Exam 5: The Operating Cycle and Merchandising Operations

Goods totaling $28,000 purchased February 2 on terms of 2/10,n/30 and on which returns of $1,000 were made on February 10 would be subject to which of the following discounts if paid for on February 12?

Each of the following is a feature of internal control except

Use this information to answer the following question. Chupka Company experienced the following events during the period: 1. A tabulation of invoices at the end of the day showed $\$ 800$ in MasterCard invoices, which were deposited in a bank account at full value less a 5 percent discount. 2. Made a sale on American Express card for $\$ 400$ and mailed invoice to American Express for payment. The discount charged by American Express is 4 percent. The entry to record transaction 1 would include an increase in

When a customer returns goods,the company decreases the Sales account.

When the terms of sale include a sales discount,it usually is advisable for the buyer to pay within the discount period.

The entry to record a sales return from a customer would require a(n)

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows: Advertieing Esguense 14,000 Common Stock 100,000 Dividends 21,000 Fraight-In 7,000 Freight-Out Esgense 10,000 Interest Income 24,000 Merchandise Inventory (Jan. 1) 58,000 Merchandise Inventory (Dec. 31) 56,000 Purchases 60,000 Purchases Returns and Allowances 4,000 Rent Exgense 9,000 Retained Earning 40,000 Sales 150,000 Sales Returns and Allowances 19,000 Wages Engense 32,000 Goods available for sale would appear on the income statement as

Effective internal control requires a department to purchase supplies on its own.

Management's authorization of transactions relates to a control activity in the accounting system.

Which of the following is not considered in computing net cost of purchases?

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

Management's regular assessment of its internal controls is called risk assessment.

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

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

Cash flow cannot be managed,but it is a natural component of business operations.

Feathertouch Company sold merchandize worth $800 on credit,terms n/15 and on the next day the customer returned merchandize worth $50,which cost $30 for Feathertouch company.What is the required journal entry to record the merchandize returns under the perpetual inventory system?

All of the following are examples of internal control activities except

Upon making a credit card sale,a business should record the sale as an accounts receivable until the customer pays his or her credit card bill.

A discount that buyers take for early payment of merchandise is called a

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