Question 1

The normal balance of Sales Returns and Allowances is a credit.

Accepted Answer

A) True 
 B)False

Question 2

Profit margin is calculated by dividing profit by

Accepted Answer

A) sales. 
B) sales revenues. 
C) net sales. 
D) gross sales. 
A) sales. 
B) sales revenues. 
C) net sales. 
D) gross sales.

Question 3

A merchandiser will have profit from operations of exactly $0 when

Accepted Answer

A) net sales equals cost of goods sold. 
B) cost of goods sold equals gross profit. 
C) operating expenses equal net sales. 
D) gross profit equals operating expenses. 
A) net sales equals cost of goods sold. 
B) cost of goods sold equals gross profit. 
C) operating expenses equal net sales. 
D) gross profit equals operating expenses.

Question 4

After gross profit is calculated, operating expenses are deducted to determine

Accepted Answer

A) gross margin. 
B) profit (loss) before income tax. 
C) cost of goods sold. 
D) profit margin. 
A) gross margin. 
B) profit (loss) before income tax. 
C) cost of goods sold. 
D) profit margin.

Question 5

Profit from operations for a merchandising company is net sales less

Accepted Answer

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

Question 6

Under a perpetual inventory system, freight costs incurred by the buyer are added to the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 7

Profit from operations appears on both the single-step and multiple-step forms of the income statement.

Accepted Answer

A) True 
 B)False

Question 8

Corporations following IFRS must classify their expenses either by nature or by function.

Accepted Answer

A) True 
 B)False

Question 9

The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense accounts.

Accepted Answer

A) True 
 B)False

Question 10

Cashmere Corporation purchased merchandise inventory with an invoice price of $16,000 and credit terms of 2/10, n/30.How much cash will Cashmere pay if they pay within the discount period?

Accepted Answer

A) $16,000 
B) $15,680 
C) $14,720 
D) $14,400 
A) $16,000 
B) $15,680 
C) $14,720 
D) $14,400

Question 11

Which statement is correct about expenses on the income statement?

Accepted Answer

A) Classifying expenses by nature means that expenses are reported according to the activity for which they are incurred. 
B) Examples of expenses classified by function are cost of goods sold and administrative expenses. 
C) Expenses must be classified by their function. 
D) Expenses must be classified in decreasing order of magnitude. 
A) Classifying expenses by nature means that expenses are reported according to the activity for which they are incurred. 
B) Examples of expenses classified by function are cost of goods sold and administrative expenses. 
C) Expenses must be classified by their function. 
D) Expenses must be classified in decreasing order of magnitude.

Question 12

If a purchaser using a perpetual inventory system pays freight costs, then the

Accepted Answer

A) Merchandise Inventory account is increased. 
B) Merchandise Inventory account is not affected. 
C) Freight Out account is increased. 
D) Freight In account is increased. 
A) Merchandise Inventory account is increased. 
B) Merchandise Inventory account is not affected. 
C) Freight Out account is increased. 
D) Freight In account is increased.

Question 13

What is the term applied to the excess of net sales over the cost of goods sold?

Accepted Answer

A) gross sales 
B) profit from operations 
C) profit 
D) gross profit 
A) gross sales 
B) profit from operations 
C) profit 
D) gross profit

Question 14

The time it takes to go from cash to cash in producing revenues is called the

Accepted Answer

A) accounting cycle. 
B) purchasing cycle. 
C) operating cycle. 
D) merchandising cycle. 
A) accounting cycle. 
B) purchasing cycle. 
C) operating cycle. 
D) merchandising cycle.

Question 15

The entry to record a sale of $525 with terms of 2/10, n/30 will include a

Accepted Answer

A) debit to Sales Discounts for $10.50. 
B) debit to Sales for $514.50. 
C) credit to Accounts Receivable for $525. 
D) credit to Sales for $525. 
A) debit to Sales Discounts for $10.50. 
B) debit to Sales for $514.50. 
C) credit to Accounts Receivable for $525. 
D) credit to Sales for $525.

Question 16

The entry to record the return of goods from a customer would include a

Accepted Answer

A) debit to Sales. 
B) credit to Sales. 
C) debit to Sales Returns and Allowances. 
D) credit to Sales Returns and Allowances. 
A) debit to Sales. 
B) credit to Sales. 
C) debit to Sales Returns and Allowances. 
D) credit to Sales Returns and Allowances.

Question 17

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Accepted Answer

A) credit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) debit to Cash for $1,000. 
D) credit to Accounts Receivable for $980. 
A) credit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) debit to Cash for $1,000. 
D) credit to Accounts Receivable for $980.

Question 18

Use the following information to answer questions 
  
-Gross profit would be

Accepted Answer

A) $112,000. 
B) $284,000. 
C) $378,000. 
D) $501,000. 
A) $112,000. 
B) $284,000. 
C) $378,000. 
D) $501,000.

Question 19

Cost of goods available for sale is considered an operating expense for a merchandising company.

Accepted Answer

A) True 
 B)False

Question 20

Gross profit margin is calculated by dividing cost of goods sold by net sales.

Accepted Answer

A) True 
 B)False

The normal balance of Sales Returns and Allowances is a credit.

Profit margin is calculated by dividing profit by

A merchandiser will have profit from operations of exactly $0 when

After gross profit is calculated, operating expenses are deducted to determine

Profit from operations for a merchandising company is net sales less

Under a perpetual inventory system, freight costs incurred by the buyer are added to the Merchandise Inventory account.

Profit from operations appears on both the single-step and multiple-step forms of the income statement.

Corporations following IFRS must classify their expenses either by nature or by function.

The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense accounts.

Cashmere Corporation purchased merchandise inventory with an invoice price of $16,000 and credit terms of 2/10, n/30.How much cash will Cashmere pay if they pay within the discount period?

Which statement is correct about expenses on the income statement?

If a purchaser using a perpetual inventory system pays freight costs, then the

What is the term applied to the excess of net sales over the cost of goods sold?

The time it takes to go from cash to cash in producing revenues is called the

The entry to record a sale of $525 with terms of 2/10, n/30 will include a

The entry to record the return of goods from a customer would include a

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Use the following information to answer questions -Gross profit would be

Cost of goods available for sale is considered an operating expense for a merchandising company.

Gross profit margin is calculated by dividing cost of goods sold by net sales.

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

The normal balance of Sales Returns and Allowances is a credit.

Profit margin is calculated by dividing profit by

A merchandiser will have profit from operations of exactly $0 when

After gross profit is calculated, operating expenses are deducted to determine

Profit from operations for a merchandising company is net sales less

Under a perpetual inventory system, freight costs incurred by the buyer are added to the Merchandise Inventory account.

Profit from operations appears on both the single-step and multiple-step forms of the income statement.

Corporations following IFRS must classify their expenses either by nature or by function.

The Sales Returns and Allowances account and the Sales Discounts account are both classified as expense accounts.

Cashmere Corporation purchased merchandise inventory with an invoice price of $16,000 and credit terms of 2/10, n/30.How much cash will Cashmere pay if they pay within the discount period?

Which statement is correct about expenses on the income statement?

If a purchaser using a perpetual inventory system pays freight costs, then the

What is the term applied to the excess of net sales over the cost of goods sold?

The time it takes to go from cash to cash in producing revenues is called the

The entry to record a sale of $525 with terms of 2/10, n/30 will include a

The entry to record the return of goods from a customer would include a

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Use the following information to answer questions -Gross profit would be

Cost of goods available for sale is considered an operating expense for a merchandising company.

Gross profit margin is calculated by dividing cost of goods sold by net sales.

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