Question 1

Profit margin indicates whether a company is controlling operating expenses relative to sales.

Accepted Answer

A) True 
 B)False

Question 2

Identify the differences between service and merchandising companies.

Accepted Answer

A service company performs services.It h

Question 3

Under a perpetual inventory system, the following is determined each time a sale occurs:

Accepted Answer

A) Gross Profit. 
B) Cost of Goods Sold. 
C) Purchases. 
D) Accounts Receivable. 
A) Gross Profit. 
B) Cost of Goods Sold. 
C) Purchases. 
D) Accounts Receivable.

Question 4

A purchase invoice is a document that

Accepted Answer

A) provides support for goods sold for cash. 
B) provides evidence of operating expenses incurred. 
C) provides evidence of credit purchases. 
D) serves only as a customer receipt. 
A) provides support for goods sold for cash. 
B) provides evidence of operating expenses incurred. 
C) provides evidence of credit purchases. 
D) serves only as a customer receipt.

Question 5

A multiple-step income statement shows

Accepted Answer

A) gross profit but not profit from operations. 
B) neither gross profit nor profit from operations. 
C) both gross profit and profit from operations. 
D) profit from operations but not gross profit. 
A) gross profit but not profit from operations. 
B) neither gross profit nor profit from operations. 
C) both gross profit and profit from operations. 
D) profit from operations but not gross profit.

Question 6

Use the following information to answer questions 
  
-The gross profit margin would be

Accepted Answer

A) 56.7%. 
B) 34.3%. 
C) 43.3%. 
D) 39.5%. 
A) 56.7%. 
B) 34.3%. 
C) 43.3%. 
D) 39.5%.

Question 7

Profit margin is a measure of

Accepted Answer

A) liquidity. 
B) profitability. 
C) solvency. 
D) comparability. 
A) liquidity. 
B) profitability. 
C) solvency. 
D) comparability.

Question 8

Sales revenues are earned when the goods are transferred from buyer to seller.

Accepted Answer

A) True 
 B)False

Question 9

Prepare entries for purchases under a perpetual inventory system.

Accepted Answer

The Merchandise Inventory account is deb

Question 10

Sales less operating expenses equal gross profit.

Accepted Answer

A) True 
 B)False

Question 11

Mountain Corp.sells merchandise on account for $2,000 to Cliff Corp., terms 2/10, n/30.Cliff returns $800 worth of merchandise that was damaged, along with a cheque to settle the account within the discount period.What entry does Mountain make upon receipt of the cheque?

Accepted Answer

The answer of Mountain Corp.sells merchandise on account for $2,000...

Question 12

Operating expenses are similar in merchandising and service companies.

Accepted Answer

A) True 
 B)False

Question 13

The gross profit margin is calculated by dividing gross profit by

Accepted Answer

A) sales. 
B) cost of goods sold. 
C) net sales. 
D) operating expenses. 
A) sales. 
B) cost of goods sold. 
C) net sales. 
D) operating expenses.

Question 14

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

Accepted Answer

A) must have a computerized 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 computerized 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

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Accepted Answer

A) True 
 B)False

Question 16

Interest revenue for a merchandising company is usually reported in the non-operating activities section of the income statement.

Accepted Answer

A) True 
 B)False

Question 17

The form of the income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Accepted Answer

A) multiple-step income statement. 
B) revenue income statement. 
C) report-form income statement. 
D) single-step income statement. 
A) multiple-step income statement. 
B) revenue income statement. 
C) report-form income statement. 
D) single-step income statement.

Question 18

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

Accepted Answer

A) True 
 B)False

Question 19

The abbreviation "FOB" stands for

Accepted Answer

A) free on board. 
B) freight on board. 
C) free only (to) buyer. 
D) freight charge on buyer. 
A) free on board. 
B) freight on board. 
C) free only (to) buyer. 
D) freight charge on buyer.

Question 20

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

Accepted Answer

A) There is a section for operating expenses. 
B) There may be a section for non-operating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold. 
A) There is a section for operating expenses. 
B) There may be a section for non-operating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold.

Profit margin indicates whether a company is controlling operating expenses relative to sales.

Identify the differences between service and merchandising companies.

Under a perpetual inventory system, the following is determined each time a sale occurs:

A purchase invoice is a document that

A multiple-step income statement shows

Use the following information to answer questions -The gross profit margin would be

Profit margin is a measure of

Sales revenues are earned when the goods are transferred from buyer to seller.

Prepare entries for purchases under a perpetual inventory system.

Sales less operating expenses equal gross profit.

Mountain Corp.sells merchandise on account for $2,000 to Cliff Corp., terms 2/10, n/30.Cliff returns $800 worth of merchandise that was damaged, along with a cheque to settle the account within the discount period.What entry does Mountain make upon receipt of the cheque?

Operating expenses are similar in merchandising and service companies.

The gross profit margin is calculated by dividing gross profit by

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

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Interest revenue for a merchandising company is usually reported in the non-operating activities section of the income statement.

The form of the income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

The abbreviation "FOB" stands for

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

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

Profit margin indicates whether a company is controlling operating expenses relative to sales.

Identify the differences between service and merchandising companies.

Under a perpetual inventory system, the following is determined each time a sale occurs:

A purchase invoice is a document that

A multiple-step income statement shows

Use the following information to answer questions -The gross profit margin would be

Profit margin is a measure of

Sales revenues are earned when the goods are transferred from buyer to seller.

Prepare entries for purchases under a perpetual inventory system.

Sales less operating expenses equal gross profit.

Mountain Corp.sells merchandise on account for $2,000 to Cliff Corp., terms 2/10, n/30.Cliff returns $800 worth of merchandise that was damaged, along with a cheque to settle the account within the discount period.What entry does Mountain make upon receipt of the cheque?

Operating expenses are similar in merchandising and service companies.

The gross profit margin is calculated by dividing gross profit by

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

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Interest revenue for a merchandising company is usually reported in the non-operating activities section of the income statement.

The form of the income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

The abbreviation "FOB" stands for

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

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