Exam 5: The Operating Cycle and Merchandising Operations

The periodic inventory system relies on a physical count of merchandise for its balance sheet amount.

Use this information to answer the following question. Account Name Debit Credit Sales 300,000 Sales Returns and Allowances 10,000 Purchases 62,000 Purchases Returns and Allowances 8,000 Freight-In 12,000 Selling Expenses 30,000 General and Administrative Expenses 110,000 In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000. Cost of goods sold for the period was

For each description below,state which document is being described. a. Document issued to permit the treasurer to make a payment b. Bill sent by the vendor to the purchaser c. Written request prepared by a department asking the purchasing department to make a purchase d. Document accompanying money put in the bank e. Document describing items in a shipment of goods delivered f. Document sent to a vendor requesting shipment of goods

Use this information to answer the following question. Account Name Debit Credit Sales 300,000 Sales Returns and Allowances 10,000 Purchases 68,000 Purchases Returns and Allowances 8,000 Freight-In 12,000 Selling Expenses 30,000 General and Administrative Expenses 110,000 In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000. If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Under an effective system of internal control,errors occur only as a result of fraud or dishonesty.

Service businesses can be classified as wholesalers and retailers.

Which of the following is necessary for computing cost of goods sold but not necessary for computing goods available for sale?

Indicate whether each business practice listed below strengthens (S)or weakens (W)a company's system of internal control. _____ a. Discouraging employees from taking paid vacations _____ b. Using banking facilities as much as possible _____ c. Having employees bonded _____ d. Conducting surprise audits of cash on hand _____ e. Having one person open the mail _____ _____ f. Having the receiving department compare goods received with goods ordered

The collection of a $1,000 account beyond the 2 percent discount period would result in a(n)

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

Chancellor Company purchased merchandize worth $900 on credit,terms n/30.What is the required journal entry to record the transaction under the perpetual inventory system?

Computerization has led to a large increase in the use of the perpetual inventory system.

The bonding of employees is an example of which feature of a good system of internal control?

Proper control procedures can guarantee the prevention of theft.

Compute the dollar amount of each item indicated by a letter in the following table.Treat each horizontal row of numbers as a separate problem.

Which of the following attributes of internal control would be violated if the accounting clerk wrote checks to pay accounts payable?

A company would be more likely to know the amount of inventory on hand if it used the periodic inventory system rather than the perpetual inventory system.

Using the following information,calculate for 2010 (a)net sales,(b)cost of goods sold,(c)gross margin,and (d)net income. Freight-In \ 11,400 Merchandise Inventory, December 31, 2009 130,000 Sales 320,000 Purchases Returns and Allowances 1,600 Advertising Expense 18,000 Purchases 140,000 Merchandise Inventory, December 31, 2010 110,000 Sales Returns and Allowances 11,000 General and Administrative Expenses 114,000

Which of the following should not be included in the count of ending merchandise inventory?

The entry to record a purchase of $6,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)