Question 1

Adding together the ending merchandise inventory and cost of goods sold gives the amount of goods available for sale.

Accepted Answer

A) True 
 B)False

Question 2

When the periodic inventory system is used,a physical inventory should be taken at the end of the fiscal year.

Accepted Answer

A) True 
 B)False

Question 3

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following activities is not a component of the operating cycle?

Accepted Answer

A)  Payment of employees' wages 
B)  Sale of merchandise 
C)  Purchase of merchandise 
D)  Collection of cash from merchandise sales 
A)  Payment of employees' wages 
B)  Sale of merchandise 
C)  Purchase of merchandise 
D)  Collection of cash from merchandise sales

Question 5

When a business is able to deposit its credit card sales invoices directly into a special bank account,it debits Cash,not Accounts Receivable.

Accepted Answer

A) True 
 B)False

Question 6

When a company makes payment for goods or services,the check is prepared by the company's

Accepted Answer

A)  requesting department. 
B)  treasurer. 
C)  accounting department. 
D)  receiving department. 
A)  requesting department. 
B)  treasurer. 
C)  accounting department. 
D)  receiving department.

Question 7

When payment is received by mail,a detailed list of such receipts would not be retained by the

Accepted Answer

A)  person who opens the mail. 
B)  accounting department. 
C)  receiving department. 
D)  cashier. 
A)  person who opens the mail. 
B)  accounting department. 
C)  receiving department. 
D)  cashier.

Question 8

Each of the following is a feature of internal control except

Accepted Answer

A)  limited access to assets. 
B)  periodic independent verification. 
C)  management compensation packages. 
D)  authorization of transactions. 
A)  limited access to assets. 
B)  periodic independent verification. 
C)  management compensation packages. 
D)  authorization of transactions.

Question 9

The use of major credit cards requires sellers to establish the customer's credit.

Accepted Answer

A) True 
 B)False

Question 10

Under the perpetual inventory system,which of the following accounts would not be used?

Accepted Answer

A)  Cost of Goods Sold 
B)  Merchandise Inventory 
C)  Sales 
D)  Purchases 
A)  Cost of Goods Sold 
B)  Merchandise Inventory 
C)  Sales 
D)  Purchases

Question 11

FOB shipping point means that the seller incurs the shipping costs.

Accepted Answer

A) True 
 B)False

Question 12

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 15.What is the required journal entry to record the payment under the periodic inventory system?

Accepted Answer

A) 
$\begin{array}{lc}
\text { Accounts Payable } & 784 \
\text { Purchases Discounts } & 16 \
\text { Cash } &&800
\end{array}$ 
B) 
$\begin{array}{ll}
\text { Accounts Payable } & 800 \
\text { Purchases Discounts } &&16 \
\text { Cash }&&784
\end{array}$ 
C) 
$\begin{array}{ll}
\text { Cash } & 800 \
\text { Accounts Payable } && 800
\end{array}$ 
D) 
$\begin{array}{ll}
\begin{array}{c}
\text { Accounts Payable } & 800\
\text { Cash }&& 800
\end{array}  \
\end{array}$ 
A) 
$\begin{array}{lc}
\text { Accounts Payable } & 784 \
\text { Purchases Discounts } & 16 \
\text { Cash } &&800
\end{array}$ 
B) 
$\begin{array}{ll}
\text { Accounts Payable } & 800 \
\text { Purchases Discounts } &&16 \
\text { Cash }&&784
\end{array}$ 
C) 
$\begin{array}{ll}
\text { Cash } & 800 \
\text { Accounts Payable } && 800
\end{array}$ 
D) 
$\begin{array}{ll}
\begin{array}{c}
\text { Accounts Payable } & 800\
\text { Cash }&& 800
\end{array}  \
\end{array}$

Question 13

Compute the dollar amount of the items indicated by letters a through f in the table below.
 $\begin{array}{|l|r|c|}
\hline&\text { Case 1 } & \text { Case } 2\
\hline\
\hline \text { Sales } & \$ 5,500 & \$ 13,000 \
\hline \text { Beginning Merchandise Inventory } & 75 & \text { d } \
\hline \text { Net Cost of Purchases } & 4,975 & 4,600 \
\hline \text { Ending Merchandise Inventory } & \text { a } & 600 \
\hline \text { Cost of Goods Sold } & \text { b } & \text { e } \
\hline \text { Gross Margin } & \text { c } & 4,800 \
\hline \text { Operating Expenses } & 450 & \text { f } \
\hline \text { Income Before Income Taxes } & 150 & 1,200\
\hline
\end{array}$

Accepted Answer

a.$150
b.$

Question 14

Management is responsible for establishing a satisfactory system of internal control.

Accepted Answer

A) True 
 B)False

Question 15

Assume that the sales made by Wessling Corporation for the month ended February 28,20xx,were made to customers using credit cards and totaled $5,666.Prepare one journal entry to record these sales assuming that all of the credit card companies charge Wessling Corporation a 2.5 percent discount fee.(Omit date.)Round to the nearest whole dollar.

Accepted Answer

The answer of Assume that the sales made by Wessling...

Question 16

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?

Accepted Answer

A) 
$\begin{array}{llr}
  \text {  Accounts Receivable} &900\
 \text { Purchases } &&900\
\end{array}$ 
B) 
$\begin{array}{llr}
  \text { Purchases } &900\
 \text { Merchandize Inventory } &&900\
\end{array}$ 
C) 
$\begin{array}{llr}
  \text {  Merchandize Inventory} & 900\
 \text {Accounts Pavable  } && 900\
\end{array}$ 
D) 
$\begin{array} { lc c } 
\text { Accounts Payable } & 900 \
\quad \text { Merchandize Inventory } & & 900
\end{array}$ 
A) 
$\begin{array}{llr}
  \text {  Accounts Receivable} &900\
 \text { Purchases } &&900\
\end{array}$ 
B) 
$\begin{array}{llr}
  \text { Purchases } &900\
 \text { Merchandize Inventory } &&900\
\end{array}$ 
C) 
$\begin{array}{llr}
  \text {  Merchandize Inventory} & 900\
 \text {Accounts Pavable  } && 900\
\end{array}$ 
D) 
$\begin{array} { lc c } 
\text { Accounts Payable } & 900 \
\quad \text { Merchandize Inventory } & & 900
\end{array}$

Question 17

An advantage of using the periodic inventory system is that it requires less recordkeeping than the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following documents is prepared by to a company's accounting department?

Accepted Answer

A)  Receiving report 
B)  Check authorization 
C)  Bank statement 
D)  Invoice 
A)  Receiving report 
B)  Check authorization 
C)  Bank statement 
D)  Invoice

Question 19

A remittance advice is attached to a(n)

Accepted Answer

A)  check. 
B)  invoice. 
C)  purchase order. 
D)  receiving report. 
A)  check. 
B)  invoice. 
C)  purchase order. 
D)  receiving report.

Question 20

If insured goods are shipped FOB destination,the seller should file a claim for goods damaged in transit.

Accepted Answer

A) True 
 B)False

Exam 5: The Operating Cycle and Merchandising Operations

Adding together the ending merchandise inventory and cost of goods sold gives the amount of goods available for sale.

When the periodic inventory system is used,a physical inventory should be taken at the end of the fiscal year.

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Which of the following activities is not a component of the operating cycle?

When a business is able to deposit its credit card sales invoices directly into a special bank account,it debits Cash,not Accounts Receivable.

When a company makes payment for goods or services,the check is prepared by the company's

When payment is received by mail,a detailed list of such receipts would not be retained by the

Each of the following is a feature of internal control except

The use of major credit cards requires sellers to establish the customer's credit.

Under the perpetual inventory system,which of the following accounts would not be used?

FOB shipping point means that the seller incurs the shipping costs.

On June 3,Maryland Company purchased merchandize worth $800 on credit,terms 2/10,n/30.The amount paid on June 15.What is the required journal entry to record the payment under the periodic inventory system?

Management is responsible for establishing a satisfactory system of internal control.

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?

An advantage of using the periodic inventory system is that it requires less recordkeeping than the perpetual inventory system.

Which of the following documents is prepared by to a company's accounting department?

A remittance advice is attached to a(n)

If insured goods are shipped FOB destination,the seller should file a claim for goods damaged in transit.

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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