Exam 6: The Operating Cycle and Merchandising Operations

Assume that on March 13,Cimarron Company made a purchase totaling $13,000.Record this transaction in journal form assuming the perpetual inventory system was in use (omit explanations).

Match each definition with the correct term below. -Purchases account

Scuilli Corporation purchased $5,000 worth of merchandise,terms n/30,from the Zupcic Corporation on June 4.The cost of the merchandise to Zupcic was $3,600.On June 10,Scuilli returned $700 worth of goods to Zupcic for full credit.The goods had a cost of $450 to Zupcic.On June 12,the account was paid in full.Prepare journal entries without explanations to record these transactions in (a)Scuilli's records and (b)Zupcic's records.Assume use of the perpetual inventory system by both companies. a.Scuilli's records: b.Zupcic's records:

Which of the following is a measure of liquidity?

A retail operation would still have to take a physical inventory even if it uses a perpetual inventory system.

Before a check authorization is issued,the following documents must be in agreement,except for the

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Use this information to answer the following question. In addition,beginning merchandise inventory was $44,000 and ending merchandise inventory was $28,000. If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Taking a physical inventory refers to making a count of all merchandise on hand at a particular time.

Which of the following is not a primary concern of internal control?

It is likely that a company would want to bond its employees who handle cash or inventory.

Merchandise inventory becomes part of cost of goods sold when a company

All of the following are examples of internal control activities except

When the periodic inventory system is used,a physical inventory does not need to be taken at the end of the fiscal year.

Goods totaling $56,000 purchased August 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on August 10 would be subject to which of the following discounts if paid for on August 12?

Which of the following goods would not be included in merchandise inventory for a purchasing company?

A large discount chain,like Wal-Mart or Target,most likely would use the perpetual inventory system to maintain control of its inventory.

An effective system of internal control requires that individuals never take vacations.

Current assets divided by current liabilities is known as the

Match each definition with the correct term below. -Sales returns and allowances account