Question 1

In order to calculate shrinkage:

Accepted Answer

A) both periodic and perpetual inventory systems are needed. 
B) a periodic inventory system is most effective. 
C) a perpetual inventory system requires an occasional count of actual inventory. 
D) it does not matter which system one uses. 
A) both periodic and perpetual inventory systems are needed. 
B) a periodic inventory system is most effective. 
C) a perpetual inventory system requires an occasional count of actual inventory. 
D) it does not matter which system one uses.

Question 2

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

Accepted Answer

A) True 
 B)False

Question 3

The company does a physical count and finds three items missing due to shrinkage.

Accepted Answer

A) debited (Dr) 
B) Bedited (Cr) 
C) Ceither (N) 
A) debited (Dr) 
B) Bedited (Cr) 
C) Ceither (N)

Question 4

OakHart,Inc.,the maker of widgets and whatnots,made merchandise costing $145,500 and sold it on credit to MapleHeart for $405,000 with terms 2/10,n/30.Some of the merchandise differed from what MapleHeart had ordered,so OakHart agreed to give an allowance of $10,000.MapleHeart satisfied the remaining balance by paying within the discount period.What is OakHart's gross profit percentage?

Accepted Answer

37.6%
Net Sales = 405,000 - 10

Question 5

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Accepted Answer

A) True 
 B)False

Question 6

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

Accepted Answer

A) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected within the discount period. 
B) Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected within the discount period. 
C) Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected after the discount period. 
D) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected after the discount period. 
A) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected within the discount period. 
B) Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected within the discount period. 
C) Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected after the discount period. 
D) Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected after the discount period.

Question 7

A rising gross profit percentage indicates management's inability to control production and inventory costs.

Accepted Answer

A) True 
 B)False

Question 8

A company had the following partial list of account balances at year-end:

$\begin{array}{c}
\begin{array}{|l}
  \hline\text {Gales Returns and Allowarices  }\
  \hline\text {Accourt Receivable  }\
 \hline \text {  Bales Discouts}\
 \hline \text {  Bales Reverue}\
 \hline \text { 
Bellirg ard Adrniristrative Expenses }\
 \hline
\end{array}
\begin{array}{|r|}
 \hline\$500\
 \hline9,000\
 \hline700\
 \hline57,200\
 \hline300\
 \hline
\end{array}
\end{array}$
 The amount of net sales reported on the income statement would be:

Accepted Answer

A) $57,200. 
B) $64,200. 
C) $56,000. 
D) $55,700. 
A) $57,200. 
B) $64,200. 
C) $56,000. 
D) $55,700.

Question 9

Which of the following is not an advantage of perpetual inventory system?

Accepted Answer

A) It helps reduce expenses and costs. 
B) It helps increase productivity of the economy. 
C) It is simple and less costly to maintain. 
D) It provides up to date information on inventory and cost of goods sold instantly. 
A) It helps reduce expenses and costs. 
B) It helps increase productivity of the economy. 
C) It is simple and less costly to maintain. 
D) It provides up to date information on inventory and cost of goods sold instantly.

Question 10

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Accepted Answer

A) $1,500 
B) $1,960 
C) $1,470 
D) $1,970 
A) $1,500 
B) $1,960 
C) $1,470 
D) $1,970

Question 11

Which of the following is a true statement for a company using a perpetual inventory system?

Accepted Answer

A) Sales discounts is a contra-account to revenue. 
B) Purchase discounts is a contra-account to revenue. 
C) Purchase discounts is a contra-account to accounts receivable 
D) Sales discounts is a contra-account to inventory. 
A) Sales discounts is a contra-account to revenue. 
B) Purchase discounts is a contra-account to revenue. 
C) Purchase discounts is a contra-account to accounts receivable 
D) Sales discounts is a contra-account to inventory.

Question 12

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Accepted Answer

A) receive a 15% discount if they pay within 2 days. 
B) receive a 2% discount if they pay 15% of the amount due within 30 days. 
C) receive a 15% discount if they pay within 30 days. 
D) receive a 2% discount if they pay within 15 days. 
A) receive a 15% discount if they pay within 2 days. 
B) receive a 2% discount if they pay 15% of the amount due within 30 days. 
C) receive a 15% discount if they pay within 30 days. 
D) receive a 2% discount if they pay within 15 days.

Question 13

Gross profit percentage can be used to

Accepted Answer

A) analyze changes in the company's operations over time. 
B) compare one company to another. 
C) determine whether a company is earning enough on each sale to cover its operating expenses. 
D) All of the choices are correct. 
A) analyze changes in the company's operations over time. 
B) compare one company to another. 
C) determine whether a company is earning enough on each sale to cover its operating expenses. 
D) All of the choices are correct.

Question 14

The receipt of cash is one of the operating activities of:

Accepted Answer

A) companies that sell goods but not companies that sell services. 
B) companies that sell to consumers but not companies that sell to other companies. 
C) merchandising,manufacturing,and service companies. 
D) companies that sell goods they bought from others but not companies that make the goods they sell. 
A) companies that sell goods but not companies that sell services. 
B) companies that sell to consumers but not companies that sell to other companies. 
C) merchandising,manufacturing,and service companies. 
D) companies that sell goods they bought from others but not companies that make the goods they sell.

Question 15

The cost of goods sold equation is:

Accepted Answer

A) Beginning inventory + Purchases + Purchase discounts + Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
B) Beginning inventory - Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
C) Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
D) Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances + Counted ending inventory = Cost of Goods Sold. 
A) Beginning inventory + Purchases + Purchase discounts + Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
B) Beginning inventory - Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
C) Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold. 
D) Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances + Counted ending inventory = Cost of Goods Sold.

Question 16

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Accepted Answer

A) While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage. 
B) Coca-Cola generated a lower gross profit percentage because their sales revenue was lower. 
C) PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as shown by their $13.0 billion gross profit. 
D) None of the answers are acceptable. 
A) While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage. 
B) Coca-Cola generated a lower gross profit percentage because their sales revenue was lower. 
C) PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as shown by their $13.0 billion gross profit. 
D) None of the answers are acceptable.

Question 17

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Accepted Answer

A) 72%. 
B) 3.57%. 
C) 0.389%. 
D) 28%. 
A) 72%. 
B) 3.57%. 
C) 0.389%. 
D) 28%.

Question 18

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

Accepted Answer

A) Business to Business (B2
B)  
B) Business to consumers 
C) To retail customers 
D) To long and frequent customers 
A) Business to Business (B2
B)  
B) Business to consumers 
C) To retail customers 
D) To long and frequent customers

Question 19

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

Accepted Answer

A) True 
 B)False

Question 20

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Accepted Answer

A) True 
 B)False

In order to calculate shrinkage:

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

The company does a physical count and finds three items missing due to shrinkage.

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

A rising gross profit percentage indicates management's inability to control production and inventory costs.

A company had the following partial list of account balances at year-end: Gales Returns and Allowarices Accourt Receivable Bales Discouts Bales Reverue Bellirg ard Adrniristrative Expenses \5 00 9,000 700 57,200 300 The amount of net sales reported on the income statement would be:

Which of the following is not an advantage of perpetual inventory system?

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Which of the following is a true statement for a company using a perpetual inventory system?

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Gross profit percentage can be used to

The receipt of cash is one of the operating activities of:

The cost of goods sold equation is:

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, financial Statements, and Financial Results

Fraud, internal Control, and Cash

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Shareholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 6: Merchandising Operations and the Multi-Step Income Statement

In order to calculate shrinkage:

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

The company does a physical count and finds three items missing due to shrinkage.

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

A rising gross profit percentage indicates management's inability to control production and inventory costs.

A company had the following partial list of account balances at year-end: Gales Returns and Allowarices Accourt Receivable Bales Discouts Bales Reverue Bellirg ard Adrniristrative Expenses \5 00 9,000 700 57,200 300 The amount of net sales reported on the income statement would be:

Which of the following is not an advantage of perpetual inventory system?

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Which of the following is a true statement for a company using a perpetual inventory system?

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Gross profit percentage can be used to

The receipt of cash is one of the operating activities of:

The cost of goods sold equation is:

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, financial Statements, and Financial Results

Fraud, internal Control, and Cash

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Shareholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters