Question 1

Which of the following accounts has a normal credit balance?

Accepted Answer

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

Question 2

During the year, Sarah's Pet Shop's merchandise inventory decreased by $50,000.If the company's cost of goods sold for the year was $750,000, purchases would have been

Accepted Answer

A) $800,000. 
B) $700,000. 
C) $650,000. 
D) Unable to determine. 
A) $800,000. 
B) $700,000. 
C) $650,000. 
D) Unable to determine.

Question 3

Grayson Company purchased merchandise with an invoice price of $2,000 and credit terms of 3/10, n/30.Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?

Accepted Answer

A) 3% 
B) 8% 
C) 36% 
D) 54% 
A) 3% 
B) 8% 
C) 36% 
D) 54%

Question 4

Which statement is incorrect?

Accepted Answer

A) The sales revenue account is used to record the sales of goods held for resale to customers. 
B) Sales discounts are recorded as debits to the sales revenue account. 
C) The sales revenue account is a revenue account. 
D) The sales revenue account has a normal credit balance and is closed at the end of the accounting period. 
A) The sales revenue account is used to record the sales of goods held for resale to customers. 
B) Sales discounts are recorded as debits to the sales revenue account. 
C) The sales revenue account is a revenue account. 
D) The sales revenue account has a normal credit balance and is closed at the end of the accounting period.

Question 5

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Accepted Answer

A) True 
 B)False

Question 6

The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a

Accepted Answer

A) credit to Sales Discounts for $18. 
B) debit to Sales Revenue for $882. 
C) credit to Accounts Receivable for $900. 
D) credit to Sales Revenue for $900. 
A) credit to Sales Discounts for $18. 
B) debit to Sales Revenue for $882. 
C) credit to Accounts Receivable for $900. 
D) credit to Sales Revenue for $900.

Question 7

Financial information is presented below:   The profit margin would be

Accepted Answer

A) .75. 
B) .05. 
C) .25. 
D) .95. 
A) .75. 
B) .05. 
C) .25. 
D) .95.

Question 8

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

Question 9

Which of the following statements is true regarding profit margin?

Accepted Answer

A) Profit margin can be improved by decreasing the gross profit rate and/or controlling operating expenses and other costs. 
B) Profit margin does not vary across industries. 
C) Discount stores with high merchandise turnover generally have higher profit margins. 
D) If the profit margin has a higher value, this suggests favorable return on each dollar of sales. 
A) Profit margin can be improved by decreasing the gross profit rate and/or controlling operating expenses and other costs. 
B) Profit margin does not vary across industries. 
C) Discount stores with high merchandise turnover generally have higher profit margins. 
D) If the profit margin has a higher value, this suggests favorable return on each dollar of sales.

Question 10

Fehr Company sells merchandise on account for $7,500 to Kelly Company with credit terms of 2/10, n/30.Kelly Company returns $1,500 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Accepted Answer

A) $7,350 
B) $7,380 
C) $6,000 
D) $5,880 
A) $7,350 
B) $7,380 
C) $6,000 
D) $5,880

Question 11

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

Accepted Answer

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

Which of the following accounts has a normal credit balance?

During the year, Sarah's Pet Shop's merchandise inventory decreased by $50,000.If the company's cost of goods sold for the year was $750,000, purchases would have been

Grayson Company purchased merchandise with an invoice price of $2,000 and credit terms of 3/10, n/30.Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?

Which statement is incorrect?

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a

Financial information is presented below: The profit margin would be

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

Which of the following statements is true regarding profit margin?

Fehr Company sells merchandise on account for $7,500 to Kelly Company with credit terms of 2/10, n/30.Kelly Company returns $1,500 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

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

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

Which of the following accounts has a normal credit balance?

During the year, Sarah's Pet Shop's merchandise inventory decreased by $50,000.If the company's cost of goods sold for the year was $750,000, purchases would have been

Grayson Company purchased merchandise with an invoice price of $2,000 and credit terms of 3/10, n/30.Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms?

Which statement is incorrect?

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a

Financial information is presented below: The profit margin would be

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

Which of the following statements is true regarding profit margin?

Fehr Company sells merchandise on account for $7,500 to Kelly Company with credit terms of 2/10, n/30.Kelly Company returns $1,500 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

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

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