Question 1

A merchandising company using a perpetual system will make

Accepted Answer

A)  the same number of adjusting entries as a service company does. 
B)  one more adjusting entry than a service company does. 
C)  one less adjusting entry than a service company does. 
D)  different types of adjusting entries compared to a service company. 
A)  the same number of adjusting entries as a service company does. 
B)  one more adjusting entry than a service company does. 
C)  one less adjusting entry than a service company does. 
D)  different types of adjusting entries compared to a service company.

Question 2

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

Accepted Answer

A)  $189,000. 
B)  $204,000. 
C)  $219,000. 
D)  $249,000. 
A)  $189,000. 
B)  $204,000. 
C)  $219,000. 
D)  $249,000.

Question 3

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 purchased 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 4

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Accepted Answer

A) True 
 B)False

Question 5

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 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)  $3,920 
B)  $4,000 
C)  $4,900 
D)  $4,920 
A)  $3,920 
B)  $4,000 
C)  $4,900 
D)  $4,920

Question 6

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 7

The multiple-step form of income statement is easier to read than the single-step form.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Accepted Answer

A)  Cash received on account with a discount 
B)  Payment of freight costs on a purchase 
C)  Return of merchandise sold 
D)  Sale of merchandise on credit 
A)  Cash received on account with a discount 
B)  Payment of freight costs on a purchase 
C)  Return of merchandise sold 
D)  Sale of merchandise on credit

Question 9

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 nonoperating income (loss) for the month of August, 2015 is

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $3,000. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $3,000.

Question 10

Sales revenue less cost of goods sold is called

Accepted Answer

A)  gross profit. 
B)  net profit. 
C)  net income. 
D)  marginal income. 
A)  gross profit. 
B)  net profit. 
C)  net income. 
D)  marginal income.

Question 11

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Accepted Answer

A) True 
 B)False

Question 12

The Freight-In account

Accepted Answer

A)  increases the cost of merchandise purchased. 
B)  is contra to the Purchases account. 
C)  is a permanent account. 
D)  has a normal credit balance. 
A)  increases the cost of merchandise purchased. 
B)  is contra to the Purchases account. 
C)  is a permanent account. 
D)  has a normal credit balance.

Question 13

Under GAAP, income statement items are generally described as

Accepted Answer

A)  administration, distribution, manufacturing, etc. 
B)  salaries, depreciation, utilities, etc. 
C)  administration, depreciation, manufacturing, etc. 
D)  salaries, distribution, utilities, etc. 
A)  administration, distribution, manufacturing, etc. 
B)  salaries, depreciation, utilities, etc. 
C)  administration, depreciation, manufacturing, etc. 
D)  salaries, distribution, utilities, etc.

Question 14

If a company determines cost of goods sold each time a sale occurs, it

Accepted Answer

A)  must have a computer accounting system. 
B)  uses a combination of the perpetual and periodic inventory systems. 
C)  uses a periodic inventory system. 
D)  uses a perpetual inventory system. 
A)  must have a computer accounting system. 
B)  uses a combination of the perpetual and periodic inventory systems. 
C)  uses a periodic inventory system. 
D)  uses a perpetual inventory system.

Question 15

A company shows the following balances: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 2,500,000 \
\text { Sales Returns and Allowances } & 450,000 \
\text { Sales Discounts| } & 50,000 \
\text { Cost of Goods Sold } & 1,400,000
\end{array}$$ What is the gross profit rate?

Accepted Answer

A)  30% 
B)  44% 
C)  56% 
D)  70% 
A)  30% 
B)  44% 
C)  56% 
D)  70%

Question 16

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

Accepted Answer

A)  36%. 
B)  37.5%. 
C)  40%. 
D)  41.7%. 
A)  36%. 
B)  37.5%. 
C)  40%. 
D)  41.7%.

Question 17

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a true statement about a multiple-step income statement?

Accepted Answer

A)  Operating expenses are similar for merchandising and service enterprises. 
B)  There may be a section for nonoperating activities. 
C)  There may be a section for operating assets. 
D)  There is a section for cost of goods sold. 
A)  Operating expenses are similar for merchandising and service enterprises. 
B)  There may be a section for nonoperating activities. 
C)  There may be a section for operating assets. 
D)  There is a section for cost of goods sold.

Question 19

Which one of the following is shown on a multiple-step but not on a single-step income statement?

Accepted Answer

A)  Net sales 
B)  Net income 
C)  Gross profit 
D)  Cost of goods sold 
A)  Net sales 
B)  Net income 
C)  Gross profit 
D)  Cost of goods sold

Question 20

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

Accepted Answer

A)  $1,500,000 and 66.7%. 
B)  $2,250,000 and 40%. 
C)  $1,500,000 and 40%. 
D)  $2,250,000 and 60%. 
A)  $1,500,000 and 66.7%. 
B)  $2,250,000 and 40%. 
C)  $1,500,000 and 40%. 
D)  $2,250,000 and 60%.

A merchandising company using a perpetual system will make

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

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 purchased is

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

The multiple-step form of income statement is easier to read than the single-step form.

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Sales revenue less cost of goods sold is called

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

The Freight-In account

Under GAAP, income statement items are generally described as

If a company determines cost of goods sold each time a sale occurs, it

A company shows the following balances: Sales Revenue \ 2,500,000 Sales Returns and Allowances 450,000 Sales Discounts| 50,000 Cost of Goods Sold 1,400,000 What is the gross profit rate?

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

Which of the following is not a true statement about a multiple-step income statement?

Which one of the following is shown on a multiple-step but not on a single-step income statement?

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

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

A merchandising company using a perpetual system will make

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

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 purchased is

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

The multiple-step form of income statement is easier to read than the single-step form.

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Sales revenue less cost of goods sold is called

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

The Freight-In account

Under GAAP, income statement items are generally described as

If a company determines cost of goods sold each time a sale occurs, it

A company shows the following balances: Sales Revenue \ 2,500,000 Sales Returns and Allowances 450,000 Sales Discounts| 50,000 Cost of Goods Sold 1,400,000 What is the gross profit rate?

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

Which of the following is not a true statement about a multiple-step income statement?

Which one of the following is shown on a multiple-step but not on a single-step income statement?

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

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