Exam 6: The Operating Cycle and Merchandising Operations

Under the perpetual inventory system, the purchase of merchandise is recorded with a debit to Purchases.

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

Under the periodic inventory system, Cost of goods sold must be computed on the income statement because it is not updated for purchases, sales, and other transactions during the accounting period.

Prepare entries in journal form without explanations for the merchandising transactions listed below for Naveh Company. Assume use of the periodic inventory system.

Sandy's Supply Store entered into the transactions listed below. In the journal provided, prepare Sandy's Supply Store's entries, assuming use of the perpetual inventory system. Omit explanations.

Use this information to answer the following question. In addition, beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000. Net sales for the period were

The change in merchandise inventory level from the beginning to the end of the year affects cost of goods sold.

The collection of a $400 account within the 2 percent discount period would result in a(n)

When the buyer bears the transportation charge, it is called freight-out.

Use this information to answer the following question. In addition, beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000. Net cost of purchases for the period were

Sale and purchase of goods should be recorded at their list price, less any trade discount involved.

Under the periodic inventory system, cost of goods sold is treated as an account.

With the periodic inventory system, cost of goods available for sale must be calculated before cost of goods sold.

Use this information to answer the following question. The selected accounts and balances for Keystone Market appear as follows: The amount of net sales on the income statement would be

Which of the following does not represent a sale?

Chancellor Company purchased merchandize worth $900 on credit, terms n/30 and returned merchandize worth $100 on next day. What is the required journal entry to record the merchandize returns under the periodic inventory system?

On the income statement, freight-out is included as part of cost of goods sold.

Under the perpetual inventory system, the Cost of Goods Sold and Merchandise Inventory accounts are updated with each sale.

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

The computerization has helped taking physical inventory to a great extent under the periodic inventory system.