Question 1

Gross sales less sales returns and allowances less sales discounts equals

Accepted Answer

A) collectible sales. 
B) net sales. 
C) total sales. 
D) operating sales.

Question 2

Profit will result if gross profit exceeds

Accepted Answer

A) cost of goods sold. 
B) operating expenses. 
C) purchases. 
D) cost of goods sold plus operating expenses.

Question 3

Under the perpetual inventory system, in addition to making the entry to record the sale, the seller would

Accepted Answer

A) debit Merchandise Inventory and credit Cost of Goods Sold. 
B) debit Cost of Goods Sold and credit Purchases. 
C) debit Cost of Goods Sold and credit Merchandise Inventory. 
D) make no additional entry until the end of the period.

Question 4

Freight terms will specify the point at which ownership of the goods is transferred from the seller to the buyer.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true about inventory systems?

Accepted Answer

A) Periodic inventory systems require more detailed inventory records. 
B) Perpetual inventory systems require more detailed inventory records. 
C) A periodic system requires cost of goods sold to be recorded after each sale. 
D) A perpetual system determines cost of goods sold only at the end of the accounting period.

Question 6

A physical inventory count should be done at least once a year regardless of whether a perpetual or periodic inventory system is being used.

Accepted Answer

A) True 
 B)False

Question 7

Use the following information to answer questions 
 
-The profit margin would be

Accepted Answer

A) 18.5%. 
B) 15.6%. 
C) 60.6%. 
D) 34.3%.

Question 8

Which one of the following would not appear on a single-step income statement?

Accepted Answer

A) gross profit 
B) expenses 
C) sales revenues 
D) cost of goods sold

Question 9

Which of the following would not be classified as a contra account?

Accepted Answer

A) Sales 
B) Sales Returns and Allowances 
C) Accumulated Depreciation 
D) Sales Discounts

Question 10

Cost of Goods Sold is considered an operating expense for a merchandising company.

Accepted Answer

A) True 
 B)False

Question 11

Freight paid by the seller to a customer's business is recorded as a

Accepted Answer

A) credit to Sales. 
B) debit to Sales. 
C) debit to an operating expense. 
D) credit to Cost of Goods Sold.

Question 12

Sales Returns and Allowances is a(n)

Accepted Answer

A) asset account. 
B) contra asset account. 
C) expense account. 
D) contra revenue account.

Question 13

Profit from operations appears on

Accepted Answer

A) both a multiple-step and a single-step income statement. 
B) neither a multiple-step nor a single-step income statement. 
C) a single-step income statement only. 
D) a multiple-step income statement only.

Question 14

A loss from operations will result if operating expenses exceed

Accepted Answer

A) cost of goods sold. 
B) selling expenses. 
C) cost of goods sold plus sales returns and allowances. 
D) gross profit.

Question 15

Generally, the revenue account for a merchandising company is called

Accepted Answer

A) Sales Revenue or Sales. 
B) Investment Revenue. 
C) Gross Profit. 
D) Net Sales.

Exam 5: Merchandising Operations and the Multiple-Step Income Statement

Gross sales less sales returns and allowances less sales discounts equals

Profit will result if gross profit exceeds

Under the perpetual inventory system, in addition to making the entry to record the sale, the seller would

Freight terms will specify the point at which ownership of the goods is transferred from the seller to the buyer.

Which of the following is true about inventory systems?

A physical inventory count should be done at least once a year regardless of whether a perpetual or periodic inventory system is being used.

Use the following information to answer questions -The profit margin would be

Which one of the following would not appear on a single-step income statement?

Which of the following would not be classified as a contra account?

Cost of Goods Sold is considered an operating expense for a merchandising company.

Freight paid by the seller to a customer's business is recorded as a

Sales Returns and Allowances is a(n)

Profit from operations appears on

A loss from operations will result if operating expenses exceed

Generally, the revenue account for a merchandising company is called