Exam 6: The Operating Cycle and Merchandising Operations

The income statement account balances on December 31,2013,for Janice Corporation appear below.In addition,beginning merchandise inventory was $3,000 and ending merchandise inventory was $4,000.Prepare a 2013 income statement for the company.

When the buyer bears the transportation charge,it is called freight-out.

When the terms of sale include a sales discount,it usually is advisable for the buyer to pay within the discount period.

Each of the following is a feature of internal control except

Beaver Company bought merchandise from Caddo Company.Following are the terms of sale for the merchandise. What is the net cost of the merchandise to Beaver Company,assuming it was paid for within 10 days of purchase?

Each of the following is a feature of internal control except

On May 13,Maryland Company purchased merchandise worth $2,400 on credit,terms 2/10,n/30.The amount was paid on May 25.What is the required journal entry to record the payment under the periodic inventory system?

Under the perpetual inventory system,which of the following accounts would not be used?

Businesses can be classified as service companies,wholesalers,or retailers.

Under the periodic inventory system,the Purchases account is used to accumulate all purchases of merchandise for resale.

Assuming the use of the periodic inventory system,use the data below to calculate the net cost of purchases and the goods available for sale for the year ended December 31,2013.

Match each definition with the correct term below. -Monitoring

Inventory losses are easier to identify under the perpetual inventory system than under the periodic inventory system.

Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000,purchases of $75,000,and sales of $125,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Sales Discounts and Sales Returns and Allowances are revenue accounts.

In a small business,because it is often cost-prohibitive to hire extra employees,the lack of certain separations of duties can best be overcome by

Garvin Company bought equipment from Haskell Company.Following are the terms of sale for the equipment. What is the net cost of the equipment to Haskell Company,assuming it was paid for within 10 days of purchase?

A system of internal control cannot be considered good until the possibility of human error has been completely eliminated.

Use this information to answer the following question. The selected accounts and balances for Pawnee Market appear as follows: Advertising Expense 28,000 Common Stock 200,000 Dividends 42,000 Freight-In 14,000 Freight-Out Expense 20,000 Interest Income 48,000 Merchandise Inventory (Jan. 1) 116,000 Merchandise Inventory (Dec. 31) 112,000 Purchases 120,000 Purchases Returns and Allowances 8,000 Rent Expense 18,000 Retained Earnings 80,000 Sales 300,000 Sales Returns and Allowances 38,000 Wages Expense 64,000 Goods available for sale would appear on the income statement as