Question 1

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 2

The physical inventory count is used to determine

Accepted Answer

A) cost of inventory purchased during the period. 
B) cost of inventory sold during the period. 
C) the cost of inventory on hand. 
D) the cost of goods available for sale. 
A) cost of inventory purchased during the period. 
B) cost of inventory sold during the period. 
C) the cost of inventory on hand. 
D) the cost of goods available for sale.

Question 3

Management may be alerted to a quality problem with their merchandise by a sudden increase in which account?

Accepted Answer

A) Sales 
B) Sales Returns and Allowances 
C) Sales Discounts 
D) Cost of Goods Sold 
A) Sales 
B) Sales Returns and Allowances 
C) Sales Discounts 
D) Cost of Goods Sold

Question 4

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

Accepted Answer

A) True 
 B)False

Question 5

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A) in the selling expenses of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra revenue account of the seller. 
A) in the selling expenses of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra revenue account of the seller.

Question 6

The credit terms offered by a company 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 10 days and 30 days 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 10 days and 30 days 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 7

Non-operating activities include revenues and expenses that are related to the company's main operations.

Accepted Answer

A) True 
 B)False

Question 8

Freight costs incurred on incoming merchandise are an operating expense to the buyer.

Accepted Answer

A) True 
 B)False

Question 9

Under the perpetual inventory system, purchases of merchandise for sale are recorded in the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales 
D) Cost of Goods Sold 
A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales 
D) Cost of Goods Sold

Question 11

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

Accepted Answer

A) True 
 B)False

Question 12

Gross profit appears on both the single-step and multiple-step forms of the income statement.

Accepted Answer

A) True 
 B)False

Question 13

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

Accepted Answer

A) True 
 B)False

Question 14

Interest expense would be classified on a multiple-step income statement under the heading

Accepted Answer

A) Other expenses and losses. 
B) Other revenues and gains. 
C) Operating expenses. 
D) Cost of goods sold. 
A) Other expenses and losses. 
B) Other revenues and gains. 
C) Operating expenses. 
D) Cost of goods sold.

Question 15

A quantity discount is recorded separately, the same way as a purchase discount.

Accepted Answer

A) True 
 B)False

Question 16

Profit margin is calculated by dividing profit by net sales.

Accepted Answer

A) True 
 B)False

Question 17

A company shows the following balances:   What is the gross profit margin?

Accepted Answer

A) 42.5% 
B) 48.6% 
C) 49.3% 
D) 55.0% 
A) 42.5% 
B) 48.6% 
C) 49.3% 
D) 55.0%

Question 18

The journal entry by the buyer to record a return of merchandise purchased on account under a perpetual inventory system would credit

Accepted Answer

A) Accounts Payable. 
B) Purchase Returns and Allowances. 
C) Sales. 
D) Merchandise Inventory. 
A) Accounts Payable. 
B) Purchase Returns and Allowances. 
C) Sales. 
D) Merchandise Inventory.

Question 19

Use the following information to answer questions 
  
-The amount of net sales on the income statement would be

Accepted Answer

A) $501,000. 
B) $538,000. 
C) $513,000. 
D) $550,000. 
A) $501,000. 
B) $538,000. 
C) $513,000. 
D) $550,000.

Question 20

Which one of the following would appear on the income statement of both a merchandising company and a service company?

Accepted Answer

A) Gross profit 
B) Profit 
C) Sales revenues 
D) Cost of goods sold 
A) Gross profit 
B) Profit 
C) Sales revenues 
D) Cost of goods sold

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

The physical inventory count is used to determine

Management may be alerted to a quality problem with their merchandise by a sudden increase in which account?

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

The credit terms offered by a company are 2/10, n/30, which means that

Non-operating activities include revenues and expenses that are related to the company's main operations.

Freight costs incurred on incoming merchandise are an operating expense to the buyer.

Under the perpetual inventory system, purchases of merchandise for sale are recorded in the Merchandise Inventory account.

Which of the following accounts has a normal credit balance?

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

Gross profit appears on both the single-step and multiple-step forms of the income statement.

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

Interest expense would be classified on a multiple-step income statement under the heading

A quantity discount is recorded separately, the same way as a purchase discount.

Profit margin is calculated by dividing profit by net sales.

A company shows the following balances: What is the gross profit margin?

The journal entry by the buyer to record a return of merchandise purchased on account under a perpetual inventory system would credit

Use the following information to answer questions -The amount of net sales on the income statement would be

Which one of the following would appear on the income statement of both a merchandising company and a service company?

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

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

The physical inventory count is used to determine

Management may be alerted to a quality problem with their merchandise by a sudden increase in which account?

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

The credit terms offered by a company are 2/10, n/30, which means that

Non-operating activities include revenues and expenses that are related to the company's main operations.

Freight costs incurred on incoming merchandise are an operating expense to the buyer.

Under the perpetual inventory system, purchases of merchandise for sale are recorded in the Merchandise Inventory account.

Which of the following accounts has a normal credit balance?

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

Gross profit appears on both the single-step and multiple-step forms of the income statement.

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

Interest expense would be classified on a multiple-step income statement under the heading

A quantity discount is recorded separately, the same way as a purchase discount.

Profit margin is calculated by dividing profit by net sales.

A company shows the following balances: What is the gross profit margin?

The journal entry by the buyer to record a return of merchandise purchased on account under a perpetual inventory system would credit

Use the following information to answer questions -The amount of net sales on the income statement would be

Which one of the following would appear on the income statement of both a merchandising company and a service company?

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