Question 1

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

Accepted Answer

A) Gross profit 
B) Operating expenses 
C) Sales revenues 
D) Cost of goods sold 
A) Gross profit 
B) Operating expenses 
C) Sales revenues 
D) Cost of goods sold

Question 2

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18.What amount is received as payment in full on July 24?

Accepted Answer

A) $3,332 
B) $3,440 
C) $3,528 
D) $3,600 
A) $3,332 
B) $3,440 
C) $3,528 
D) $3,600

Question 3

Net sales appears on both the multiple-step and single-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) $290,000. 
B) $302,000. 
C) $308,000. 
D) $320,000. 
A) $290,000. 
B) $302,000. 
C) $308,000. 
D) $320,000.

Question 5

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

Accepted Answer

A) sales revenue. 
B) inventory. 
C) sales discounts. 
D) freight-out. 
A) sales revenue. 
B) inventory. 
C) sales discounts. 
D) freight-out.

Question 6

A periodic inventory system requires a detailed inventory record of inventory items.

Accepted Answer

A) True 
 B)False

Question 7

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $30,000. 
B) $90,000. 
C) $165,000. 
D) $225,000. 
A) $30,000. 
B) $90,000. 
C) $165,000. 
D) $225,000.

Question 8

The collection of a $1,000 account after the 2 percent discount period will result in a

Accepted Answer

A) debit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) credit to Cash for $1,000. 
D) debit to Sales Discounts for $20. 
A) debit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) credit to Cash for $1,000. 
D) debit to Sales Discounts for $20.

Question 9

A merchandising company has different types of adjusting entries than a service company.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Purchases 
B) Sales Returns and Allowances 
C) Freight-In 
D) Purchase Discounts 
A) Purchases 
B) Sales Returns and Allowances 
C) Freight-In 
D) Purchase Discounts

Question 11

The Sales Returns and Allowances account does not provide information to management about

Accepted Answer

A) possible inferior merchandise. 
B) the percentage of credit sales versus cash sales. 
C) inefficiencies in filling orders. 
D) errors in overbilling customers. 
A) possible inferior merchandise. 
B) the percentage of credit sales versus cash sales. 
C) inefficiencies in filling orders. 
D) errors in overbilling customers.

Question 12

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

Accepted Answer

Question 13

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

Accepted Answer

A) sales discounts. 
B) free delivery. 
C) sales allowances. 
D) sales returns. 
A) sales discounts. 
B) free delivery. 
C) sales allowances. 
D) sales returns.

Question 14

Sales revenue

Accepted Answer

A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected. 
A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected.

Question 15

A merchandising company using a perpetual system will likely make

Accepted Answer

A) the same number of adjusting entries as a service company does. 
B) one more adjusting entry than a service company does. 
C) one less adjusting entry than a service company does. 
D) different types of adjusting entries compared to a service company. 
A) the same number of adjusting entries as a service company does. 
B) one more adjusting entry than a service company does. 
C) one less adjusting entry than a service company does. 
D) different types of adjusting entries compared to a service company.

Question 16

Operating expenses are different for merchandising and service enterprises.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

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 19

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31.Ezra's gross profit is

Accepted Answer

A) $0. 
B) $10,000. 
C) $24,000. 
D) $46,000. 
A) $0. 
B) $10,000. 
C) $24,000. 
D) $46,000.

Question 20

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

Accepted Answer

A) True 
 B)False

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18.What amount is received as payment in full on July 24?

Net sales appears on both the multiple-step and single-step forms of an income statement.

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

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

A periodic inventory system requires a detailed inventory record of inventory items.

Financial information is presented below: Gross profit would be

The collection of a $1,000 account after the 2 percent discount period will result in a

A merchandising company has different types of adjusting entries than a service company.

Which of the following accounts has a normal credit balance?

The Sales Returns and Allowances account does not provide information to management about

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

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

Sales revenue

A merchandising company using a perpetual system will likely make

Operating expenses are different for merchandising and service enterprises.

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

The Freight-In account

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31.Ezra's gross profit is

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

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: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters

Exam 5: Accounting for Merchandising Operations

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18.What amount is received as payment in full on July 24?

Net sales appears on both the multiple-step and single-step forms of an income statement.

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

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

A periodic inventory system requires a detailed inventory record of inventory items.

Financial information is presented below: Gross profit would be

The collection of a $1,000 account after the 2 percent discount period will result in a

A merchandising company has different types of adjusting entries than a service company.

Which of the following accounts has a normal credit balance?

The Sales Returns and Allowances account does not provide information to management about

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

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

Sales revenue

A merchandising company using a perpetual system will likely make

Operating expenses are different for merchandising and service enterprises.

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

The Freight-In account

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31.Ezra's gross profit is

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

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: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters