Question 1

Sales revenues are usually considered earned when

Accepted Answer

A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made. 
A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made.

Question 2

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A) discount. 
B) return. 
C) contra asset. 
D) allowance. 
A) discount. 
B) return. 
C) contra asset. 
D) allowance.

Question 3

The terms 2/10, n/30 mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Accepted Answer

A) True 
 B)False

Question 4

Financial information is presented below:   The profit margin would be

Accepted Answer

A) .36. 
B) .18. 
C) .06. 
D) .08. 
A) .36. 
B) .18. 
C) .06. 
D) .08.

Question 5

What is a difference between merchandising companies and service enterprises?

Accepted Answer

A) Merchandising companies must prepare multiple-step income statements and service enterprises must prepare single-step income statements. 
B) Merchandising companies generally have a longer operating cycle than service enterprises. 
C) Cost of goods sold is an expense for service enterprises but not for merchandising companies. 
D) All are these choices are differences. 
A) Merchandising companies must prepare multiple-step income statements and service enterprises must prepare single-step income statements. 
B) Merchandising companies generally have a longer operating cycle than service enterprises. 
C) Cost of goods sold is an expense for service enterprises but not for merchandising companies. 
D) All are these choices are differences.

Question 6

What is the term applied to the excess of net sales over the cost of goods sold?

Accepted Answer

A) Income before income taxes 
B) Income from operations 
C) Net income 
D) Gross profit 
A) Income before income taxes 
B) Income from operations 
C) Net income 
D) Gross profit

Question 7

Income from operations appears on

Accepted Answer

A) both a multiple-step and a single-step income statement. 
B) neither a multiple-step nor a single-step income statement. 
C) a single-step income statement. 
D) a multiple-step income statement. 
A) both a multiple-step and a single-step income statement. 
B) neither a multiple-step nor a single-step income statement. 
C) a single-step income statement. 
D) a multiple-step income statement.

Question 8

Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30.
Returned $2,400 of the shipment for credit.
Paid $600 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory

Accepted Answer

A) increased by $115,248. 
B) increased by $118,200. 
C) increased by $115,836. 
D) increased by $115,848. 
A) increased by $115,248. 
B) increased by $118,200. 
C) increased by $115,836. 
D) increased by $115,848.

Question 9

Under the perpetual inventory system, which of the following accounts would not be used?

Accepted Answer

A) Sales Revenue 
B) Purchases 
C) Cost of Goods Sold 
D) Inventory 
A) Sales Revenue 
B) Purchases 
C) Cost of Goods Sold 
D) Inventory

Question 10

Two categories of expenses in merchandising companies are

Accepted Answer

A) cost of goods sold and financing expenses. 
B) operating expenses and financing expenses. 
C) cost of goods sold and operating expenses. 
D) other expenses and cost of goods sold. 
A) cost of goods sold and financing expenses. 
B) operating expenses and financing expenses. 
C) cost of goods sold and operating expenses. 
D) other expenses and cost of goods sold.

Question 11

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

Accepted Answer

A) True 
 B)False

Question 12

The primary source of revenue for a wholesaler is

Accepted Answer

A) investment income. 
B) service revenue. 
C) the sale of merchandise. 
D) the sale of plant assets the company owns. 
A) investment income. 
B) service revenue. 
C) the sale of merchandise. 
D) the sale of plant assets the company owns.

Question 13

Cash register tapes provide evidence of credit sales.

Accepted Answer

A) True 
 B)False

Question 14

A sales discount does not

Accepted Answer

A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra revenue account. 
D) increase an operating expense account. 
A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra revenue account. 
D) increase an operating expense account.

Question 15

Merchandise is sold for $5,000 with terms 1/10, n/30.If $1,000 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40.

Accepted Answer

A) True 
 B)False

Question 16

The income statement for a merchandising company presents only two amounts not shown on a service company's income statement.

Accepted Answer

A) True 
 B)False

Question 17

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) $165,000. 
D) $162,000. 
A) $153,000. 
B) $150,000. 
C) $165,000. 
D) $162,000.

Question 18

In the credit terms of 1/10, n/30, the "1" represents the

Accepted Answer

A) number of days in the discount period. 
B) full amount of the invoice. 
C) number of days when the entire amount is due. 
D) percent of the cash discount. 
A) number of days in the discount period. 
B) full amount of the invoice. 
C) number of days when the entire amount is due. 
D) percent of the cash discount.

Question 19

Under the periodic inventory system, acquisitions of merchandise are not recorded in the Inventory account.

Accepted Answer

A) True 
 B)False

Question 20

Sales revenue

Accepted Answer

A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected. 
A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected.

Sales revenues are usually considered earned when

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

The terms 2/10, n/30 mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Financial information is presented below: The profit margin would be

What is a difference between merchandising companies and service enterprises?

What is the term applied to the excess of net sales over the cost of goods sold?

Income from operations appears on

Under the perpetual inventory system, which of the following accounts would not be used?

Two categories of expenses in merchandising companies are

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

The primary source of revenue for a wholesaler is

Cash register tapes provide evidence of credit sales.

A sales discount does not

Merchandise is sold for $5,000 with terms 1/10, n/30.If $1,000 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40.

The income statement for a merchandising company presents only two amounts not shown on a service company's income statement.

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

In the credit terms of 1/10, n/30, the "1" represents the

Under the periodic inventory system, acquisitions of merchandise are not recorded in the Inventory account.

Sales revenue

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

Sales revenues are usually considered earned when

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

The terms 2/10, n/30 mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Financial information is presented below: The profit margin would be

What is a difference between merchandising companies and service enterprises?

What is the term applied to the excess of net sales over the cost of goods sold?

Income from operations appears on

Under the perpetual inventory system, which of the following accounts would not be used?

Two categories of expenses in merchandising companies are

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

The primary source of revenue for a wholesaler is

Cash register tapes provide evidence of credit sales.

A sales discount does not

Merchandise is sold for $5,000 with terms 1/10, n/30.If $1,000 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40.

The income statement for a merchandising company presents only two amounts not shown on a service company's income statement.

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

In the credit terms of 1/10, n/30, the "1" represents the

Under the periodic inventory system, acquisitions of merchandise are not recorded in the Inventory account.

Sales revenue

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