Question 1

The Sales Returns and Allowances account is classified as a(n)

Accepted Answer

A) asset account. 
B) contra asset account. 
C) expense account. 
D) contra revenue account. 
A) asset account. 
B) contra asset account. 
C) expense account. 
D) contra revenue account.

Question 2

Two categories of expenses for 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) sales 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) sales and cost of goods sold.

Question 3

When the buyer pays an invoice within the discount period, the amount of the discount increases the merchandise inventory account reported on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 4

Sampson Company's accounting records show the following at the year ending on December 31, 2011:   Using the periodic system, the cost of goods sold is

Accepted Answer

A) ₤301,665. 
B) ₤298,365. 
C) ₤285,765. 
D) ₤314,265. 
A) ₤301,665. 
B) ₤298,365. 
C) ₤285,765. 
D) ₤314,265.

Question 5

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Accepted Answer

A) True 
 B)False

Question 6

Freight terms of FOB Destination means that the seller pays the freight costs.

Accepted Answer

A) True 
 B)False

Question 7

In terms of liquidity, merchandise inventory is

Accepted Answer

A) more liquid than cash. 
B) more liquid than accounts receivable. 
C) more liquid than prepaid expenses. 
D) less liquid than store equipment. 
A) more liquid than cash. 
B) more liquid than accounts receivable. 
C) more liquid than prepaid expenses. 
D) less liquid than store equipment.

Question 8

Net sales is sales less

Accepted Answer

A) sales discounts. 
B) sales returns. 
C) sales returns and allowances. 
D) sales discounts and sales returns and allowances. 
A) sales discounts. 
B) sales returns. 
C) sales returns and allowances. 
D) sales discounts and sales returns and allowances.

Question 9

In the statement of financial position, ending merchandise inventory is reported

Accepted Answer

A) in current assets immediately following prepaid expenses. 
B) in current assets immediately following accounts receivable. 
C) in current assets immediately following cash. 
D) under property, plant, and equipment. 
A) in current assets immediately following prepaid expenses. 
B) in current assets immediately following accounts receivable. 
C) in current assets immediately following cash. 
D) under property, plant, and equipment.

Question 10

Powers Company has the following account balances:   The cost of goods purchased for the period is

Accepted Answer

A) $78,000. 
B) $70,500. 
C) $76,500. 
D) $66,900. 
A) $78,000. 
B) $70,500. 
C) $76,500. 
D) $66,900.

Question 11

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Accepted Answer

A) Magnitude. 
B) Nature. 
C) Position. 
D) Classification. 
A) Magnitude. 
B) Nature. 
C) Position. 
D) Classification.

Question 12

During August, 2011, Joe's Supply Store generated revenues of $60,000.The company's expenses were as follows: cost of goods sold of $24,000 and operating expenses of $4,000.The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Joe's net income for August, 2011 is

Accepted Answer

A) $36,000. 
B) $35,000. 
C) $33,000. 
D) $32,000. 
A) $36,000. 
B) $35,000. 
C) $33,000. 
D) $32,000.

Question 13

Net purchases plus freight-in determines

Accepted Answer

A) cost of goods sold. 
B) cost of goods available for sale. 
C) cost of goods purchased. 
D) total goods available for sale. 
A) cost of goods sold. 
B) cost of goods available for sale. 
C) cost of goods purchased. 
D) total goods available for sale.

Question 14

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

Accepted Answer

A) Accounts Payable. 
B) Merchandise Inventory. 
C) Purchase Discounts. 
D) Sales Discounts. 
A) Accounts Payable. 
B) Merchandise Inventory. 
C) Purchase Discounts. 
D) Sales Discounts.

Question 15

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.On December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Terms of the sale were 2/10, net 30.On December 18, 2011, Advanced Communications, Inc.paid the account in full.Advanced Communications, Inc.uses a perpetual inventory system.Which of the following is true regarding the impact on the statement of financial position for Advanced Communications, Inc.when the payment is made on December 18, 2011?

Accepted Answer

A) Cash decreased by €666,400. 
B) Inventory decreased by €13,600. 
C) Accounts payable decreases by €680,000. 
D) Inventory decreased by €17,600. 
A) Cash decreased by €666,400. 
B) Inventory decreased by €13,600. 
C) Accounts payable decreases by €680,000. 
D) Inventory decreased by €17,600.

Question 16

The steps in the accounting cycle are different for a merchandising company than for a service company.

Accepted Answer

A) True 
 B)False

Question 17

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A) the customer must pay the bill within 10 days. 
B) the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C) the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D) two sales returns can be made within 10 days of the invoice date and no returns thereafter. 
A) the customer must pay the bill within 10 days. 
B) the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C) the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D) two sales returns can be made within 10 days of the invoice date and no returns thereafter.

Question 18

Global Care uses a perpetual inventory system and purchased wheelchairs under terms FOB destination.The freight charges associated with the wheelchairs will be added to the inventory account on Global Care's statement of financial position.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following accounts is not closed to Income Summary?

Accepted Answer

A) Cost of Goods Sold 
B) Merchandise Inventory 
C) Sales 
D) Sales Discounts 
A) Cost of Goods Sold 
B) Merchandise Inventory 
C) Sales 
D) Sales Discounts

Question 20

Stan's Market recorded the following events involving a recent purchase of merchandise:   As a result of these events, the company's merchandise inventory

Accepted Answer

A) increased by $19,208. 
B) increased by $19,700. 
C) increased by $19,306. 
D) increased by $19,308. 
A) increased by $19,208. 
B) increased by $19,700. 
C) increased by $19,306. 
D) increased by $19,308.

The Sales Returns and Allowances account is classified as a(n)

Two categories of expenses for merchandising companies are

When the buyer pays an invoice within the discount period, the amount of the discount increases the merchandise inventory account reported on the statement of financial position.

Sampson Company's accounting records show the following at the year ending on December 31, 2011: Using the periodic system, the cost of goods sold is

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Freight terms of FOB Destination means that the seller pays the freight costs.

In terms of liquidity, merchandise inventory is

Net sales is sales less

In the statement of financial position, ending merchandise inventory is reported

Powers Company has the following account balances: The cost of goods purchased for the period is

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Net purchases plus freight-in determines

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

The steps in the accounting cycle are different for a merchandising company than for a service company.

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Global Care uses a perpetual inventory system and purchased wheelchairs under terms FOB destination.The freight charges associated with the wheelchairs will be added to the inventory account on Global Care's statement of financial position.

Which of the following accounts is not closed to Income Summary?

Stan's Market recorded the following events involving a recent purchase of merchandise: As a result of these events, the company's merchandise inventory

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters

Exam 5: Accounting for Merchandising Operations

The Sales Returns and Allowances account is classified as a(n)

Two categories of expenses for merchandising companies are

When the buyer pays an invoice within the discount period, the amount of the discount increases the merchandise inventory account reported on the statement of financial position.

Sampson Company's accounting records show the following at the year ending on December 31, 2011: Using the periodic system, the cost of goods sold is

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Freight terms of FOB Destination means that the seller pays the freight costs.

In terms of liquidity, merchandise inventory is

Net sales is sales less

In the statement of financial position, ending merchandise inventory is reported

Powers Company has the following account balances: The cost of goods purchased for the period is

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Net purchases plus freight-in determines

A buyer would record a payment within the discount period under a perpetual inventory system by crediting

The steps in the accounting cycle are different for a merchandising company than for a service company.

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Global Care uses a perpetual inventory system and purchased wheelchairs under terms FOB destination.The freight charges associated with the wheelchairs will be added to the inventory account on Global Care's statement of financial position.

Which of the following accounts is not closed to Income Summary?

Stan's Market recorded the following events involving a recent purchase of merchandise: As a result of these events, the company's merchandise inventory

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters