Exam 4: Accounting for Merchandising Operations

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses and reports subtotals for various classes of items.

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equal:

Each sales transaction of a seller that uses a perpetual system involves recognizing both revenue and cost of merchandise sold.

A company purchased $8,750 worth of merchandise, with terms of 2/10, n/30. The invoice was paid within the cash discount period. Accordingly, the company received a cash discount of _______________.

The acid-test ratio:

Cost of goods sold is also called cost of sales.

Generally accepted accounting principles require companies to use a specific format for the financial statements.

Cost of goods sold is reported on both the income statement and the balance sheet.

On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 1, what would be the appropriate journal entry?

A company purchased $6,000 of merchandise on credit with terms 4/15, n/30. How much will be debited to Accounts Payable if the company pays $800 cash on this account within ten days?

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

The quick assets are defined as:

What is inventory shrinkage? How do managers account for shrinkage?

A company's current assets were $17,980, its quick assets were $11,420 and its current liabilities were $12,190. Its quick ratio equals:

Multiple-step income statements:

From the adjusted trial balance for the Worker Products Company, prepare a multiple-step income statement in good form.

A ___________ is an intermediary that buys products from manufacturers and sells to retailers.

The current period's ending inventory is:

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.