Question 1

Gross profit equals the difference between net sales and

Accepted Answer

A) profit. 
B) cost of goods sold. 
C) operating expenses. 
D) cost of goods sold plus operating expenses. 
A) profit. 
B) cost of goods sold. 
C) operating expenses. 
D) cost of goods sold plus operating expenses.

Question 2

The largest current asset for a merchandiser is usually

Accepted Answer

A) inventory. 
B) prepaid expenses. 
C) cash. 
D) accounts receivable. 
A) inventory. 
B) prepaid expenses. 
C) cash. 
D) accounts receivable.

Question 3

Gross profit for a merchandising company equals the difference between net sales and

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) profit. 
D) cost of goods sold plus operating expenses. 
A) operating expenses. 
B) cost of goods sold. 
C) profit. 
D) cost of goods sold plus operating expenses.

Question 4

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 5

A sales discount does not

Accepted Answer

A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra revenue account. 
D) increase an operating expense account. 
A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra revenue account. 
D) increase an operating expense account.

Question 6

Chocolate Corporation sells merchandise on account for $3,000 to Marshmallow Corporation with credit terms of 2/10, n/30.Marshmallow returns $600 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

Accepted Answer

A) $2,952 
B) $2,940 
C) $2,400 
D) $2,352 
A) $2,952 
B) $2,940 
C) $2,400 
D) $2,352

Question 7

An advantage of the single-step income statement over the multiple-step form is

Accepted Answer

A) the amount of information it provides. 
B) its comprehensiveness. 
C) its simplicity. 
D) its use in calculating ratios. 
A) the amount of information it provides. 
B) its comprehensiveness. 
C) its simplicity. 
D) its use in calculating ratios.

Question 8

Gross profit does not appear

Accepted Answer

A) on a merchandising company's multiple-step income statement. 
B) on a service company's income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on the income statement, if the periodic inventory system is used, because it cannot be calculated. 
A) on a merchandising company's multiple-step income statement. 
B) on a service company's income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on the income statement, if the periodic inventory system is used, because it cannot be calculated.

Question 9

Evidence of cash sales is usually supported by

Accepted Answer

A) purchase invoices. 
B) sales invoices. 
C) purchase orders. 
D) cash register tapes. 
A) purchase invoices. 
B) sales invoices. 
C) purchase orders. 
D) cash register tapes.

Question 10

Sales revenues are usually considered earned when

Accepted Answer

A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made. 
A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made.

Question 11

Sales Discounts is a contra revenue account to Sales.

Accepted Answer

A) True 
 B)False

Question 12

A sales invoice is prepared when goods

Accepted Answer

A) are sold for cash. 
B) are sold on credit. 
C) sold on credit are returned. 
D) are sold on credit or for cash. 
A) are sold for cash. 
B) are sold on credit. 
C) sold on credit are returned. 
D) are sold on credit or for cash.

Question 13

A company using a perpetual inventory system that returns goods purchased on credit would

Accepted Answer

A) debit Accounts Payable and credit Merchandise Inventory. 
B) debit Sales and credit Accounts Payable. 
C) debit Cash and credit Accounts Payable. 
D) debit Accounts Payable and credit Purchases. 
A) debit Accounts Payable and credit Merchandise Inventory. 
B) debit Sales and credit Accounts Payable. 
C) debit Cash and credit Accounts Payable. 
D) debit Accounts Payable and credit Purchases.

Question 14

On July 10, Swant Inc.purchased $1,000 of inventory on terms of 2/10, n/45.The amount due on August 25 is

Accepted Answer

A) $1,020. 
B) $1,000. 
C) $980. 
D) $990. 
A) $1,020. 
B) $1,000. 
C) $980. 
D) $990.

Question 15

Beginning inventory plus purchases equals

Accepted Answer

A) cost of goods available for sale. 
B) cost of goods sold. 
C) ending inventory. 
D) total inventory on hand. 
A) cost of goods available for sale. 
B) cost of goods sold. 
C) ending inventory. 
D) total inventory on hand.

Question 16

The multiple-step income statement is considered more useful than the single-step income statement for a merchandising company because it highlights the components of profit.

Accepted Answer

A) True 
 B)False

Question 17

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) each time a sale occurs. 
A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) each time a sale occurs.

Question 18

The gross profit amount is generally considered to be more informative than the gross profit margin.

Accepted Answer

A) True 
 B)False

Question 19

When goods are shipped FOB shipping point, freight costs are an operating expense for the seller.

Accepted Answer

A) True 
 B)False

Question 20

The terms 2/10, n/30 mean that a 2% discount is allowed on payments made over 10 days but within the credit period.

Accepted Answer

A) True 
 B)False

Gross profit equals the difference between net sales and

The largest current asset for a merchandiser is usually

Gross profit for a merchandising company equals the difference between net sales and

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

A sales discount does not

Chocolate Corporation sells merchandise on account for $3,000 to Marshmallow Corporation with credit terms of 2/10, n/30.Marshmallow returns $600 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

An advantage of the single-step income statement over the multiple-step form is

Gross profit does not appear

Evidence of cash sales is usually supported by

Sales revenues are usually considered earned when

Sales Discounts is a contra revenue account to Sales.

A sales invoice is prepared when goods

A company using a perpetual inventory system that returns goods purchased on credit would

On July 10, Swant Inc.purchased $1,000 of inventory on terms of 2/10, n/45.The amount due on August 25 is

Beginning inventory plus purchases equals

The multiple-step income statement is considered more useful than the single-step income statement for a merchandising company because it highlights the components of profit.

In a perpetual inventory system, cost of goods sold is recorded

The gross profit amount is generally considered to be more informative than the gross profit margin.

When goods are shipped FOB shipping point, freight costs are an operating expense for the seller.

The terms 2/10, n/30 mean that a 2% discount is allowed on payments made over 10 days but within the credit period.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 5: Merchandising Operations and the Multiple-Step Income Statement

Gross profit equals the difference between net sales and

The largest current asset for a merchandiser is usually

Gross profit for a merchandising company equals the difference between net sales and

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

A sales discount does not

Chocolate Corporation sells merchandise on account for $3,000 to Marshmallow Corporation with credit terms of 2/10, n/30.Marshmallow returns $600 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

An advantage of the single-step income statement over the multiple-step form is

Gross profit does not appear

Evidence of cash sales is usually supported by

Sales revenues are usually considered earned when

Sales Discounts is a contra revenue account to Sales.

A sales invoice is prepared when goods

A company using a perpetual inventory system that returns goods purchased on credit would

On July 10, Swant Inc.purchased $1,000 of inventory on terms of 2/10, n/45.The amount due on August 25 is

Beginning inventory plus purchases equals

The multiple-step income statement is considered more useful than the single-step income statement for a merchandising company because it highlights the components of profit.

In a perpetual inventory system, cost of goods sold is recorded

The gross profit amount is generally considered to be more informative than the gross profit margin.

When goods are shipped FOB shipping point, freight costs are an operating expense for the seller.

The terms 2/10, n/30 mean that a 2% discount is allowed on payments made over 10 days but within the credit period.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters