Question 1

Refer to the following trial balance.   How much is the gross profit?

Accepted Answer

A)  $256,000 
B)  $118,000 
C)  $112,000 
D)  $109,000 
A)  $256,000 
B)  $118,000 
C)  $112,000 
D)  $109,000

Question 2

On a multi-step income statement,the operating expenses are subtracted from ________ to arrive at operating income.

Accepted Answer

A)  net sales 
B)  cost of goods sold 
C)  net profit 
D)  gross profit 
A)  net sales 
B)  cost of goods sold 
C)  net profit 
D)  gross profit

Question 3

The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed.Which of the following is credited to close the Income Summary account?

Accepted Answer

A)  Owner, Withdrawals 
B)  Sales Revenue 
C)  Cost of Goods Sold 
D)  Owner, Capital 
A)  Owner, Withdrawals 
B)  Sales Revenue 
C)  Cost of Goods Sold 
D)  Owner, Capital

Question 4

Regarding a periodic inventory system,which of the following statements is incorrect?

Accepted Answer

A)  The periodic inventory system is normally used for relatively expensive goods. 
B)  Restaurants and small retail stores normally use the periodic inventory system. 
C)  Periodic inventory systems are becoming less and less popular. 
D)  The physical count of inventory is required in order to determine the quantities on hand. 
A)  The periodic inventory system is normally used for relatively expensive goods. 
B)  Restaurants and small retail stores normally use the periodic inventory system. 
C)  Periodic inventory systems are becoming less and less popular. 
D)  The physical count of inventory is required in order to determine the quantities on hand.

Question 5

Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement.

Accepted Answer

A) True 
 B)False

Question 6

Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the following details. $$\begin{array} { | l | r | } 
\hline \text { Purchases } & \$ 510,000 \
\hline \text { Beginning Merchandise } & \
\text { Inventory } & 180,000 \
\hline \text { Purchase Returns and } & \
\hline \text { Allowances } & 50,000 \
\hline \text { Purchase Discounts } & 14,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Ending Merchandise Inventory } & 180,00 \
\hline
\end{array}$$

Accepted Answer

A)  $510,000 
B)  $461,000 
C)  $476,000 
D)  $821,000 
A)  $510,000 
B)  $461,000 
C)  $476,000 
D)  $821,000

Question 7

In a periodic inventory system,accounting for sales discounts is the same as in a perpetual inventory system,except there is no entry for merchandise inventory.

Accepted Answer

A) True 
 B)False

Question 8

Home Theater Company has the following transaction related to the sale of merchandise inventory.
 June 1: Sold a home theater system (cost of $ \$ 6,200 $ ) for $ \$ 9,000 $ to a customer. The customer paid cash. The sales price included a two-year service contract valued at $ \$ 840 $. 
Dec 31. Recorded the amount of service contract earned. Journalize the transactions of Home Theater assuming that the company uses the perpetual inventory system.Do not record the cost of goods sold entry.Omit explanations.

Accepted Answer

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

Question 9

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

Accepted Answer

A) True 
 B)False

Question 10

York Merchandising Company uses a perpetual inventory system.At the end of the accounting period,a physical count of merchandise inventory reveals a balance of $76,500.The books show a balance of $78,200.
(a)Prepare the adjusting entry.Omit explanation.
(b)Discuss the possible causes for the difference between the physical count and the balance in the books.
(c)How does this affect net income?

Accepted Answer

(a) 
 (b)The difference can be

Question 11

Each time a sale is recorded,two journal entries are also recorded to account for estimated sales returns.

Accepted Answer

A) True 
 B)False

Question 12

A retailer purchases goods from a manufacturer and sells them to wholesalers.

Accepted Answer

A) True 
 B)False

Question 13

Value Electronics Company started its operations on January 1,2019.Value engages in buying and selling different types of electronic gadgets.The first step in its operating cycle would be to ________.

Accepted Answer

A)  collect cash from customers 
B)  sell goods to customers 
C)  purchase inventory from vendors 
D)  record the sales in accounts 
A)  collect cash from customers 
B)  sell goods to customers 
C)  purchase inventory from vendors 
D)  record the sales in accounts

Question 14

Gross profit is the excess of cost of goods sold over net sales revenue.

Accepted Answer

A) True 
 B)False

Question 15

A merchandiser returned inventory worth $1,900 that was purchased on account.In a periodic inventory system,the journal entry to record the return would include ________.

Accepted Answer

A)  a debit to Purchase Returns and Allowances for $1,900 and a credit to Accounts Payable for $1,900 
B)  a debit to Accounts Payable for $1,900 and a $1,900 credit to Purchase Returns and Allowances 
C)  a debit to Purchases for $1,900 and a credit to Accounts Payable for $1,900 
D)  a debit to Accounts Payable for $1,900 and a credit to Purchases for $1,900 
A)  a debit to Purchase Returns and Allowances for $1,900 and a credit to Accounts Payable for $1,900 
B)  a debit to Accounts Payable for $1,900 and a $1,900 credit to Purchase Returns and Allowances 
C)  a debit to Purchases for $1,900 and a credit to Accounts Payable for $1,900 
D)  a debit to Accounts Payable for $1,900 and a credit to Purchases for $1,900

Question 16

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $600 to the vendor.Which of the following would be the correct journal entry to record these returns?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Purchase Returns } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Purchase Returns } & & 600 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Merchandise Inventory } & & 600 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Purchase Returns } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Purchase Returns } & & 600 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Merchandise Inventory } & & 600 \
\hline
\end{array}$$

Question 17

Journalize the following transactions for a merchandiser that uses the perpetual inventory system.
On January 8,inventory was sold for $7,000 on account.Credit terms were 2/15,n/30 (cost $5,500).On January 17,cash was received in full settlement of the January 8 sale.Omit explanations.

Accepted Answer

\[\begin{array} { | r | r | r | r | } 
\

Question 18

An invoice can be either a sales invoice or a purchase invoice.

Accepted Answer

A) True 
 B)False

Question 19

Under the perpetual inventory system,discounts taken on an invoice by the buyer would be ________.

Accepted Answer

A)  debited to Merchandise Inventory 
B)  credited to Merchandise Inventory 
C)  debited to Cost of Goods Sold 
D)  credited to Cost of Goods Sold 
A)  debited to Merchandise Inventory 
B)  credited to Merchandise Inventory 
C)  debited to Cost of Goods Sold 
D)  credited to Cost of Goods Sold

Question 20

Refer to the following trial balance. $$\begin{array} { | l | r | r | } 
\hline & { \text { Debit } } &  { \text { Credit } } \
\hline \text { Cash } & \$ 6,000 & \
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Inventory } & 17,000 & \
\hline \text { Supplies } & 4,000 & \
\hline \text { Land } & 100,000 & \
\hline \text { Accounts Payable } & & \$ 5,000 \
\hline \text { Notes Payable } & & 25,000 \
\hline \text { Song, Capital } & & 81,000 \
\hline \text { Song, Withdrawals } & 81,000 & \
\hline \text { Sales Revenue } & 6,000 & \
\hline \text { Cost of Goods Sold } & 21,000 & \
\hline \text { Salaries Expense } & 18,000 & \
\hline \text { Utilities Expense } & 4,000 & \
\hline \text { Rent Expense } & \$ 271,000 & \$ 271,000 \
\hline
\end{array}$$ How much is the gross profit?

Accepted Answer

A)  $79,000 
B)  $160,000 
C)  $77,000 
D)  $30,000 
A)  $79,000 
B)  $160,000 
C)  $77,000 
D)  $30,000

Exam 5: Merchandising Operations

Refer to the following trial balance. How much is the gross profit?

On a multi-step income statement,the operating expenses are subtracted from ________ to arrive at operating income.

The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed.Which of the following is credited to close the Income Summary account?

Regarding a periodic inventory system,which of the following statements is incorrect?

Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement.

Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the following details. Purchases \ 510,000 Beginning Merchandise Inventory 180,000 Purchase Returns and Allowances 50,000 Purchase Discounts 14,000 Freight In 15,000 Ending Merchandise Inventory 180,00

In a periodic inventory system,accounting for sales discounts is the same as in a perpetual inventory system,except there is no entry for merchandise inventory.

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

Each time a sale is recorded,two journal entries are also recorded to account for estimated sales returns.

A retailer purchases goods from a manufacturer and sells them to wholesalers.

Value Electronics Company started its operations on January 1,2019.Value engages in buying and selling different types of electronic gadgets.The first step in its operating cycle would be to ________.

Gross profit is the excess of cost of goods sold over net sales revenue.

A merchandiser returned inventory worth $1,900 that was purchased on account.In a periodic inventory system,the journal entry to record the return would include ________.

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $600 to the vendor.Which of the following would be the correct journal entry to record these returns?

Journalize the following transactions for a merchandiser that uses the perpetual inventory system. On January 8,inventory was sold for $7,000 on account.Credit terms were 2/15,n/30 (cost $5,500).On January 17,cash was received in full settlement of the January 8 sale.Omit explanations.

An invoice can be either a sales invoice or a purchase invoice.

Under the perpetual inventory system,discounts taken on an invoice by the buyer would be ________.

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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