Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which statement is incorrect?

Accepted Answer

A) Periodic inventory systems provide better control over inventories than perpetual inventory systems. 
B) Computers and electronic scanners allow more companies to use a perpetual inventory system. 
C) Freight-in is debited to Inventory when a perpetual inventory system is used. 
D) Regardless of the inventory system that is used, companies should take a physical inventory count. 
A) Periodic inventory systems provide better control over inventories than perpetual inventory systems. 
B) Computers and electronic scanners allow more companies to use a perpetual inventory system. 
C) Freight-in is debited to Inventory when a perpetual inventory system is used. 
D) Regardless of the inventory system that is used, companies should take a physical inventory count.

Question 3

During the year, Megan's Pet Shop's merchandise inventory decreased by $80,000.If the company's cost of goods sold for the year was $1,200,000, purchases would have been

Accepted Answer

A) $1,280,000. 
B) $1,120,000. 
C) $1,040,000. 
D) Unable to determine. 
A) $1,280,000. 
B) $1,120,000. 
C) $1,040,000. 
D) Unable to determine.

Question 4

Sales revenue is only earned during the period in which the cash is collected from the buyer.

Accepted Answer

A) True 
 B)False

Question 5

Under a perpetual inventory system, acquisition of merchandise for resale is debited to

Accepted Answer

A) the Inventory account. 
B) the Purchases account. 
C) the Supplies account. 
D) the Cost of Goods Sold account. 
A) the Inventory account. 
B) the Purchases account. 
C) the Supplies account. 
D) the Cost of Goods Sold account.

Question 6

Which of the following items will not result in an adjustment to the inventory account balance under a perpetual system?

Accepted Answer

A) A purchase of merchandise 
B) A return of merchandise inventory to the supplier 
C) Payment of freight costs for goods shipped to a customer 
D) Payment of freight costs for goods received from a supplier 
A) A purchase of merchandise 
B) A return of merchandise inventory to the supplier 
C) Payment of freight costs for goods shipped to a customer 
D) Payment of freight costs for goods received from a supplier

Question 7

Piper Company sells merchandise on account for $1,800 to Morton Company with credit terms of 2/10, n/30.Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What entry does Piper Company make upon receipt of the check?

Accepted Answer

The answer of Piper Company sells merchandise on account for...

Question 8

A merchandiser that sells directly to consumers is a

Accepted Answer

A) retailer. 
B) wholesaler. 
C) broker. 
D) service enterprise. 
A) retailer. 
B) wholesaler. 
C) broker. 
D) service enterprise.

Question 9

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 10

For a jewelry retailer, which is an example of Other Revenues and Gains?

Accepted Answer

A) Repair revenue 
B) Unearned revenue 
C) Gain on sale of display cases 
D) Discount received for paying for merchandise inventory within the discount period 
A) Repair revenue 
B) Unearned revenue 
C) Gain on sale of display cases 
D) Discount received for paying for merchandise inventory within the discount period

Question 11

Casin Company sells $900 of merchandise on account to Delta Exploration with credit terms of 2/10, n/30.If Delta Exploration remits a check taking advantage of the discount offered, what is the amount of Delta Exploration's check?

Accepted Answer

A) $630 
B) $882 
C) $810 
D) $720 
A) $630 
B) $882 
C) $810 
D) $720

Question 12

Financial information is presented below: Operating expenses $ 28,000
Sales returns and allowances 7,000
Sales discounts 3,000
Sales revenue 150,000
Cost of goods sold 98,000
The profit margin would be

Accepted Answer

A) .28. 
B) .09. 
C) .30. 
D) .10. 
A) .28. 
B) .09. 
C) .30. 
D) .10.

Question 13

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

Accepted Answer

A) $660,420. 
B) $708,420. 
C) $717,220. 
D) $691,620. 
A) $660,420. 
B) $708,420. 
C) $717,220. 
D) $691,620.

Question 14

Gross profit does not appear

Accepted Answer

A) on a merchandising company income statement. 
B) on a service company income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on the income statement if the periodic inventory system is used because it cannot be calculated. 
A) on a merchandising company income statement. 
B) on a service company income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on the income statement if the periodic inventory system is used because it cannot be calculated.

Question 15

Which of the following activities is not a component of the operating cycle?

Accepted Answer

A) Sale of merchandise 
B) Payment of employees' salaries 
C) Collection of cash from merchandise sales 
D) Purchase of merchandise 
A) Sale of merchandise 
B) Payment of employees' salaries 
C) Collection of cash from merchandise sales 
D) Purchase of merchandise

Question 16

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

Accepted Answer

A) 4% 
B) 24% 
C) 36% 
D) 72% 
A) 4% 
B) 24% 
C) 36% 
D) 72%

Question 17

Merchandising companies that sell to retailers are known as

Accepted Answer

A) brokers. 
B) corporations. 
C) wholesalers. 
D) service firms. 
A) brokers. 
B) corporations. 
C) wholesalers. 
D) service firms.

Question 18

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 19

A very small business most likely would use a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 20

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 20 days after the invoice date to take advantage of the cash discount.

Accepted Answer

A) True 
 B)False

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

Which statement is incorrect?

During the year, Megan's Pet Shop's merchandise inventory decreased by $80,000.If the company's cost of goods sold for the year was $1,200,000, purchases would have been

Sales revenue is only earned during the period in which the cash is collected from the buyer.

Under a perpetual inventory system, acquisition of merchandise for resale is debited to

Which of the following items will not result in an adjustment to the inventory account balance under a perpetual system?

Piper Company sells merchandise on account for $1,800 to Morton Company with credit terms of 2/10, n/30.Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What entry does Piper Company make upon receipt of the check?

A merchandiser that sells directly to consumers is a

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

For a jewelry retailer, which is an example of Other Revenues and Gains?

Casin Company sells $900 of merchandise on account to Delta Exploration with credit terms of 2/10, n/30.If Delta Exploration remits a check taking advantage of the discount offered, what is the amount of Delta Exploration's check?

Financial information is presented below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 The profit margin would be

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

Gross profit does not appear

Which of the following activities is not a component of the operating cycle?

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

Merchandising companies that sell to retailers are known as

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

A very small business most likely would use a perpetual inventory system.

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 20 days after the invoice date to take advantage of the cash discount.

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

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

Which statement is incorrect?

During the year, Megan's Pet Shop's merchandise inventory decreased by $80,000.If the company's cost of goods sold for the year was $1,200,000, purchases would have been

Sales revenue is only earned during the period in which the cash is collected from the buyer.

Under a perpetual inventory system, acquisition of merchandise for resale is debited to

Which of the following items will not result in an adjustment to the inventory account balance under a perpetual system?

Piper Company sells merchandise on account for $1,800 to Morton Company with credit terms of 2/10, n/30.Morton Company returns $600 of merchandise that was damaged, along with a check to settle the account within the discount period.What entry does Piper Company make upon receipt of the check?

A merchandiser that sells directly to consumers is a

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

For a jewelry retailer, which is an example of Other Revenues and Gains?

Casin Company sells $900 of merchandise on account to Delta Exploration with credit terms of 2/10, n/30.If Delta Exploration remits a check taking advantage of the discount offered, what is the amount of Delta Exploration's check?

Financial information is presented below: Operating expenses $ 28,000 Sales returns and allowances 7,000 Sales discounts 3,000 Sales revenue 150,000 Cost of goods sold 98,000 The profit margin would be

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

Gross profit does not appear

Which of the following activities is not a component of the operating cycle?

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

Merchandising companies that sell to retailers are known as

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

A very small business most likely would use a perpetual inventory system.

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 20 days after the invoice date to take advantage of the cash discount.

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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