Question 1

If merchandise costing $5,000, with terms 2/10, n/30, is paid within 10 days, the amount of the purchase discount is $100.

Accepted Answer

A) True 
 B)False

Question 2

Turner Corporation returned $150 of goods originally purchased on credit from Morgan Industries.Using the periodic Inventory approach, Turner would record this transaction as:

Accepted Answer

The answer of Turner Corporation returned $150 of goods originally...

Question 3

Which of the following would not be classified as a contra account?

Accepted Answer

A) Sales Revenue 
B) Sales Returns and Allowances 
C) Accumulated Depreciation 
D) Sales Discounts 
A) Sales Revenue 
B) Sales Returns and Allowances 
C) Accumulated Depreciation 
D) Sales Discounts

Question 4

Gross profit appears on both the single-step and multiple-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 5

Betty's Fabrics sold merchandise for $171,000 cash during the month of July.Returns that month totaled $3,600.If the company's gross profit rate is 40%, Betty will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A) $171,000 and $102,600. 
B) $167,400 and $66,960. 
C) $167,400 and $100,440. 
D) $171,000 and $100,440. 
A) $171,000 and $102,600. 
B) $167,400 and $66,960. 
C) $167,400 and $100,440. 
D) $171,000 and $100,440.

Question 6

Sales Discounts and Sales Returns and Allowances both have normal debit balances.

Accepted Answer

A) True 
 B)False

Question 7

Gross profit equals the difference between net sales and

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) net income. 
D) cost of goods sold plus operating expenses. 
A) operating expenses. 
B) cost of goods sold. 
C) net income. 
D) cost of goods sold plus operating expenses.

Question 8

The quality of earnings ratio is calculated as net income divided by net cash provided by operating activities.

Accepted Answer

A) True 
 B)False

Question 9

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $54,000. 
B) $57,000. 
C) $69,000. 
D) $66,000. 
A) $54,000. 
B) $57,000. 
C) $69,000. 
D) $66,000.

Question 10

Assume Grammar Company uses the periodic inventory system and has a beginning inventory balance of $5,000, purchases of $75,000, and sales of $125,000.Grammar closes its records once a year on December 31.In the accounting records, the inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Accepted Answer

A) equal to $5,000. 
B) more than $5,000. 
C) less than $5,000. 
D) indeterminate. 
A) equal to $5,000. 
B) more than $5,000. 
C) less than $5,000. 
D) indeterminate.

Question 11

A Sales Returns and Allowances account is notdebited if a customer

Accepted Answer

A) returns defective merchandise. 
B) receives a credit for merchandise of inferior quality. 
C) utilizes a prompt payment incentive. 
D) returns goods that are not in accordance with specifications. 
A) returns defective merchandise. 
B) receives a credit for merchandise of inferior quality. 
C) utilizes a prompt payment incentive. 
D) returns goods that are not in accordance with specifications.

Question 12

When using the periodic inventory system, which of the following is not a step in determining cost of goods purchased?

Accepted Answer

A) Add freight-in 
B) Subtract purchase returns and allowances 
C) Subtract cost of ending inventory 
D) All of these are necessary steps. 
A) Add freight-in 
B) Subtract purchase returns and allowances 
C) Subtract cost of ending inventory 
D) All of these are necessary steps.

Question 13

Travis Corporation purchases merchandise on account from Jackson Company, terms 2/10, n/30.Travis and Jackson both use periodic inventory systems.If Travis pays within the discount period, Jackson will

Accepted Answer

A) debit the amount of the discount to Sales Discounts. 
B) credit the amount of the discount to Cash. 
C) credit the amount of the discount to Purchases Discounts. 
D) credit the amount of the discount to Sales Revenue. 
A) debit the amount of the discount to Sales Discounts. 
B) credit the amount of the discount to Cash. 
C) credit the amount of the discount to Purchases Discounts. 
D) credit the amount of the discount to Sales Revenue.

Question 14

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

Accepted Answer

A) debit Inventory and credit Cost of Goods Sold. 
B) debit Cost of Goods Sold and credit Purchases. 
C) debit Cost of Goods sold and credit Inventory. 
D) make no additional entry until the end of the period. 
A) debit Inventory and credit Cost of Goods Sold. 
B) debit Cost of Goods Sold and credit Purchases. 
C) debit Cost of Goods sold and credit Inventory. 
D) make no additional entry until the end of the period.

Question 15

When using the periodic system the physical inventory count is used to determine

Accepted Answer

A) only the sales value of goods in the ending inventory. 
B) both the cost of the goods in ending inventory and the sales value of goods sold during the period. 
C) both the cost of the goods sold and the cost of ending inventory. 
D) only the cost of merchandise sold during the period. 
A) only the sales value of goods in the ending inventory. 
B) both the cost of the goods in ending inventory and the sales value of goods sold during the period. 
C) both the cost of the goods sold and the cost of ending inventory. 
D) only the cost of merchandise sold during the period.

Question 16

Each of the following companies is a merchandising company except a

Accepted Answer

A) wholesale parts company. 
B) candy store. 
C) moving company. 
D) furniture store. 
A) wholesale parts company. 
B) candy store. 
C) moving company. 
D) furniture store.

Question 17

Gross profit does not appear

Accepted Answer

A) on a multiple-step income statement. 
B) on a single-step income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on either a multiple-step or single-step income statement. 
A) on a multiple-step income statement. 
B) on a single-step income statement. 
C) to be relevant in analyzing the operation of a merchandising company. 
D) on either a multiple-step or single-step income statement.

Question 18

Opportunities for businesses to use data analytics in making decisions include all of the following except

Accepted Answer

A) what type of sales discount to offer. 
B) policies regarding sales returns. 
C) which customers should be granted credit. 
D) All of these are opportunities to use data analytics. 
A) what type of sales discount to offer. 
B) policies regarding sales returns. 
C) which customers should be granted credit. 
D) All of these are opportunities to use data analytics.

Question 19

Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise.

Accepted Answer

A) True 
 B)False

Question 20

Andrea's Fashions sold merchandise for $190,000 cash during the month of July.Returns that month totaled $4,000.If the company's gross profit rate is 40%, Andrea's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A) $190,000 and $114,000. 
B) $186,000 and $74,400. 
C) $186,000 and $111,600. 
D) $190,000 and $111,600. 
A) $190,000 and $114,000. 
B) $186,000 and $74,400. 
C) $186,000 and $111,600. 
D) $190,000 and $111,600.

If merchandise costing $5,000, with terms 2/10, n/30, is paid within 10 days, the amount of the purchase discount is $100.

Turner Corporation returned $150 of goods originally purchased on credit from Morgan Industries.Using the periodic Inventory approach, Turner would record this transaction as:

Which of the following would not be classified as a contra account?

Gross profit appears on both the single-step and multiple-step forms of an income statement.

Betty's Fabrics sold merchandise for $171,000 cash during the month of July.Returns that month totaled $3,600.If the company's gross profit rate is 40%, Betty will report monthly net sales revenue and cost of goods sold of

Sales Discounts and Sales Returns and Allowances both have normal debit balances.

Gross profit equals the difference between net sales and

The quality of earnings ratio is calculated as net income divided by net cash provided by operating activities.

Financial information is presented below: Gross profit would be

A Sales Returns and Allowances account is notdebited if a customer

When using the periodic inventory system, which of the following is not a step in determining cost of goods purchased?

Travis Corporation purchases merchandise on account from Jackson Company, terms 2/10, n/30.Travis and Jackson both use periodic inventory systems.If Travis pays within the discount period, Jackson will

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

When using the periodic system the physical inventory count is used to determine

Each of the following companies is a merchandising company except a

Gross profit does not appear

Opportunities for businesses to use data analytics in making decisions include all of the following except

Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise.

Andrea's Fashions sold merchandise for $190,000 cash during the month of July.Returns that month totaled $4,000.If the company's gross profit rate is 40%, Andrea's will report monthly net sales revenue and cost of goods sold of

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

If merchandise costing $5,000, with terms 2/10, n/30, is paid within 10 days, the amount of the purchase discount is $100.

Turner Corporation returned $150 of goods originally purchased on credit from Morgan Industries.Using the periodic Inventory approach, Turner would record this transaction as:

Which of the following would not be classified as a contra account?

Gross profit appears on both the single-step and multiple-step forms of an income statement.

Betty's Fabrics sold merchandise for $171,000 cash during the month of July.Returns that month totaled $3,600.If the company's gross profit rate is 40%, Betty will report monthly net sales revenue and cost of goods sold of

Sales Discounts and Sales Returns and Allowances both have normal debit balances.

Gross profit equals the difference between net sales and

The quality of earnings ratio is calculated as net income divided by net cash provided by operating activities.

Financial information is presented below: Gross profit would be

A Sales Returns and Allowances account is notdebited if a customer

When using the periodic inventory system, which of the following is not a step in determining cost of goods purchased?

Travis Corporation purchases merchandise on account from Jackson Company, terms 2/10, n/30.Travis and Jackson both use periodic inventory systems.If Travis pays within the discount period, Jackson will

Under the perpetual inventory system, in addition to making the entry to record a sale, a company would

When using the periodic system the physical inventory count is used to determine

Each of the following companies is a merchandising company except a

Gross profit does not appear

Opportunities for businesses to use data analytics in making decisions include all of the following except

Operating expenses are subtracted from revenue for a service enterprise and from gross profit for a merchandising enterprise.

Andrea's Fashions sold merchandise for $190,000 cash during the month of July.Returns that month totaled $4,000.If the company's gross profit rate is 40%, Andrea's will report monthly net sales revenue and cost of goods sold of

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