Question 1

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Gross profit for a merchandiser is net sales minus

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) sales discounts. 
D) cost of goods available for sale. 
A) operating expenses. 
B) cost of goods sold. 
C) sales discounts. 
D) cost of goods available for sale.

Question 4

The gross profit rate is computed by dividing gross profit by

Accepted Answer

A) cost of goods sold. 
B) net income. 
C) net sales. 
D) sales. 
A) cost of goods sold. 
B) net income. 
C) net sales. 
D) sales.

Question 5

If a company has net sales of $500,000 and cost of goods sold of $300,000, the gross profit rate is

Accepted Answer

A) 60%. 
B) 40%. 
C) 20%. 
D) 100%. 
A) 60%. 
B) 40%. 
C) 20%. 
D) 100%.

Question 6

Sales returns and allowances is reported on the statement of financial position as a contra account to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 7

Accepted Answer

The answer of  ...

Question 8

Which of the following expressions is incorrect?

Accepted Answer

A) Gross profit - operating expenses = net income 
B) Sales - cost of goods sold - operating expenses = net income 
C) Net income + operating expenses = gross profit 
D) Operating expenses - cost of goods sold = gross profit 
A) Gross profit - operating expenses = net income 
B) Sales - cost of goods sold - operating expenses = net income 
C) Net income + operating expenses = gross profit 
D) Operating expenses - cost of goods sold = gross profit

Question 9

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

Accepted Answer

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

Question 10

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Accepted Answer

A) True 
 B)False

Question 11

Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 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 received 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 for Advanced Communications, Inc.at December 31, 2011?

Accepted Answer

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

Question 12

A merchandising company that sells directly to consumers is a

Accepted Answer

A) retailer. 
B) wholesaler. 
C) broker. 
D) service company. 
A) retailer. 
B) wholesaler. 
C) broker. 
D) service company.

Question 13

On October 4, 2011, Terry Corporation had credit sales transactions of $2,500 from merchandise having cost $1,900.The entries to record the day's credit transactions include a

Accepted Answer

A) debit of $2,500 to Merchandise Inventory. 
B) credit of $2,500 to Sales. 
C) debit of $1,900 to Merchandise Inventory. 
D) credit of $1,900 to Cost of Goods Sold. 
A) debit of $2,500 to Merchandise Inventory. 
B) credit of $2,500 to Sales. 
C) debit of $1,900 to Merchandise Inventory. 
D) credit of $1,900 to Cost of Goods Sold.

Question 14

Ball Company sells merchandise on account for ₤2,000 to Edds Company with credit terms of 2/10, n/30.Edds Company returns ₤400 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Accepted Answer

A) ₤1,960 
B) ₤1,968 
C) ₤1,600 
D) ₤1,568 
A) ₤1,960 
B) ₤1,968 
C) ₤1,600 
D) ₤1,568

Question 15

Company A sells ¥5,000 of merchandise on account to Company B with credit terms of 2/10, n/30.If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Accepted Answer

A) ¥3,500 
B) ¥4,900 
C) ¥4,500 
D) ¥4,000 
A) ¥3,500 
B) ¥4,900 
C) ¥4,500 
D) ¥4,000

Question 16

Murray's Fashions sold merchandise for $57,000 cash during the month of July.Returns that month totaled $1,200.If the company's gross profit rate is 40%, Murray's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A) $57,000 and $22,800. 
B) $55,800 and $22,320. 
C) $55,800 and $33,480. 
D) $57,000 and $33,480. 
A) $57,000 and $22,800. 
B) $55,800 and $22,320. 
C) $55,800 and $33,480. 
D) $57,000 and $33,480.

Question 17

Rowland Company reported the following balances at June 30, 2011:   Net sales for the month is

Accepted Answer

A) $16,200. 
B) $15,600. 
C) $15,300. 
D) $7,800. 
A) $16,200. 
B) $15,600. 
C) $15,300. 
D) $7,800.

Question 18

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

Accepted Answer

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

Question 19

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

Accepted Answer

A) True 
 B)False

Question 20

Cost of goods available for sale is computed by adding

Accepted Answer

A) freight-in to net purchases. 
B) beginning inventory to net purchases. 
C) beginning inventory to purchases and freight-in. 
D) beginning inventory to cost of goods purchased. 
A) freight-in to net purchases. 
B) beginning inventory to net purchases. 
C) beginning inventory to purchases and freight-in. 
D) beginning inventory to cost of goods purchased.

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

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

Gross profit for a merchandiser is net sales minus

The gross profit rate is computed by dividing gross profit by

If a company has net sales of $500,000 and cost of goods sold of $300,000, the gross profit rate is

Sales returns and allowances is reported on the statement of financial position as a contra account to cost of goods sold.

Which of the following expressions is incorrect?

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

A merchandising company that sells directly to consumers is a

On October 4, 2011, Terry Corporation had credit sales transactions of $2,500 from merchandise having cost $1,900.The entries to record the day's credit transactions include a

Ball Company sells merchandise on account for ₤2,000 to Edds Company with credit terms of 2/10, n/30.Edds Company returns ₤400 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Company A sells ¥5,000 of merchandise on account to Company B with credit terms of 2/10, n/30.If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Murray's Fashions sold merchandise for $57,000 cash during the month of July.Returns that month totaled $1,200.If the company's gross profit rate is 40%, Murray's will report monthly net sales revenue and cost of goods sold of

Rowland Company reported the following balances at June 30, 2011: Net sales for the month is

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

Cost of goods available for sale is computed by adding

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

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

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

Gross profit for a merchandiser is net sales minus

The gross profit rate is computed by dividing gross profit by

If a company has net sales of $500,000 and cost of goods sold of $300,000, the gross profit rate is

Sales returns and allowances is reported on the statement of financial position as a contra account to cost of goods sold.

Which of the following expressions is incorrect?

Mather Company made a purchase of merchandise on credit from Underwood Company on August 8, for $9,000, terms 3/10, n/30.On August 17, Mather makes the appropriate payment to Underwood.The entry on August 17 for Mather Company is:

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

A merchandising company that sells directly to consumers is a

On October 4, 2011, Terry Corporation had credit sales transactions of $2,500 from merchandise having cost $1,900.The entries to record the day's credit transactions include a

Ball Company sells merchandise on account for ₤2,000 to Edds Company with credit terms of 2/10, n/30.Edds Company returns ₤400 of merchandise that was damaged, along with a check to settle the account within the discount period.What is the amount of the check?

Company A sells ¥5,000 of merchandise on account to Company B with credit terms of 2/10, n/30.If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Murray's Fashions sold merchandise for $57,000 cash during the month of July.Returns that month totaled $1,200.If the company's gross profit rate is 40%, Murray's will report monthly net sales revenue and cost of goods sold of

Rowland Company reported the following balances at June 30, 2011: Net sales for the month is

Rasner Co.returned defective goods costing $5,000 to Markum Company on April 19, for credit.The goods were purchased April 10, on credit, terms 3/10, n/30.The entry by Rasner Co.on April 19, in receiving full credit is:

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

Cost of goods available for sale is computed by adding

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