Question 1

Financial information is presented below:   The profit margin would be

Accepted Answer

A) .36. 
B) .05. 
C) .12. 
D) .06. 
A) .36. 
B) .05. 
C) .12. 
D) .06.

Question 2

A merchandising company's net income is determined by subtracting operating expenses from gross profit.

Accepted Answer

A) True 
 B)False

Question 3

The revenue recognition principle is applied to merchandising companies by recognizing sales revenues when the performance obligation is satisfied.

Accepted Answer

A) True 
 B)False

Question 4

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 5

Anderson Inc.sells $1,200 of merchandise on account to Baltic Company with credit terms of 2/10, n/30.If Baltic Company remits a check taking advantage of the discount offered, what is the amount of Baltic Company's check?

Accepted Answer

A) $1,176 
B) $1,200 
C) $1,080 
D) $1,120 
A) $1,176 
B) $1,200 
C) $1,080 
D) $1,120

Question 6

Cost of Goods Sold is considered an expense of a merchandising firm.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) .35. 
B) .30. 
C) .70. 
D) .28. 
A) .35. 
B) .30. 
C) .70. 
D) .28.

Question 8

A credit sale of $3,800 is made on April 25, terms 2/10, net/30, on which a return of $200 is granted on April 28.What amount will be received as payment in full if collected on May 4?

Accepted Answer

A) $3,528 
B) $3,724 
C) $3,800 
A) $3,528 
B) $3,724 
C) $3,800

Question 9

The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a

Accepted Answer

A) debit to Sales Discounts for $36. 
B) debit to Sales Revenue for $1,764. 
C) credit to Accounts Receivable for $1,800. 
D) credit to Sales Revenue for $1,800. 
A) debit to Sales Discounts for $36. 
B) debit to Sales Revenue for $1,764. 
C) credit to Accounts Receivable for $1,800. 
D) credit to Sales Revenue for $1,800.

Question 10

The gross profit rate is computed by dividing gross profit by

Accepted Answer

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

Question 11

Sales Discounts is a contra revenue account to Sales Revenue.

Accepted Answer

A) True 
 B)False

Question 12

Davies Company purchased merchandise inventory with an invoice price of $15,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Davies Company pays within the discount period?

Accepted Answer

A) $15,000 
B) $14,760 
C) $14,700 
A) $15,000 
B) $14,760 
C) $14,700

Question 13

Sampson Company's accounting records show the following at the year ending on December 31, 2022.   Using the periodic system, the cost of goods sold is

Accepted Answer

A) $702,220. 
B) $697,820. 
C) $681,020. 
D) $719,020. 
A) $702,220. 
B) $697,820. 
C) $681,020. 
D) $719,020.

Question 14

A sales invoice is prepared when goods

Accepted Answer

A) are sold for cash. 
B) are sold on credit. 
C) sold on credit are returned. 
D) are sold on credit or for cash. 
A) are sold for cash. 
B) are sold on credit. 
C) sold on credit are returned. 
D) are sold on credit or for cash.

Question 15

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) each time a sale occurs. 
A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) each time a sale occurs.

Question 16

The operating cycle of a merchandising company is ordinarily shorter than that of a service company.

Accepted Answer

A) True 
 B)False

Question 17

The journal entry to record a credit sale ignoring cost of goods sold is

Accepted Answer

A) Cash
 Sales Revenue 
B) Cash Service Revenue 
C) Accounts Receivable
 Sales Returns and Allowances 
D) Accounts Receivable 
Sales Revenue 
A) Cash
 Sales Revenue 
B) Cash Service Revenue 
C) Accounts Receivable
 Sales Returns and Allowances 
D) Accounts Receivable 
Sales Revenue

Question 18

The collection of a $1,500 account within the 2 percent discount period will result in a

Accepted Answer

A) debit to Sales Discounts for $30. 
B) debit to Accounts Receivable for $1,470. 
C) credit to Cash for $1,470. 
D) credit to Accounts Receivable for $1,470. 
A) debit to Sales Discounts for $30. 
B) debit to Accounts Receivable for $1,470. 
C) credit to Cash for $1,470. 
D) credit to Accounts Receivable for $1,470.

Question 19

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

Accepted Answer

A) Operating expenses do not include income tax expense. 
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) Operating expenses do not include income tax expense. 
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.

Question 20

The operating cycle of a merchandising company is

Accepted Answer

A) always one year in length. 
B) ordinarily longer than that of a service company. 
C) about the same as that of a service company. 
D) ordinarily shorter than that of a service company. 
A) always one year in length. 
B) ordinarily longer than that of a service company. 
C) about the same as that of a service company. 
D) ordinarily shorter than that of a service company.

Financial information is presented below: The profit margin would be

A merchandising company's net income is determined by subtracting operating expenses from gross profit.

The revenue recognition principle is applied to merchandising companies by recognizing sales revenues when the performance obligation is satisfied.

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Anderson Inc.sells $1,200 of merchandise on account to Baltic Company with credit terms of 2/10, n/30.If Baltic Company remits a check taking advantage of the discount offered, what is the amount of Baltic Company's check?

Cost of Goods Sold is considered an expense of a merchandising firm.

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

A credit sale of $3,800 is made on April 25, terms 2/10, net/30, on which a return of $200 is granted on April 28.What amount will be received as payment in full if collected on May 4?

The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a

The gross profit rate is computed by dividing gross profit by

Sales Discounts is a contra revenue account to Sales Revenue.

Davies Company purchased merchandise inventory with an invoice price of $15,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Davies Company pays within the discount period?

Sampson Company's accounting records show the following at the year ending on December 31, 2022. Using the periodic system, the cost of goods sold is

A sales invoice is prepared when goods

In a perpetual inventory system, cost of goods sold is recorded

The operating cycle of a merchandising company is ordinarily shorter than that of a service company.

The journal entry to record a credit sale ignoring cost of goods sold is

The collection of a $1,500 account within the 2 percent discount period will result in a

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

The operating cycle of a merchandising company is

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

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

Financial information is presented below: The profit margin would be

A merchandising company's net income is determined by subtracting operating expenses from gross profit.

The revenue recognition principle is applied to merchandising companies by recognizing sales revenues when the performance obligation is satisfied.

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Anderson Inc.sells $1,200 of merchandise on account to Baltic Company with credit terms of 2/10, n/30.If Baltic Company remits a check taking advantage of the discount offered, what is the amount of Baltic Company's check?

Cost of Goods Sold is considered an expense of a merchandising firm.

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

A credit sale of $3,800 is made on April 25, terms 2/10, net/30, on which a return of $200 is granted on April 28.What amount will be received as payment in full if collected on May 4?

The entry to record a sale of $1,800 with terms of 2/10, n/30 will include a

The gross profit rate is computed by dividing gross profit by

Sales Discounts is a contra revenue account to Sales Revenue.

Davies Company purchased merchandise inventory with an invoice price of $15,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Davies Company pays within the discount period?

Sampson Company's accounting records show the following at the year ending on December 31, 2022. Using the periodic system, the cost of goods sold is

A sales invoice is prepared when goods

In a perpetual inventory system, cost of goods sold is recorded

The operating cycle of a merchandising company is ordinarily shorter than that of a service company.

The journal entry to record a credit sale ignoring cost of goods sold is

The collection of a $1,500 account within the 2 percent discount period will result in a

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

The operating cycle of a merchandising company is

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