Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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.

Question 3

The periodic inventory system is used most commonly by companies that sell

Accepted Answer

A)  low-priced, high-volume merchandise. 
B)  high-priced, high-volume merchandise. 
C)  high-priced, low-volume merchandise. 
D)  high-priced, low and high-volume merchandise. 
A)  low-priced, high-volume merchandise. 
B)  high-priced, high-volume merchandise. 
C)  high-priced, low-volume merchandise. 
D)  high-priced, low and high-volume merchandise.

Question 4

The adjusted trial balance of McCoy Company included the following selected accounts:   Instructions
1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2014.
2. Calculate the profit margin and gross profit rate.

Accepted Answer

The answer of The adjusted trial balance of McCoy Company...

Question 5

Inventories are defined by IFRS as

Accepted Answer

A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answer choices are correct. 
A)  held-for-sale in the ordinary course of business. 
B)  in the process of production for sale in the ordinary course of business. 
C)  in the form of materials or supplies to be consumed in the production process or in the providing of services. 
D)  All of these answer choices are correct.

Question 6

The primary difference between a periodic and perpetual inventory system is that a periodic system

Accepted Answer

A)  keeps a record showing the inventory on hand at all time. 
B)  provides better control over inventories. 
C)  records the cost of the sale on the date the sale is made. 
D)  determines the inventory on hand only at the end of the accounting period. 
A)  keeps a record showing the inventory on hand at all time. 
B)  provides better control over inventories. 
C)  records the cost of the sale on the date the sale is made. 
D)  determines the inventory on hand only at the end of the accounting period.

Question 7

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 8

The following information is available from the annual reports of Flynn Company and Tolan Inc.   Instructions
1. Calculate the profit margin and gross profit rate for each company.
2. What conclusion concerning the relative profitability of the two companies can be drawn from these data?

Accepted Answer

@#IMG-DLM& 
2. Because all of Tolan's pr

Question 9

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 10

Under the periodic inventory system, cost of goods sold is treated as an account.

Accepted Answer

A) True 
 B)False

Question 11

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Accepted Answer

A)  Accounts Payable. 
B)  Purchase Returns and Allowances. 
C)  Sales Revenue. 
D)  Inventory. 
A)  Accounts Payable. 
B)  Purchase Returns and Allowances. 
C)  Sales Revenue. 
D)  Inventory.

Question 12

Under a perpetual inventory system

Accepted Answer

A)  accounting records continuously disclose the amount of inventory. 
B)  increases in inventory resulting from purchases are debited to purchases. 
C)  there is no need for a year-end physical count. 
D)  the account purchase returns and allowances is credited when goods are returned to vendors. 
A)  accounting records continuously disclose the amount of inventory. 
B)  increases in inventory resulting from purchases are debited to purchases. 
C)  there is no need for a year-end physical count. 
D)  the account purchase returns and allowances is credited when goods are returned to vendors.

Question 13

Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?

Accepted Answer

A)  $9,000 
B)  $8,820 
C)  $8,100 
D)  $8,280 
A)  $9,000 
B)  $8,820 
C)  $8,100 
D)  $8,280

Question 14

When a customer returns inventory previously purchased on credit, the entry to record the credit granted to the customer requires a debit to the ___________________ account and a credit to the ________________ account.

Accepted Answer

Sales Retu

Question 15

Erin Corporation purchases $500 of merchandise on credit. Using the periodic inventory approach, Erin would record this transaction as:

Accepted Answer

The answer of Erin Corporation purchases $500 of merchandise on...

Question 16

Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

Accepted Answer

The answer of Inventory on hand can be obtained from...

Question 17

The periodic inventory system provides an up to date amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

Sales revenues are only earned during the period cash is collected from the buyer.

Accepted Answer

A) True 
 B)False

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

The operating cycle of a merchandising company is

The periodic inventory system is used most commonly by companies that sell

The adjusted trial balance of McCoy Company included the following selected accounts: Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2014. 2. Calculate the profit margin and gross profit rate.

Inventories are defined by IFRS as

The primary difference between a periodic and perpetual inventory system is that a periodic system

A sales discount does not

The following information is available from the annual reports of Flynn Company and Tolan Inc. Instructions 1. Calculate the profit margin and gross profit rate for each company. 2. What conclusion concerning the relative profitability of the two companies can be drawn from these data?

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

Under the periodic inventory system, cost of goods sold is treated as an account.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Under a perpetual inventory system

Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?

When a customer returns inventory previously purchased on credit, the entry to record the credit granted to the customer requires a debit to the ___ account and a credit to the account.

Erin Corporation purchases $500 of merchandise on credit. Using the periodic inventory approach, Erin would record this transaction as:

Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

The periodic inventory system provides an up to date amount of inventory on hand.

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

Which statement is incorrect?

Sales revenues are only earned during the period cash is collected from the buyer.

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 and Acquisitions in Accounting

Filters

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

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

The operating cycle of a merchandising company is

The periodic inventory system is used most commonly by companies that sell

The adjusted trial balance of McCoy Company included the following selected accounts: Instructions 1. Use the above information to prepare a multiple-step income statement for the year ended December 31, 2014. 2. Calculate the profit margin and gross profit rate.

Inventories are defined by IFRS as

The primary difference between a periodic and perpetual inventory system is that a periodic system

A sales discount does not

The following information is available from the annual reports of Flynn Company and Tolan Inc. Instructions 1. Calculate the profit margin and gross profit rate for each company. 2. What conclusion concerning the relative profitability of the two companies can be drawn from these data?

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

Under the periodic inventory system, cost of goods sold is treated as an account.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Under a perpetual inventory system

Conway Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Conway Company pays within the discount period?

When a customer returns inventory previously purchased on credit, the entry to record the credit granted to the customer requires a debit to the ___________________ account and a credit to the ________________ account.

Erin Corporation purchases $500 of merchandise on credit. Using the periodic inventory approach, Erin would record this transaction as:

Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

The periodic inventory system provides an up to date amount of inventory on hand.

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

Which statement is incorrect?

Sales revenues are only earned during the period cash is collected from the buyer.

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 and Acquisitions in Accounting

Filters

When a customer returns inventory previously purchased on credit, the entry to record the credit granted to the customer requires a debit to the ___ account and a credit to the account.