Question 1

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A)  the customer must pay the bill within 10 days. 
B)  the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C)  the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D)  two sales returns can be made within 10 days of the invoice date and no returns thereafter. 
A)  the customer must pay the bill within 10 days. 
B)  the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C)  the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D)  two sales returns can be made within 10 days of the invoice date and no returns thereafter.

Question 2

When goods are returned that relate to a prior cash sale,

Accepted Answer

A)  the Sales Returns and Allowances account should not be used. 
B)  the cash account will be credited. 
C)  Sales Returns and Allowances will be credited. 
D)  Accounts Receivable will be credited. 
A)  the Sales Returns and Allowances account should not be used. 
B)  the cash account will be credited. 
C)  Sales Returns and Allowances will be credited. 
D)  Accounts Receivable will be credited.

Question 3

A Sales Returns and Allowances account is not debited if a customer

Accepted Answer

A)  returns defective merchandise. 
B)  receives a credit for merchandise of inferior quality. 
C)  utilizes a prompt payment incentive. 
D)  returns goods that are not in accordance with specifications. 
A)  returns defective merchandise. 
B)  receives a credit for merchandise of inferior quality. 
C)  utilizes a prompt payment incentive. 
D)  returns goods that are not in accordance with specifications.

Question 4

Net purchases plus freight-in determines

Accepted Answer

A)  cost of goods sold. 
B)  cost of goods available for sale. 
C)  cost of goods purchased. 
D)  total goods available for sale. 
A)  cost of goods sold. 
B)  cost of goods available for sale. 
C)  cost of goods purchased. 
D)  total goods available for sale.

Question 5

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 6

Inventory is classified as a current asset in a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

A)  $3,675 
B)  $3,750 
C)  $3,920 d $4,000 
A)  $3,675 
B)  $3,750 
C)  $3,920 d $4,000

Question 8

The Sales Returns and Allowances account is classified as a(n)

Accepted Answer

A)  asset account. 
B)  contra asset account. 
C)  expense account. 
D)  contra revenue account. 
A)  asset account. 
B)  contra asset account. 
C)  expense account. 
D)  contra revenue account.

Question 9

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 gross profit 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 10

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Accepted Answer

A)  $475,000. 
B)  $500,000. 
C)  $525,000. 
D)  Unable to determine. 
A)  $475,000. 
B)  $500,000. 
C)  $525,000. 
D)  Unable to determine.

Question 11

Financial information is presented below: $$\begin{array} { l r } 
\text { Operating Expenses } & \$ 60,000 \
\text { Sales Revenue } & 225,000 \
\text { Cost of Goods Sold } & 135,000
\end{array}$$ Gross profit would be

Accepted Answer

A)  $30,000. 
B)  $90,000. 
C)  $165,000. 
D)  $225,000. 
A)  $30,000. 
B)  $90,000. 
C)  $165,000. 
D)  $225,000.

Question 12

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Accepted Answer

A) True 
 B)False

Question 13

The number of years of income statement information to be presented is

Accepted Answer

A)  2 years under both GAAP and IFRS. 
B)  3 years under both GAAP and IFRS. 
C)  2 years under GAAP and 3 years under IFRS. 
D)  3 years under GAAP and 2 years under IFRS. 
A)  2 years under both GAAP and IFRS. 
B)  3 years under both GAAP and IFRS. 
C)  2 years under GAAP and 3 years under IFRS. 
D)  3 years under GAAP and 2 years under IFRS.

Question 14

Gross profit does not appear

Accepted Answer

A)  on a multiple-step income statement. 
B)  on a single-step income statement. 
C)  to be relevant in analyzing the operation of a merchandiser. 
D)  on the income statement if the periodic inventory system is used because it cannot be calculated. 
A)  on a multiple-step income statement. 
B)  on a single-step income statement. 
C)  to be relevant in analyzing the operation of a merchandiser. 
D)  on the income statement if the periodic inventory system is used because it cannot be calculated.

Question 15

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

Accepted Answer

A)  seller. 
B)  buyer. 
C)  transportation company. 
D)  buyer and the seller. 
A)  seller. 
B)  buyer. 
C)  transportation company. 
D)  buyer and the seller.

Question 16

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 income from operations is

Accepted Answer

A)  $18,000. 
B)  $27,000. 
C)  $45,000. 
D)  $90,000. 
A)  $18,000. 
B)  $27,000. 
C)  $45,000. 
D)  $90,000.

Question 17

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

Accepted Answer

A)  .363. 
B)  .400. 
C)  .456. 
D)  .503. 
A)  .363. 
B)  .400. 
C)  .456. 
D)  .503.

Question 18

The Inventory account is used in each of the following except the entry to record

Accepted Answer

A)  goods purchased on account. 
B)  the return of goods purchased. 
C)  payment of freight on goods sold. 
D)  payment within the discount period. 
A)  goods purchased on account. 
B)  the return of goods purchased. 
C)  payment of freight on goods sold. 
D)  payment within the discount period.

Question 19

On a classified balance sheet, inventory is classified as

Accepted Answer

A)  an intangible asset. 
B)  property, plant, and equipment. 
C)  a current asset. 
D)  a long-term investment. 
A)  an intangible asset. 
B)  property, plant, and equipment. 
C)  a current asset. 
D)  a long-term investment.

Question 20

The operating cycle of a merchandiser is

Accepted Answer

A)  always one year in length. 
B)  generally longer than it is for a service company. 
C)  about the same as for a service company. 
D)  generally shorter than it is for a service company. 
A)  always one year in length. 
B)  generally longer than it is for a service company. 
C)  about the same as for a service company. 
D)  generally shorter than it is for a service company.

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

When goods are returned that relate to a prior cash sale,

A Sales Returns and Allowances account is not debited if a customer

Net purchases plus freight-in determines

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Inventory is classified as a current asset in a classified balance sheet.

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

The Sales Returns and Allowances account is classified as a(n)

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 gross profit is

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Financial information is presented below: Operating Expenses \ 60,000 Sales Revenue 225,000 Cost of Goods Sold 135,000 Gross profit would be

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

The number of years of income statement information to be presented is

Gross profit does not appear

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

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 income from operations is

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 The gross profit rate would be

The Inventory account is used in each of the following except the entry to record

On a classified balance sheet, inventory is classified as

The operating cycle of a merchandiser is

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

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

When goods are returned that relate to a prior cash sale,

A Sales Returns and Allowances account is not debited if a customer

Net purchases plus freight-in determines

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Inventory is classified as a current asset in a classified balance sheet.

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

The Sales Returns and Allowances account is classified as a(n)

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 gross profit is

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Financial information is presented below: Operating Expenses \ 60,000 Sales Revenue 225,000 Cost of Goods Sold 135,000 Gross profit would be

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

The number of years of income statement information to be presented is

Gross profit does not appear

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

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 income from operations is

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 The gross profit rate would be

The Inventory account is used in each of the following except the entry to record

On a classified balance sheet, inventory is classified as

The operating cycle of a merchandiser is

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