Exam 6: Internal Control and Financial Reporting for Cash and Merchandising Operations

Etcetera Clothing sold merchandise inventory on account at a price of $16,000 with payment terms of 2/10,n/30.The merchandise cost Etcetera Clothing $11,000.If the customer paid for the merchandise 5 days after receiving the invoice,how much cash was collected by Etcetera Clothing?

When a periodic inventory system is in use,the Inventory account is updated only at the end of the period.

Which of the following is a merchandising company?

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. -Use the information above to answer the following question.Net income would be:

In a perpetual inventory system,paying transportation charges on goods purchased FOB shipping point would have which of the following effects?

In a periodic inventory system,the cost of goods sold is recorded as each sale occurs.

The journal entry to record the payment within the discount period for goods previously purchased on account causes:

Using a perpetual inventory system,what is the correct journal entry when a customer returns a product that was purchased on account?

Beyer Company bought inventory from Sellar Company,FOB destination.On December 31,the last day of the accounting year,the goods were on a truck owned by Common Carrier,Inc.,and not expected to arrive until January 2.Which company should include these goods in its December 31 inventory?

Multistep income statements:

A company that purchases inventory for $10,000 with terms 2/10,n/30.It then returns $2,000 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $100.The company pays the amount due within the discount period.What is the amount of the discount that will be taken?

Multiple-step income statements:?

Choose the appropriate letter to match the term and the definition.There are more definitions than terms. Term 1.____ Inventory 2.____ Purchase Discount 3.____ Purchase Returns and Allowances 4.____ Sales Discount 5.____ Sales Returns & Allowances 6.____ Shrinkage Definition A.The sum of beginning inventory and purchases for the period. B.The cost of inventory lost to theft,fraud,and error. C.A reduction in the cost of inventory purchases associated with unsatisfactory goods. D.A cash discount received for prompt payment of a purchase on account. E.Refunds and price reductions given to customers after goods have been sold and found unsatisfactory. F.Assets acquired for resale to customers. G.A sales price reduction given to customers for prompt payment of their account balance. H.Presents important subtotals,such as gross profit,to help distinguish core operating results from other,less significant items that affect net income. I.Net sales minus cost of goods sold.It is a subtotal,not an account. J.A ratio indicating the percentage of profit earned on each dollar of sales,after considering the cost of products sold.

A company sells goods at a selling price of $20,000.The cost of the goods is $15,000.Under a perpetual inventory system,the journal entries prepared to record the sale will include one with a debit to:

FAD Company uses a periodic inventory system and its inventory records for the period contain the following information: -Use the information above to answer the following question.What is the amount of cost of goods available for sale?

Thompson Company had beginning inventory of $6,000,cost of goods sold of $14,000,and ending inventory of $8,000.Purchases were:

Merchandisers record revenue when they:

The following is a listing of some of the balance sheet accounts and all of the income statement accounts for Aldine Inc.as they appear on the company's adjusted trial balance. -Use the information above to answer the following question.The gross profit percentage would be closest to:

Which of the following is an activity in the operations of a manufacturer,but not in the operations of a merchandising or service company?

On October 1,Robertson Company sold inventory in the amount of $5,800 to Alberta,Inc.with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Robertson uses a periodic inventory system.The journal entry (or entries)prepared by Robertson on October 1 is (are):