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

Tiger Co.sold merchandise on account to a customer.The customer returned some of that merchandise because it was not satisfactory.What journal entry will Tiger use to record the return?

If a company returns an item to a supplier,the supplier will record the return as:

A retailer is a company that buys products from manufacturers and sells them to wholesalers.

West Co.returned $500 of merchandise that was purchased on account.As a result of this transaction,assets will:

Bottom,Inc.paid an invoice for $1,000,with discount terms of 1/7,n/30,within the discount period and will write a check in the amount of:

A company sells three different products.Model A costs $8 and sells for $16,Model B costs $18 and sells for $45,and Model C costs $36 and sells for $120. Required: Part a.Calculate the gross profit per unit for each of the three products. Part b.Calculate the gross profit percentage for each of the three products.

The gross profit percentage is the ratio to watch if you are worried about increased competition.If the company lowers its prices to retain market share without lowering its cost of goods sold,its gross profit percentage will:

Choose the appropriate letter to match the term and the definition.There are more definitions than terms. Term 1.____ Cost of Goods Sold Equation 2.____ Goods Available for Sale 3.____ Gross Profit (or Gross Margin) 4.____ Gross Profit Percentage 5.____ Multistep Income Statement Definition A.The sum of beginning inventory and purchases for the period. B.Expresses the relationship between inventory on hand,purchased,and sold; shown as either BI + P - EI = CGS or BI + P - CGS = EI. C.The cost of inventory lost to theft,fraud,and error. D.A reduction in the cost of inventory purchases associated with unsatisfactory goods. E.A cash discount received for prompt payment of a purchase on account. F.Refunds and price reductions given to customers after goods have been sold and found unsatisfactory. 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.

Lansing Company has a gross profit percentage of 61%,while Arbor Company has a gross profit percentage of 37%.Which of the following statements is correct?

Which of the following is inventory?

To make it easier for financial statement users to compare account balances from one period to the next,companies report:

The gross profit percentage for Elk Roofing Products is 25%.If the company has Net Sales of $850,000 for the year,what was the amount of Cost of Goods Sold?

Which line item would be found on a merchandiser's balance sheet and not on a service firm's?

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.Gross profit would be:

Which of the following statements regarding inventory counts is not correct?

The accounting records of the National Corp.show the following: What is the gross profit?

The periodic inventory system uses the Purchases account to keep track of the amount of inventory that is purchased.

If a perpetual inventory system is in use,which of the following statements about transactions with customers is correct?

The following account balances appeared on the company's trial balance at year-end: The amount of net sales reported on the income statement would be:

A company reported the following: -Use the above information to answer the following question.What is the amount of income before income taxes?