Question 1

Cost of goods sold plus ending inventory equals:

Accepted Answer

A) net purchases. 
B) cost of goods available for sale. 
C) gross margin. 
D) gross profit. 
A) net purchases. 
B) cost of goods available for sale. 
C) gross margin. 
D) gross profit.

Question 2

When the seller accepts a return of goods from the purchaser originally sold on account, the seller's journal entry would include a debit to:

Accepted Answer

A) Sales Discounts and credit to Cash. 
B) Sales Returns and Allowances and credit to Accounts Receivable. 
C) Sales Returns and Allowances and credit to Sales Discounts. 
D) Sales Revenue and credit to Cash. 
A) Sales Discounts and credit to Cash. 
B) Sales Returns and Allowances and credit to Accounts Receivable. 
C) Sales Returns and Allowances and credit to Sales Discounts. 
D) Sales Revenue and credit to Cash.

Question 3

In a periodic inventory system, when a company returns merchandise previously purchased on account, the entry to record the return would include a:

Accepted Answer

A) debit to Inventory. 
B) credit to Purchase Returns and Allowances. 
C) debit to Sales Returns and Allowances. 
D) credit to Accounts Payable. 
A) debit to Inventory. 
B) credit to Purchase Returns and Allowances. 
C) debit to Sales Returns and Allowances. 
D) credit to Accounts Payable.

Question 4

Table 5-3 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 750,000 \
\hline \text { Interest revenue } & 18,000 \
\hline \text { Freight in } & 44,000 \
\hline \text { Beginning inventory } & 75,000 \
\hline \text { Purchases discounts } & 20,000 \
\hline \text { Sales reburns and allowances } & 44,000 \
\hline \text { Operating expenses } & 99,000 \
\hline \text { Interest expense } & 15,000 \
\hline \text { Ending inventory } & 72,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 25,000 \
\hline \text { William Browning, Withdrawals } & 61,000 \
\hline \text { Purchase returns and allowances } & 36,000 \
\hline
\end{array}$$
-Refer to Table 5-3. Net sales is:

Accepted Answer

A) $681,000. 
B) $750,000. 
C) $725,000. 
D) $706,000. 
A) $681,000. 
B) $750,000. 
C) $725,000. 
D) $706,000.

Question 5

The entries to record a $5,000 cash sale under a perpetual inventory system, when the cost of the merchandise is $3,200, include a:

Accepted Answer

A) debit to Inventory for $5,000. 
B) debit to Sales Revenue for $5,000. 
C) credit to Cost of Goods Sold for $3,200. 
D) debit to Cost of Goods Sold for $3,200. 
A) debit to Inventory for $5,000. 
B) debit to Sales Revenue for $5,000. 
C) credit to Cost of Goods Sold for $3,200. 
D) debit to Cost of Goods Sold for $3,200.

Question 6

In a periodic inventory system, purchases of inventory are debited to an account titled Purchases.

Accepted Answer

A) True 
 B)False

Question 7

If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:

Accepted Answer

A) Inventory and credit to Cash for $200. 
B) Accounts Payable and credit to Inventory for $200. 
C) Inventory and credit to Purchases Discounts for $200. 
D) Purchases Discounts and credit to Inventory for $200. 
A) Inventory and credit to Cash for $200. 
B) Accounts Payable and credit to Inventory for $200. 
C) Inventory and credit to Purchases Discounts for $200. 
D) Purchases Discounts and credit to Inventory for $200.

Question 8

Under a periodic inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:

Accepted Answer

A) credit to Accounts Receivable for $250. 
B) debit to Sales Returns and Allowances for $185. 
C) credit to Sales Revenue for $250. 
D) credit to Cost of Goods Sold for $185. 
A) credit to Accounts Receivable for $250. 
B) debit to Sales Returns and Allowances for $185. 
C) credit to Sales Revenue for $250. 
D) credit to Cost of Goods Sold for $185.

Question 9

If a purchaser returns goods purchased on account to the supplier under a periodic inventory system, the purchaser would debit:

Accepted Answer

A) Inventory and credit Accounts Payable. 
B) Accounts Payable and credit Inventory. 
C) Inventory and credit Accounts Receivable. 
D) Accounts Payable and credit Purchase Returns. 
A) Inventory and credit Accounts Payable. 
B) Accounts Payable and credit Inventory. 
C) Inventory and credit Accounts Receivable. 
D) Accounts Payable and credit Purchase Returns.

Question 10

Table 5-1 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 480,000 \
\hline \text { Cost of goods sold } & 300,000 \
\hline \text { Sales discounts } & 20,000 \
\hline \text { Sales retums and allowances } & 15,000 \
\hline \text { Operating expenses } & 85,000 \
\hline \text { Interest revenue } & 5,000 \
\hline
\end{array}$$
-Referring to Table 5-1, what is the income from operations?

Accepted Answer

A) $20,000 
B) $55,000 
C) $60,000 
D) $190,000 
A) $20,000 
B) $55,000 
C) $60,000 
D) $190,000

Question 11

The entries to record a $5,000 cash sale under a periodic inventory system, when the cost of the merchandise is $3,200, include a:

Accepted Answer

A) debit to Inventory for $5,000. 
B) credit to Sales Revenue for $5,000. 
C) debit to Cost of Goods Sold for $3,200. 
D) debit to Accounts Receivable for $5,000. 
A) debit to Inventory for $5,000. 
B) credit to Sales Revenue for $5,000. 
C) debit to Cost of Goods Sold for $3,200. 
D) debit to Accounts Receivable for $5,000.

Question 12

Inventory turnover does not affect profitability but does affect the amount of inventory on the shelf.

Accepted Answer

A) True 
 B)False

Question 13

Avery Supplies uses a periodic inventory system. Avery purchased $10,000 of inventory on account. The terms were 3/10, n/30. The purchase was made on February 1. Avery paid the supplier on February 9. Which of the following journal entries properly records this payment transaction?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 9,700 & \
\hline \text { Cash } & & 9,700 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 9,700 & \
\hline \text { Purchase Discounts } & 300 & \
\hline \text { Purchases } & & 10,000 \
\hline
\end{array}$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 10,000 & \
\hline \text { Cash } & & 9,700 \
\hline \text { Purchase Discounts } & & 300 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 10,000 & \
\hline \text { Cash } & & 10,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 9,700 & \
\hline \text { Cash } & & 9,700 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 9,700 & \
\hline \text { Purchase Discounts } & 300 & \
\hline \text { Purchases } & & 10,000 \
\hline
\end{array}$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 10,000 & \
\hline \text { Cash } & & 9,700 \
\hline \text { Purchase Discounts } & & 300 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 10,000 & \
\hline \text { Cash } & & 10,000 \
\hline
\end{array}$$

Question 14

In a purchase discount, the larger the quantity of merchandise purchased, the lower the price per item.

Accepted Answer

A) True 
 B)False

Question 15

In a periodic inventory system, the closing entries include a debit to the Inventory account in an amount that equals the ending inventory, and a credit to the Inventory account in an amount that equals the beginning inventory.

Accepted Answer

A) True 
 B)False

Question 16

Table 5-10
 $\text {Sunni Brown operates a business supplying hairstyling products (Sunni's Hairstyling}$
$\text { Products) to hair salons in downtown Halifax. She offers her clients' terms of $2 / 10 , n / 30$}$
$\text { on all sales and she uses a perpetual inventory system to account for her inventory.}$
$\text { Transactions in the month of July were as follows:}$ July  $\quad $1 Purchased $\$ 24,000$ of inventory on credit $1 / 5 , n / 15$, FOB shipping point.
 $\quad $ $\quad $2 Paid the shipping fee of $\$ 500$ for the July 1st purchase.
 $\quad $ $\quad $5 Purchased supplies on credit for $\$ 350 , \mathrm { n } / 30$.
 $\quad $ $\quad $8 Sold inventory on credit to a customer for $\$ 5,600$ (cost $\$ 3,100$ ).
 $\quad $ $\quad $Sold inventory on credit to a customer for $\$ 12,300$ less a quantity discount of
 $\quad $ $\quad $$1210 \%$ (cost $\$ 6,930 )$
 $\quad $ $\quad $12 Purchased $\$ 6,500$ of inventory on credit $2 / 10$, n/30, FOB destination.
 $\quad $ $\quad $15 Returned $\$ 1,000$ of defective merchandise from the July 1st purchase
 $\quad $ $\quad $16 Paid for the July 1st purchase less the return.
 $\quad $ $\quad $18 Received payment from the sale on July 8th.
 $\quad $ $\quad $22 Received payment from the sale on July 12 th.
 $\quad $ $\quad $25 Paid the July utility bill, $\$ 250$.
 $\quad $ $\quad $30 Paid emp loyee's salary $\$ 2,200$.
-Refer to Table 5-10. Record the July transactions in the general journal.

Accepted Answer

The answer of Table 5-10
 \(\text {Sunni Brown operates a...

Question 17

Inventory turnover is calculated as:

Accepted Answer

A) cost of goods sold divided by average inventory. 
B) cost of goods sold minus average inventory. 
C) cost of goods sold times average inventory. 
D) average inventory divided by cost of goods sold. 
A) cost of goods sold divided by average inventory. 
B) cost of goods sold minus average inventory. 
C) cost of goods sold times average inventory. 
D) average inventory divided by cost of goods sold.

Question 18

Sales discounts is a contra account and has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 19

Under a perpetual inventory system, the entry to record the cost of goods sold would include a debit to:

Accepted Answer

A) Cost of Goods Sold and a credit to Inventory for the retail price of the inventory. 
B) Inventory and a credit to Sales Revenue for the retail price of the inventory. 
C) Cost of Goods Sold and a credit to Inventory for the cost of the inventory. 
D) Inventory and a credit to Cost of Goods Sold for the cost of the inventory. 
A) Cost of Goods Sold and a credit to Inventory for the retail price of the inventory. 
B) Inventory and a credit to Sales Revenue for the retail price of the inventory. 
C) Cost of Goods Sold and a credit to Inventory for the cost of the inventory. 
D) Inventory and a credit to Cost of Goods Sold for the cost of the inventory.

Question 20

The following refers to periodic inventory: $$\begin{array} { | l | r | } 
\hline \text { Net sales } & \$ 198,000 \
\hline \text { Purchases } & 92,000 \
\hline \text { Purchases returns and allowances } & 1,800 \
\hline \text { Purchases discounts } & 1,250 \
\hline \text { Freight in } & 1,590 \
\hline \text { Beginning merchandise inventory } & 63,000 \
\hline \text { Ending merchandise inventory } & 37,000 \
\hline
\end{array}$$ Compute cost of goods sold.

Accepted Answer

A) $116,540 
B) $81,460 
C) $114,950 
D) $53,540 
A) $116,540 
B) $81,460 
C) $114,950 
D) $53,540

Cost of goods sold plus ending inventory equals:

When the seller accepts a return of goods from the purchaser originally sold on account, the seller's journal entry would include a debit to:

In a periodic inventory system, when a company returns merchandise previously purchased on account, the entry to record the return would include a:

The entries to record a $5,000 cash sale under a perpetual inventory system, when the cost of the merchandise is $3,200, include a:

In a periodic inventory system, purchases of inventory are debited to an account titled Purchases.

If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:

Under a periodic inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:

If a purchaser returns goods purchased on account to the supplier under a periodic inventory system, the purchaser would debit:

Table 5-1 Sales revenue \ 480,000 Cost of goods sold 300,000 Sales discounts 20,000 Sales retums and allowances 15,000 Operating expenses 85,000 Interest revenue 5,000 -Referring to Table 5-1, what is the income from operations?

The entries to record a $5,000 cash sale under a periodic inventory system, when the cost of the merchandise is $3,200, include a:

Inventory turnover does not affect profitability but does affect the amount of inventory on the shelf.

Avery Supplies uses a periodic inventory system. Avery purchased $10,000 of inventory on account. The terms were 3/10, n/30. The purchase was made on February 1. Avery paid the supplier on February 9. Which of the following journal entries properly records this payment transaction?

In a purchase discount, the larger the quantity of merchandise purchased, the lower the price per item.

In a periodic inventory system, the closing entries include a debit to the Inventory account in an amount that equals the ending inventory, and a credit to the Inventory account in an amount that equals the beginning inventory.

Inventory turnover is calculated as:

Sales discounts is a contra account and has a normal credit balance.

Under a perpetual inventory system, the entry to record the cost of goods sold would include a debit to:

The following refers to periodic inventory: Net sales \ 198,000 Purchases 92,000 Purchases returns and allowances 1,800 Purchases discounts 1,250 Freight in 1,590 Beginning merchandise inventory 63,000 Ending merchandise inventory 37,000 Compute cost of goods sold.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters

Exam 5: Merchandising Operations and the Accounting Cycle

Cost of goods sold plus ending inventory equals:

When the seller accepts a return of goods from the purchaser originally sold on account, the seller's journal entry would include a debit to:

In a periodic inventory system, when a company returns merchandise previously purchased on account, the entry to record the return would include a:

The entries to record a $5,000 cash sale under a perpetual inventory system, when the cost of the merchandise is $3,200, include a:

In a periodic inventory system, purchases of inventory are debited to an account titled Purchases.

If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:

Under a periodic inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:

If a purchaser returns goods purchased on account to the supplier under a periodic inventory system, the purchaser would debit:

Table 5-1 Sales revenue \ 480,000 Cost of goods sold 300,000 Sales discounts 20,000 Sales retums and allowances 15,000 Operating expenses 85,000 Interest revenue 5,000 -Referring to Table 5-1, what is the income from operations?

The entries to record a $5,000 cash sale under a periodic inventory system, when the cost of the merchandise is $3,200, include a:

Inventory turnover does not affect profitability but does affect the amount of inventory on the shelf.

Avery Supplies uses a periodic inventory system. Avery purchased $10,000 of inventory on account. The terms were 3/10, n/30. The purchase was made on February 1. Avery paid the supplier on February 9. Which of the following journal entries properly records this payment transaction?

In a purchase discount, the larger the quantity of merchandise purchased, the lower the price per item.

In a periodic inventory system, the closing entries include a debit to the Inventory account in an amount that equals the ending inventory, and a credit to the Inventory account in an amount that equals the beginning inventory.

Inventory turnover is calculated as:

Sales discounts is a contra account and has a normal credit balance.

Under a perpetual inventory system, the entry to record the cost of goods sold would include a debit to:

The following refers to periodic inventory: Net sales \ 198,000 Purchases 92,000 Purchases returns and allowances 1,800 Purchases discounts 1,250 Freight in 1,590 Beginning merchandise inventory 63,000 Ending merchandise inventory 37,000 Compute cost of goods sold.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters