Question 1

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

Accepted Answer

A) €308,000. 
B) €282,000. 
C) €320,000. 
D) €332,000. 
A) €308,000. 
B) €282,000. 
C) €320,000. 
D) €332,000.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Accepted Answer

A) Accounts Payable. 
B) Merchandise Inventory. 
C) Purchases. 
D) Purchase Returns and Allowances. 
A) Accounts Payable. 
B) Merchandise Inventory. 
C) Purchases. 
D) Purchase Returns and Allowances.

Question 4

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Accepted Answer

A) Purchases. 
B) Purchase Returns. 
C) Purchase Allowance. 
D) Merchandise Inventory. 
A) Purchases. 
B) Purchase Returns. 
C) Purchase Allowance. 
D) Merchandise Inventory.

Question 5

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Accepted Answer

A) a sales discount. 
B) free delivery. 
C) a sales allowance. 
D) a sales return. 
A) a sales discount. 
B) free delivery. 
C) a sales allowance. 
D) a sales return.

Question 6

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) Assets decreased by €880,000. 
B) Assets increased by €17,600. 
C) Liabilities decreased by €862,400. 
D) Liabilities decreased by €680,000. 
A) Assets decreased by €880,000. 
B) Assets increased by €17,600. 
C) Liabilities decreased by €862,400. 
D) Liabilities decreased by €680,000.

Question 7

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point.The freight costs will be paid by the

Accepted Answer

A) seller. 
B) buyer. 
C) transportation company. 
D) buyer and the seller. 
A) seller. 
B) buyer. 
C) transportation company. 
D) buyer and the seller.

Question 8

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

Accepted Answer

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

Question 9

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Advanced Communications, Inc.was dissatisfied with 25% of the merchandise it receives due to inferior quality.On December 21, 2011, Advanced Communications, Inc.returns the goods to Touch Tronix, Inc.for credit.Which of the following is true regarding the statement of financial position and the income statement for Touch Tronix, Inc.at December 31, 2011?

Accepted Answer

A) Assets will decrease by €50,000 and income will decrease by €50,000. 
B) Assets will decrease by €170,000 and income will decrease by €170,000. 
C) Assets will increase by €170,000 and income will decrease by €170,000. 
D) Assets will increase by €220,000 and income will decrease by €220,000. 
A) Assets will decrease by €50,000 and income will decrease by €50,000. 
B) Assets will decrease by €170,000 and income will decrease by €170,000. 
C) Assets will increase by €170,000 and income will decrease by €170,000. 
D) Assets will increase by €220,000 and income will decrease by €220,000.

Question 10

The Freight-in account

Accepted Answer

A) increases the cost of merchandise purchased. 
B) is contra to the Purchases account. 
C) is a permanent account. 
D) has a normal credit balance. 
A) increases the cost of merchandise purchased. 
B) is contra to the Purchases account. 
C) is a permanent account. 
D) has a normal credit balance.

Question 11

When the physical count of RNA Company inventory had a cost of $3,400 at year end and the unadjusted balance in Merchandise Inventory was $3,500, RNA will have to make the following entry:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Cole Company has sales revenue of ₤13,000, cost of goods sold of ₤8,000 and operating expenses of ₤3,000 for the year ended December 31.Cole's gross profit is

Accepted Answer

A) ₤10,000. 
B) ₤5,000. 
C) ₤2,000. 
D) ₤0. 
A) ₤10,000. 
B) ₤5,000. 
C) ₤2,000. 
D) ₤0.

Question 13

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 14

Companies using a perpetual inventory system record all credit purchases on the statement of financial position by increasing inventory and increasing liabilities.

Accepted Answer

A) True 
 B)False

Question 15

The major difference between the statement of financial position of a service company and a merchandising company is inventory.

Accepted Answer

A) True 
 B)False

Question 16

A sales invoice is a source document that

Accepted Answer

A) provides support for goods purchased for resale. 
B) provides evidence of incurred operating expenses. 
C) provides support for credit sales. 
D) serves only as a customer receipt. 
A) provides support for goods purchased for resale. 
B) provides evidence of incurred operating expenses. 
C) provides support for credit sales. 
D) serves only as a customer receipt.

Question 17

Gross profit rate is computed by dividing cost of goods sold by net sales.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a true statement about inventory systems?

Accepted Answer

A) Periodic inventory systems require more detailed inventory records. 
B) Perpetual inventory systems require more detailed inventory records. 
C) A periodic system requires cost of goods sold be determined after each sale. 
D) A perpetual system determines cost of goods sold only at the end of the accounting period. 
A) Periodic inventory systems require more detailed inventory records. 
B) Perpetual inventory systems require more detailed inventory records. 
C) A periodic system requires cost of goods sold be determined after each sale. 
D) A perpetual system determines cost of goods sold only at the end of the accounting period.

Question 19

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales 
D) Freight-out 
A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales 
D) Freight-out

Question 20

Financial information is presented below:   Gross profit would be

Accepted Answer

A) €154,000. 
B) €128,000. 
C) €140,000. 
D) €166,000. 
A) €154,000. 
B) €128,000. 
C) €140,000. 
D) €166,000.

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

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

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point.The freight costs will be paid by the

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

The Freight-in account

When the physical count of RNA Company inventory had a cost of $3,400 at year end and the unadjusted balance in Merchandise Inventory was $3,500, RNA will have to make the following entry:

Cole Company has sales revenue of ₤13,000, cost of goods sold of ₤8,000 and operating expenses of ₤3,000 for the year ended December 31.Cole's gross profit is

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

Companies using a perpetual inventory system record all credit purchases on the statement of financial position by increasing inventory and increasing liabilities.

The major difference between the statement of financial position of a service company and a merchandising company is inventory.

A sales invoice is a source document that

Gross profit rate is computed by dividing cost of goods sold by net sales.

Which of the following is a true statement about inventory systems?

Which of the following accounts has a normal credit balance?

Financial information is presented below: Gross profit would be

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

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

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

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point.The freight costs will be paid by the

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

The Freight-in account

When the physical count of RNA Company inventory had a cost of $3,400 at year end and the unadjusted balance in Merchandise Inventory was $3,500, RNA will have to make the following entry:

Cole Company has sales revenue of ₤13,000, cost of goods sold of ₤8,000 and operating expenses of ₤3,000 for the year ended December 31.Cole's gross profit is

On July 9, Neal Company sells goods on credit to Al Dolan for $4,000, terms 1/10, n/60.Neal receives payment on July 18.The entry by Neal on July 18 is:

Companies using a perpetual inventory system record all credit purchases on the statement of financial position by increasing inventory and increasing liabilities.

The major difference between the statement of financial position of a service company and a merchandising company is inventory.

A sales invoice is a source document that

Gross profit rate is computed by dividing cost of goods sold by net sales.

Which of the following is a true statement about inventory systems?

Which of the following accounts has a normal credit balance?

Financial information is presented below: Gross profit would be

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