Question 1

A company sells $10,000 of goods.The gross profit percentage is 32%.Net income would be $3,200.

Accepted Answer

A) True 
 B)False

Question 2

On June 15,Oakley Inc.sells merchandise on account to Sunglass Hut (SH)for $1,000 terms 2/10,n/30.On June 20,SH returns to Oakley merchandise that SH had purchased for $300.On June 24,SH completely fulfills its obligation to Oakley by making a cash payment.What is the amount of cash paid by SH to Oakley?

Accepted Answer

A) $680. 
B) $686. 
C) $700. 
D) $1,000.

Question 3

Sales revenue is $367,810 while sales returns and allowances and sales discounts total $24,180.The cost of goods sold is $216,490,operating and other expenses are $28,500,and the company pays $31,640 in income tax.Which of the following is true?

Accepted Answer

A) Net sales is $127,140 and gross profit is $98,640. 
B) Net sales is $67,000 and gross profit is $98,640. 
C) Net sales is $343,630 and gross profit is $127,140. 
D) Net sales is $367,810 and gross profit is $67,000.

Question 4

If a customer returns an item to the retailer,the retailer will record the return as:

Accepted Answer

A) sales returns and allowances. 
B) shrinkage. 
C) sales discounts. 
D) purchase returns and allowances.

Question 5

In a retail business that uses a perpetual inventory system,scanning a bar code:

Accepted Answer

A) calculates the amount owed by the customer. 
B) identifies the item sold to be removed from the Inventory account. 
C) identifies the item sold to be recorded in the Cost of Goods Sold account. 
D) all of the answers are acceptable.

Question 6

The company purchases $1600 of supplies intending to use them internally.

Accepted Answer

A) debited (Dr) 
B) Bedited (Cr) 
C) Ceither (N)

Question 7

Which of the following is a true statement for a company using a perpetual inventory system?

Accepted Answer

A) Purchase returns and allowances is a contra-account to revenue. 
B) Sales returns and allowances is a contra-account to revenue. 
C) Purchase returns and allowances is a contra-account to accounts receivable. 
D) Sales returns and allowances is a contra-account to inventory.

Question 8

A periodic inventory system does not track the cost of goods sold during the accounting period.

Accepted Answer

A) True 
 B)False

Question 9

The perpetual inventory method of tracking inventory is considered superior to the periodic method because the perpetual method:

Accepted Answer

A) makes calculations easier and less technology can be deployed. 
B) tells what inventory a company should have at any point in time. 
C) saves a company from ever having to count the goods in inventory. 
D) is more consistent with how companies calculated inventory in the past.

Question 10

A retailer sells TVs at a selling price of $20,000 on account.The total cost of the inventory sold is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:

Accepted Answer

A) $20,000 will be debited to Inventory and $20,000 will be credited to Accounts Payable. 
B) $20,000 will be debited to Accounts Receivable and $20,000 will be credited to Sales Revenue. 
C) $20,000 will be credited to Inventory and $20,000 will be credited to sales revenue. 
D) $20,000 will be debited to costs of goods sold and $20,000 will be credited to Inventory.

Question 11

Sales returns and allowances and sales discounts are expense accounts.

Accepted Answer

A) True 
 B)False

Question 12

A retailer sells plasma TVs at a selling price of $5,000 each.The total sale on account is for $20,000.Under a perpetual inventory system the journal entries to record the sale will include:

Accepted Answer

A) $20,000 will be debited to Inventory and $20,000 will be credited to Accounts Payable. 
B) $20,000 will be debited to Costs of goods sold and $20,000 will be credited to Inventory. 
C) $20,000 will be credited to Inventory and $20,000 will be credited to sales revenue. 
D) $20,000 will be debited to Accounts Receivable and $20,000 will be credited to Sales Revenue.

Question 13

Businesses need to control their day-to-day operations in order to ensure that:

Accepted Answer

A) sales are not lost because desired goods are not in stock. 
B) money is not tied up in excessive inventory. 
C) the loss of inventory and cash to theft is minimized. 
D) all of the answers are acceptable.

Exam 6: Merchandising Operations and the Multi-Step Income Statement

A company sells $10,000 of goods.The gross profit percentage is 32%.Net income would be $3,200.

Sales revenue is $367,810 while sales returns and allowances and sales discounts total $24,180.The cost of goods sold is $216,490,operating and other expenses are $28,500,and the company pays $31,640 in income tax.Which of the following is true?

If a customer returns an item to the retailer,the retailer will record the return as:

In a retail business that uses a perpetual inventory system,scanning a bar code:

The company purchases $1600 of supplies intending to use them internally.

Which of the following is a true statement for a company using a perpetual inventory system?

A periodic inventory system does not track the cost of goods sold during the accounting period.

The perpetual inventory method of tracking inventory is considered superior to the periodic method because the perpetual method:

A retailer sells TVs at a selling price of $20,000 on account.The total cost of the inventory sold is $15,000.Under a perpetual inventory system the journal entries to record the sale will include:

Sales returns and allowances and sales discounts are expense accounts.

A retailer sells plasma TVs at a selling price of $5,000 each.The total sale on account is for $20,000.Under a perpetual inventory system the journal entries to record the sale will include:

Businesses need to control their day-to-day operations in order to ensure that: