Exam 5: Accounting for Merchandising Operations

On October 4, 2015, JT Corporation had credit sales transactions of $4,000 from merchandise having cost $2,400. The entries to record the day's credit transactions include a

Under IFRS, companies can apply revaluation to

Net sales appears on both the multiple-step and single-step forms of an income statement.

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 26,000 Sales Discounts 12,000 Sales Revenue 300,000 Cost of Goods Sold 158,000 The gross profit rate would be

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?

Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods sold of $390,000, the gross profit rate is

Two categories of expenses for merchandising companies are

Net income is gross profit less

Sales revenue should be recorded in accordance with the matching principle.

The collection of a $6,000 account within the 2 percent discount period will result in a

Under IFRS, companies must classify income statement items by

Under GAAP, 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.

In terms of liquidity, inventory is

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

A periodic inventory system requires a detailed inventory record of inventory items.

A multiple-step income statement provides users with more information about a company's income performance.

McIntyre Company made a purchase of merchandise on credit from Marvin Company on August 8, for $9,000, terms 3/10, n/30. On August 17, McIntyre makes the appropriate payment to Marvin. The entry on August 17 for McIntyre Company is: a. Accounts Payable 9,000 Cash 9,000 b. Accounts Payable 8,730 Cash 8,730 c. Accounts Payable 9,000 Purchase Returns and Allowances 270 MC. 73 (Cont.) Cash 8,730 d. Accounts Payable 9,000 Inventory 270 Cash 8,730

For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.

Inventories are defined by IFRS as