Question 1

A company made net sales revenue of $550,000,and cost of goods sold totaled $192,500.Calculate its gross profit percentage.

Accepted Answer

A)  65% 
B)  35% 
C)  130% 
D)  315% 
A)  65% 
B)  35% 
C)  130% 
D)  315%

Question 2

The net income calculated using either the single-step or multi-step income statement formats is always the same.

Accepted Answer

A) True 
 B)False

Question 3

A merchandiser sold merchandise inventory on account.The journal entry to record a sales allowance in the books of the merchandiser,using the perpetual inventory system would be:

Accepted Answer

A)  $$\begin{array} { | c | r | c | } 
\hline \text { Sales Returns and Allowances } & \mathrm { XX } & \
\hline \text { Merchandise Inventory } & & \mathrm { XX } \
\hline
\end{array}$$ 
B)  $$\begin{array} { |l| r | r | } 
\hline \text { Refunds Payable } & \text { XX } & \
\hline \text { Accounts Receivable } & & \text { XX } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of Goods Sold } & \mathrm { XX } & \
\hline \text { Sales Returns and } & & \
\text { Allowances } & & \mathrm { XX } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Estimated Returns Inventory } & \mathrm { XX } & \
\hline \text { Accounts Receivable } & & \mathrm { XX } \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | c | } 
\hline \text { Sales Returns and Allowances } & \mathrm { XX } & \
\hline \text { Merchandise Inventory } & & \mathrm { XX } \
\hline
\end{array}$$ 
B)  $$\begin{array} { |l| r | r | } 
\hline \text { Refunds Payable } & \text { XX } & \
\hline \text { Accounts Receivable } & & \text { XX } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of Goods Sold } & \mathrm { XX } & \
\hline \text { Sales Returns and } & & \
\text { Allowances } & & \mathrm { XX } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Estimated Returns Inventory } & \mathrm { XX } & \
\hline \text { Accounts Receivable } & & \mathrm { XX } \
\hline
\end{array}$$

Question 4

Merchandise inventory is included in a merchandising company's current assets.

Accepted Answer

A) True 
 B)False

Question 5

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor.

Accepted Answer

A) True 
 B)False

Question 6

The gross profit percentage for Fran's Clothing Retailer was 37.7% for the year ended December 31,2018 and 42.5% for the year ended December 31,2019.The industry average gross profit percentage,for both years,is 45.7%.Briefly discuss these findings.

Accepted Answer

The gross profit percentage for Fran's C

Question 7

Rogers Motorsports selected accounts as of December 31,2018,follow:
 $$\begin{array} { | l | r | } 
\hline \text { Administrative Expenses } & \$ 130,000 \
\hline \text { Cost of Goods Sold } & 200,000 \
\hline \text { Interest Revenue } & 2,500 \
\hline \text { Net Sales Revenue } & 450,000 \
\hline \text { Selling Expenses } & 80,000 \
\hline
\end{array}$$ Prepare the multi-step income statement for the year ended December 31,2018.

Accepted Answer

Rogers Motorsports
Income Statement
Year

Question 8

On the balance sheet,Merchandise Inventory is listed above Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 9

When a seller grants a sales allowance,the customer does not return any goods to the seller.

Accepted Answer

A) True 
 B)False

Question 10

In a perpetual inventory system,the entry that adjusts the Merchandise Inventory account based on the physical count equals the merchandise inventory balance before adjustment less actual merchandise inventory on hand.

Accepted Answer

A) True 
 B)False

Question 11

ABC Electrical Supply Company purchased $560,000 of inventory.Goods of $35,000 were returned.ABC received an early discount of $55,000 and paid freight in of $15,000 and freight out of $20,000.Compute the net cost of inventory purchased.Label your work and show all computations.

Accepted Answer

\[\begin{array} { l l } 
\text { Purchas

Question 12

An entity that buys goods and sells them to consumers at a markup is a ________.

Accepted Answer

A)  retailer 
B)  wholesaler 
C)  manufacturer 
D)  producer 
A)  retailer 
B)  wholesaler 
C)  manufacturer 
D)  producer

Question 13

Journalize the following transaction for a merchandiser that uses the perpetual inventory system.
Sold goods to A.Pitt,on account,$2,500 (cost,$1,750).Omit explanations.

Accepted Answer

\[\begin{array} { |l | c | c | } 
\hline

Question 14

In a multi-step income statement,interest revenue and interest expense are included in operating income.

Accepted Answer

A) True 
 B)False

Question 15

Merchandisers must adjust for estimated sales returns and inventory shrinkage.

Accepted Answer

A) True 
 B)False

Question 16

When preparing financial statements under the periodic inventory system,a calculation of cost of goods sold must be made.

Accepted Answer

A) True 
 B)False

Question 17

A company using the perpetual inventory system purchased inventory worth $20,000 on account with terms of 3/10,n/30.Defective inventory of $2,000 was returned two days later,and the accounts were appropriately adjusted.If the invoice is paid 10 days after the invoice date,the amount of the purchase discount that would be available to the company is ________.

Accepted Answer

A)  $540 
B)  $660 
C)  $600 
D)  $590 
A)  $540 
B)  $660 
C)  $600 
D)  $590

Question 18

Cost of Goods Sold is based on the company's cost,not the retail price.

Accepted Answer

A) True 
 B)False

Question 19

Under the perpetual inventory system,the journal entry to record the freight paid by the seller on goods sold is:

Accepted Answer

A)  $$\begin{array} { | l| r | r | } 
\hline \text { Accounts Receivable } & \text { XX } & \
\hline \text { Freight Out } & & \text { XX } \
\hline \text { Sales Revenue } & & \text { XX } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Delivery Expenses } & \mathrm { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cost of Goods Sold } & \text { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & \mathrm { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l| r | r | } 
\hline \text { Accounts Receivable } & \text { XX } & \
\hline \text { Freight Out } & & \text { XX } \
\hline \text { Sales Revenue } & & \text { XX } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Delivery Expenses } & \mathrm { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cost of Goods Sold } & \text { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & \mathrm { XX } & \
\hline \text { Cash } & & \mathrm { XX } \
\hline
\end{array}$$

Question 20

Delivery expense is a(n)________.

Accepted Answer

A)  administrative expense 
B)  part of Cost of Goods Sold 
C)  operating expense 
D)  overhead expense 
A)  administrative expense 
B)  part of Cost of Goods Sold 
C)  operating expense 
D)  overhead expense

Exam 5: Merchandising Operations

A company made net sales revenue of $550,000,and cost of goods sold totaled $192,500.Calculate its gross profit percentage.

The net income calculated using either the single-step or multi-step income statement formats is always the same.

A merchandiser sold merchandise inventory on account.The journal entry to record a sales allowance in the books of the merchandiser,using the perpetual inventory system would be:

Merchandise inventory is included in a merchandising company's current assets.

Gross profit is the extra amount the company receives from the customer for merchandise sold over what the company paid to the vendor.

The gross profit percentage for Fran's Clothing Retailer was 37.7% for the year ended December 31,2018 and 42.5% for the year ended December 31,2019.The industry average gross profit percentage,for both years,is 45.7%.Briefly discuss these findings.

Rogers Motorsports selected accounts as of December 31,2018,follow: Administrative Expenses \ 130,000 Cost of Goods Sold 200,000 Interest Revenue 2,500 Net Sales Revenue 450,000 Selling Expenses 80,000 Prepare the multi-step income statement for the year ended December 31,2018.

On the balance sheet,Merchandise Inventory is listed above Accounts Receivable.

When a seller grants a sales allowance,the customer does not return any goods to the seller.

In a perpetual inventory system,the entry that adjusts the Merchandise Inventory account based on the physical count equals the merchandise inventory balance before adjustment less actual merchandise inventory on hand.

ABC Electrical Supply Company purchased $560,000 of inventory.Goods of $35,000 were returned.ABC received an early discount of $55,000 and paid freight in of $15,000 and freight out of $20,000.Compute the net cost of inventory purchased.Label your work and show all computations.

An entity that buys goods and sells them to consumers at a markup is a ________.

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Sold goods to A.Pitt,on account,$2,500 (cost,$1,750).Omit explanations.

In a multi-step income statement,interest revenue and interest expense are included in operating income.

Merchandisers must adjust for estimated sales returns and inventory shrinkage.

When preparing financial statements under the periodic inventory system,a calculation of cost of goods sold must be made.

Cost of Goods Sold is based on the company's cost,not the retail price.

Under the perpetual inventory system,the journal entry to record the freight paid by the seller on goods sold is:

Delivery expense is a(n)________.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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