Question 1

When using a perpetual inventory system, why are discounts credited to Inventory?

Accepted Answer

A) The discounts are debited to discount expense and thus the credit has to be made to merchandise inventory. 
B) The discounts reduce the cost of the inventory. 
C) The discounts are a reduction of business expenses. 
D) None of these answers choices are correct. 
A) The discounts are debited to discount expense and thus the credit has to be made to merchandise inventory. 
B) The discounts reduce the cost of the inventory. 
C) The discounts are a reduction of business expenses. 
D) None of these answers choices are correct.

Question 2

Financial information is presented below:   The gross profit rate would be

Accepted Answer

A) .75. 
B) .20 
C) .05. 
D) .25. 
A) .75. 
B) .20 
C) .05. 
D) .25.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Positive operating income will result if gross profit exceeds

Accepted Answer

A) costs of goods sold. 
B) salaries and wages expense. 
C) cost of goods sold plus operating expenses. 
D) operating expenses. 
A) costs of goods sold. 
B) salaries and wages expense. 
C) cost of goods sold plus operating expenses. 
D) operating expenses.

Question 5

The operating expenses section of an income statement for a merchandising company would not include

Accepted Answer

A) Freight-out. 
B) Utilities expense. 
C) Cost of goods sold. 
D) Insurance expense. 
A) Freight-out. 
B) Utilities expense. 
C) Cost of goods sold. 
D) Insurance expense.

Question 6

The primary difference between a periodic and perpetual inventory system is that a periodic system

Accepted Answer

A) keeps a record showing the inventory on hand at all time. 
B) provides better control over inventories. 
C) records the cost of the sale on the date the sale is made. 
D) determines the inventory on hand only at the end of the accounting period. 
A) keeps a record showing the inventory on hand at all time. 
B) provides better control over inventories. 
C) records the cost of the sale on the date the sale is made. 
D) determines the inventory on hand only at the end of the accounting period.

Question 7

The sales section of an income statement for a retailer would not include

Accepted Answer

A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold. 
A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold.

Question 8

A periodic inventory system does not require a detailed record of inventory items.

Accepted Answer

A) True 
 B)False

Question 9

The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period.

Accepted Answer

A) True 
 B)False

Question 10

A company shows the following balances: .   What is the company's gross profit rate?

Accepted Answer

A) 61% 
B) 70% 
C) 30% 
D) 39% 
A) 61% 
B) 70% 
C) 30% 
D) 39%

Question 11

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Conway Company pays within the discount period?

Accepted Answer

A) $12,000 
B) $11,760 
C) $10,800 
D) $11,040 
A) $12,000 
B) $11,760 
C) $10,800 
D) $11,040

Question 12

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Accepted Answer

A) Freight Expense 
B) Freight-In 
C) Inventory 
D) Freight-Out 
A) Freight Expense 
B) Freight-In 
C) Inventory 
D) Freight-Out

Question 13

Which of the following is not considered in computing net cost of purchases?

Accepted Answer

A) Purchases returns and allowances 
B) Purchases 
C) Freight paid on purchased goods 
D) Freight paid on goods shipped to customers 
A) Purchases returns and allowances 
B) Purchases 
C) Freight paid on purchased goods 
D) Freight paid on goods shipped to customers

Question 14

Operating expenses include interest expense and income tax expense.

Accepted Answer

A) True 
 B)False

Question 15

Under the periodic inventory system, the cost of goods sold account is updated each time a sale is made.

Accepted Answer

A) True 
 B)False

Question 16

The purchase of inventory and its eventual sale lengthen the operating cycle of a merchandising company.

Accepted Answer

A) True 
 B)False

Question 17

On September 14, 2022, Sampson Company sells merchandise valued at $24,000 on account to Pacifica Inc.with terms 3/10, n/30.Both Sampson and Pacifica use the periodic inventory system.Pacifica remits payment to Sampson on September 23.Sampson's entry on that date is:

Accepted Answer

The answer of On September 14, 2022, Sampson Company sells...

Question 18

When an invoice is paid within the discount period, the amount of the discount decreases the cost of the inventory.

Accepted Answer

A) True 
 B)False

Question 19

Financial information is presented below:   The amount of net sales on the income statement would be

Accepted Answer

A) $153,000. 
B) $150,000. 
C) $160,000. 
D) $157,000. 
A) $153,000. 
B) $150,000. 
C) $160,000. 
D) $157,000.

Question 20

Financial information is presented below:   The gross profit rate would be

Accepted Answer

A) .36. 
B) .64. 
C) .40. 
D) .34. 
A) .36. 
B) .64. 
C) .40. 
D) .34.

When using a perpetual inventory system, why are discounts credited to Inventory?

Financial information is presented below: The gross profit rate would be

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

Positive operating income will result if gross profit exceeds

The operating expenses section of an income statement for a merchandising company would not include

The primary difference between a periodic and perpetual inventory system is that a periodic system

The sales section of an income statement for a retailer would not include

A periodic inventory system does not require a detailed record of inventory items.

The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period.

A company shows the following balances: . What is the company's gross profit rate?

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Conway Company pays within the discount period?

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Which of the following is not considered in computing net cost of purchases?

Operating expenses include interest expense and income tax expense.

Under the periodic inventory system, the cost of goods sold account is updated each time a sale is made.

The purchase of inventory and its eventual sale lengthen the operating cycle of a merchandising company.

On September 14, 2022, Sampson Company sells merchandise valued at $24,000 on account to Pacifica Inc.with terms 3/10, n/30.Both Sampson and Pacifica use the periodic inventory system.Pacifica remits payment to Sampson on September 23.Sampson's entry on that date is:

When an invoice is paid within the discount period, the amount of the discount decreases the cost of the inventory.

Financial information is presented below: The amount of net sales on the income statement would be

Financial information is presented below: The gross profit rate would be

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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

When using a perpetual inventory system, why are discounts credited to Inventory?

Financial information is presented below: The gross profit rate would be

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

Positive operating income will result if gross profit exceeds

The operating expenses section of an income statement for a merchandising company would not include

The primary difference between a periodic and perpetual inventory system is that a periodic system

The sales section of an income statement for a retailer would not include

A periodic inventory system does not require a detailed record of inventory items.

The terms 2/10, net/30 mean that a 2 percent discount is allowed on payments made within the 10 days discount period.

A company shows the following balances: . What is the company's gross profit rate?

Conway Company purchased merchandise inventory with an invoice price of $12,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Conway Company pays within the discount period?

Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?

Which of the following is not considered in computing net cost of purchases?

Operating expenses include interest expense and income tax expense.

Under the periodic inventory system, the cost of goods sold account is updated each time a sale is made.

The purchase of inventory and its eventual sale lengthen the operating cycle of a merchandising company.

On September 14, 2022, Sampson Company sells merchandise valued at $24,000 on account to Pacifica Inc.with terms 3/10, n/30.Both Sampson and Pacifica use the periodic inventory system.Pacifica remits payment to Sampson on September 23.Sampson's entry on that date is:

When an invoice is paid within the discount period, the amount of the discount decreases the cost of the inventory.

Financial information is presented below: The amount of net sales on the income statement would be

Financial information is presented below: The gross profit rate would be

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters