Question 1

Under GAAP, income statement items are generally described as

Accepted Answer

A) administration, distribution, manufacturing, etc. 
B) salaries, depreciation, utilities, etc. 
C) administration, depreciation, manufacturing, etc. 
D) salaries, distribution, utilities, etc.
IFRS. 
A) administration, distribution, manufacturing, etc. 
B) salaries, depreciation, utilities, etc. 
C) administration, depreciation, manufacturing, etc. 
D) salaries, distribution, utilities, etc.
IFRS.

Question 2

During August 2022, Baxter's Supply Store generated revenues of $60,000.The company's expenses were as follows: cost of goods sold of $36,000 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. Baxter's net income for August 2022 is

Accepted Answer

A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000. 
A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000.

Question 3

Which of the following is not a true statement about a multiple-step income statement?

Accepted Answer

A) Operating expenses are similar for merchandising and service enterprises. 
B) There may be a section for non-operating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold. 
A) Operating expenses are similar for merchandising and service enterprises. 
B) There may be a section for non-operating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold.

Question 4

The sales revenue section of an income statement for a retailer would not include

Accepted Answer

A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold. 
A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold.

Question 5

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Accepted Answer

A) True 
 B)False

Question 6

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Accepted Answer

A) True 
 B)False

Question 7

Income from operations will always result if

Accepted Answer

A) the cost of goods sold exceeds operating expenses. 
B) revenues exceed cost of goods sold. 
C) revenues exceed operating expenses. 
D) gross profit exceeds operating expenses. 
A) the cost of goods sold exceeds operating expenses. 
B) revenues exceed cost of goods sold. 
C) revenues exceed operating expenses. 
D) gross profit exceeds operating expenses.

Question 8

Cost of goods sold is determined only at the end of the accounting period in

Accepted Answer

A) a perpetual inventory system. 
B) a periodic inventory system. 
C) both a perpetual and a periodic inventory system. 
D) neither a perpetual nor a periodic inventory system. 
A) a perpetual inventory system. 
B) a periodic inventory system. 
C) both a perpetual and a periodic inventory system. 
D) neither a perpetual nor a periodic inventory system.

Question 9

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Glenn Company pays within the discount period?

Accepted Answer

A) $8,100 
B) $8,280 
C) $8,820 
D) $9,000 
A) $8,100 
B) $8,280 
C) $8,820 
D) $9,000

Question 10

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A) discount. 
B) return. 
C) contra asset. 
D) allowance. 
A) discount. 
B) return. 
C) contra asset. 
D) allowance.

Question 11

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

Accepted Answer

A) True 
 B)False

Question 12

In the balance sheet, ending inventory is reported

Accepted Answer

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

Question 13

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000.The gross profit rate was

Accepted Answer

A) 36%. 
B) 37.5%. 
C) 40%. 
D) 41.7%. 
A) 36%. 
B) 37.5%. 
C) 40%. 
D) 41.7%.

Question 14

Hoyt Company provides this information for the month of November 2022: sales on credit $170,000; cash sales $70,000; sales discounts $2,000; and sales returns and allowances $9,000.Prepare the sales revenues section of the income statement based on this information.

Accepted Answer

The answer of Hoyt Company provides this information for the...

Question 15

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

Accepted Answer

Question 16

Arquette Company's financial information is presented below.

Accepted Answer

Question 17

The multiple-step form of income statement is easier to read than the single-step form.

Accepted Answer

A) True 
 B)False

Question 18

In a worksheet for a merchandising company, Inventory would appear in the

Accepted Answer

A) trial balance and adjusted trial balance columns only. 
B) trial balance and balance sheet columns only. 
C) trial balance, adjusted trial balance, and balance sheet columns. 
D) trial balance, adjusted trial balance, and income statement columns. 
A) trial balance and adjusted trial balance columns only. 
B) trial balance and balance sheet columns only. 
C) trial balance, adjusted trial balance, and balance sheet columns. 
D) trial balance, adjusted trial balance, and income statement columns.

Question 19

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28.What amount is received as payment in full on May 4?

Accepted Answer

A) $3,675 
B) $3,750 
C) $3,920 
D) $4,000 
A) $3,675 
B) $3,750 
C) $3,920 
D) $4,000

Question 20

Which of the following expressions is incorrect?

Accepted Answer

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

Under GAAP, income statement items are generally described as

Which of the following is not a true statement about a multiple-step income statement?

The sales revenue section of an income statement for a retailer would not include

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Income from operations will always result if

Cost of goods sold is determined only at the end of the accounting period in

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Glenn Company pays within the discount period?

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

In the balance sheet, ending inventory is reported

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000.The gross profit rate was

Hoyt Company provides this information for the month of November 2022: sales on credit $170,000; cash sales $70,000; sales discounts $2,000; and sales returns and allowances $9,000.Prepare the sales revenues section of the income statement based on this information.

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

Arquette Company's financial information is presented below.

The multiple-step form of income statement is easier to read than the single-step form.

In a worksheet for a merchandising company, Inventory would appear in the

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28.What amount is received as payment in full on May 4?

Which of the following expressions is incorrect?

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

Under GAAP, income statement items are generally described as

Which of the following is not a true statement about a multiple-step income statement?

The sales revenue section of an income statement for a retailer would not include

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Income from operations will always result if

Cost of goods sold is determined only at the end of the accounting period in

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30.What is the net cost of the goods if Glenn Company pays within the discount period?

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

A merchandising company using a perpetual inventory system will usually need to make an adjusting entry to ensure that the recorded inventory agrees with physical inventory count.

In the balance sheet, ending inventory is reported

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000.The gross profit rate was

Hoyt Company provides this information for the month of November 2022: sales on credit $170,000; cash sales $70,000; sales discounts $2,000; and sales returns and allowances $9,000.Prepare the sales revenues section of the income statement based on this information.

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

Arquette Company's financial information is presented below.

The multiple-step form of income statement is easier to read than the single-step form.

In a worksheet for a merchandising company, Inventory would appear in the

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28.What amount is received as payment in full on May 4?

Which of the following expressions is incorrect?

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