventory reported $8,400 on hand. Cost of goods sold for the month is

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

Which of the following accounts has a normal credit balance?

A credit granted to a customer for returned goods requires a debit to

Under a periodic inventory system, acquisition of merchandise is debited to the

The following information is available for Dennehy Company: Sales Revenue \ 390,000 Freight-In \ 30,000 Ending Inventory 37,500 Purchase Returns and Allowances 15,000 Purchases 270,000 Beginning Inventory 45,000 Dennehy's cost of goods sold is

The journal entry to record a return of merchandise purchased on account under a periodic inventory system would be

Net sales is sales revenue less

The steps in the accounting cycle are different for a merchandising company than for a service company.

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 18,000 Sales Discounts 12,000 Sales Revenue 320,000 Cost of Goods Sold 174,000 Gross profit would be

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

Operating expenses are different for merchandising and service enterprises.

Which of the following expressions is incorrect?

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

The Inventory account balance appearing in a perpetual inventory worksheet represents the

As an incentive for customers to pay their accounts promptly, a business may offer its customers

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

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Exam 5: Accounting for Merchandising Operations

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

At the beginning of September 2015, Stella Company reported Inventory of $8,000. During the month, the company made purchases of $35,600. At September 30, 2015, a physical count of inventory reported $8,400 on hand. Cost of goods sold for the month is

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

Which of the following accounts has a normal credit balance?

A credit granted to a customer for returned goods requires a debit to

Under a periodic inventory system, acquisition of merchandise is debited to the

The following information is available for Dennehy Company: Sales Revenue \ 390,000 Freight-In \ 30,000 Ending Inventory 37,500 Purchase Returns and Allowances 15,000 Purchases 270,000 Beginning Inventory 45,000 Dennehy's cost of goods sold is

The journal entry to record a return of merchandise purchased on account under a periodic inventory system would be

Net sales is sales revenue less

The steps in the accounting cycle are different for a merchandising company than for a service company.

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 18,000 Sales Discounts 12,000 Sales Revenue 320,000 Cost of Goods Sold 174,000 Gross profit would be

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

Operating expenses are different for merchandising and service enterprises.

Which of the following expressions is incorrect?

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

The Inventory account balance appearing in a perpetual inventory worksheet represents the

As an incentive for customers to pay their accounts promptly, a business may offer its customers

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