Question 1

A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Sales returns:

Accepted Answer

A)  Refer to merchandise that customers return to the seller after the sale 
B)  Refer to reductions in the selling price of merchandise sold to customers 
C)  Represent cash discounts 
D)  Represent trade discounts 
E)  Are not recorded under the perpetual inventory system until the end of each accounting period 
A)  Refer to merchandise that customers return to the seller after the sale 
B)  Refer to reductions in the selling price of merchandise sold to customers 
C)  Represent cash discounts 
D)  Represent trade discounts 
E)  Are not recorded under the perpetual inventory system until the end of each accounting period

Question 3

J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million and net income of $837 million. Its gross margin ratio equals 3.4%.
($24,750 - $16,150)/$24,750 = 34.7%

Accepted Answer

A) True 
 B)False

Question 4

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

Accepted Answer

The answer of Neutron uses a periodic inventory system. Prepare...

Question 5

In a perpetual inventory system, the merchandise inventory account reflects the cost of goods available for sale.

Accepted Answer

A) True 
 B)False

Question 6

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Accepted Answer

A) True 
 B)False

Question 7

When preparing the unadjusted trial balance in a periodic inventory system, the amount that appears as Merchandise Inventory is the ending inventory amount.

Accepted Answer

A) True 
 B)False

Question 8

A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Accepted Answer

A) True 
 B)False

Question 9

A company had sales of $350,000 and cost of goods sold of $200,000, which means gross profit is equal to $550,000.

Accepted Answer

A) True 
 B)False

Question 10

What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination?

Accepted Answer

FOB stands for free on board. If goods a

Question 11

A company has net sales of $1,832,000, sales commissions in the amount of $194,000, net income was $366,400, and the gross profit ratio is 60%, what is the amount of cost of goods sold?

Accepted Answer

A)  $538,800 
B)  $732,800 
C)  $655,200 
D)  $879,360 
E)  $1,099,200 
A)  $538,800 
B)  $732,800 
C)  $655,200 
D)  $879,360 
E)  $1,099,200

Question 12

A company had net sales of $741,800. Its cost of goods sold must have been _________ to yield a gross profit of $282,884.

Accepted Answer

The answer of A company had net sales of $741,800....

Question 13

What is the difference between the periodic and perpetual inventory systems?

Accepted Answer

A periodic inventory system updates the

Question 14

___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Accepted Answer

The answer of ___________________ refer to reductions in the selling...

Question 15

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

Accepted Answer

A)  $3,725.00 
B)  $3,925.00 
C)  $3,995.00 
D)  $4,000.50 
E)  $4,075.00 
A)  $3,725.00 
B)  $3,925.00 
C)  $3,995.00 
D)  $4,000.50 
E)  $4,075.00

Exam 4: Accounting for Merchandising Operations

A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

Sales returns:

J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million and net income of $837 million. Its gross margin ratio equals 3.4%. ($24,750 - $16,150)/$24,750 = 34.7%

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

In a perpetual inventory system, the merchandise inventory account reflects the cost of goods available for sale.

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

When preparing the unadjusted trial balance in a periodic inventory system, the amount that appears as Merchandise Inventory is the ending inventory amount.

A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

A company had sales of $350,000 and cost of goods sold of $200,000, which means gross profit is equal to $550,000.

What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination?

A company has net sales of $1,832,000, sales commissions in the amount of $194,000, net income was $366,400, and the gross profit ratio is 60%, what is the amount of cost of goods sold?

A company had net sales of $741,800. Its cost of goods sold must have been _________ to yield a gross profit of $282,884.

What is the difference between the periodic and perpetual inventory systems?

___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is:

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

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