Exam 6: The Operating Cycle and Merchandising Operations

The entry to record a $750 sale with terms of 2/10, n/30 would include a(n)

Financing period represents the time during which merchandizing company has to finance its customers.

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows: Gross margin would be

If a U.S. company purchases goods from a British supplier for a fixed number of U.S. dollars, an exchange gain or loss would not arise for the U.S. company, even if the exchange rate has changed between the time of purchase and the time of payment.

Assume that on July 24, Bond Company had a sale totaling $11,019 with a related cost of goods sold of $7,604. Record this transaction in journal form assuming the perpetual inventory system was in use.

The financing period is also referred to as the cash gap.

Under the perpetual inventory system, the entry to record a purchase return would include a credit to which account?

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.

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?

Under a perpetual inventory system, is it necessary to take a physical inventory at the end of the period? Why or why not?

Cost of goods sold is considered an expense of a merchandising business.

The net cost of purchases is found by deducting freight-in from net purchases.

If a U.S. company purchases goods for a fixed number of British pounds, and the exchange rate has fallen from $1.55 per pound to $1.50 per pound by the time payment is made, the U.S. company would record an exchange gain.

If it takes 45 days to sell inventory, 30 days to collect for the sale, and creditors' payment terms are 60 days, the financing period is 15 days.

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

The faster goods are sold and collection is made, the longer the financing period.

The difference between gross sales and net sales is equal to the sum of sales discounts and sales returns and allowances.

Which of the following companies would be most likely to use a computerized perpetual inventory system?

On June 3, Win-Tel Company sold merchandize worth $800 on credit, terms 2/10, n/30. The merchandize sold had cost $550. The customer paid the amount on June 10. What is the required journal entry to record the payment received under the periodic inventory system?

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