Question 1

A company has sales of $375,000 and its gross profit is $157,500.Its cost of goods sold equals:

Accepted Answer

A) $(217,000). 
B) $375,000. 
C) $157,500. 
D) $217,500. 
E) $532,500. 
A) $(217,000). 
B) $375,000. 
C) $157,500. 
D) $217,500. 
E) $532,500.

Question 2

Liquidity problems are likely to exist when a company's acid-test ratio:

Accepted Answer

A) Is less than the current ratio. 
B) equals 1. 
C) Is higher than 1. 
D) Is substantially lower than 1. 
E) Is higher than the current ratio. 
A) Is less than the current ratio. 
B) equals 1. 
C) Is higher than 1. 
D) Is substantially lower than 1. 
E) Is higher than the current ratio.

Question 3

A company purchases merchandise with a catalog price of $20,000.The company receives a 35% trade discount from the seller.The seller also offers credit terms of 2/10,n/30.Assuming no returns were made and that payment was made within the discount period,what is the net cost of the merchandise?

Accepted Answer

A) $13,720. 
B) $19,600. 
C) $6,860. 
D) $13,000. 
E) $12,740. 
A) $13,720. 
B) $19,600. 
C) $6,860. 
D) $13,000. 
E) $12,740.

Question 4

Austin's Pub Supply uses the periodic inventory system and had the following sales transactions during August:   Prepare the journal entries that Austin's Pub Supply must make to record these transactions.

Accepted Answer

The answer of Austin's Pub Supply uses the periodic inventory...

Question 5

On September 12,Vander Company sold merchandise in the amount of $5,800 to Jepson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Vander uses the periodic inventory system.On September 14,Jepson returns some of the merchandise.The selling price of the returned merchandise is $500 and the cost of the merchandise returned is $350.The entry or entries that Vander must make on September 14 is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 6

On September 12,Vander Company sold merchandise in the amount of $5,800 to Jepson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Vander uses the periodic inventory system.On September 14,Jepson returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.Jepson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Vander makes on September 18 is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 7

Sales less sales discounts less sales returns and allowances equals:

Accepted Answer

A) Net purchases. 
B) Cost of goods sold. 
C) Net sales. 
D) Gross profit. 
E) Net income. 
A) Net purchases. 
B) Cost of goods sold. 
C) Net sales. 
D) Gross profit. 
E) Net income.

Question 8

Beginning inventory plus net purchases is:

Accepted Answer

A) Cost of goods sold. 
B) Merchandise (goods)available for sale. 
C) Ending inventory. 
D) Sales. 
E) Shown on the balance sheet. 
A) Cost of goods sold. 
B) Merchandise (goods)available for sale. 
C) Ending inventory. 
D) Sales. 
E) Shown on the balance sheet.

Question 9

From the adjusted trial balance for Brookstone Art Supplies given below,prepare a multiple-step income statement in good form.

Accepted Answer

The answer of From the adjusted trial balance for Brookstone...

Question 10

Mega Skateboard Supplier had net sales of $2.8 million,its cost of goods sold was $1.6 million,and its net income was $0.9 million.Its gross margin ratio equals:

Accepted Answer

A) 32%. 
B) 175%. 
C) 43%. 
D) 57%. 
E) 56%. 
A) 32%. 
B) 175%. 
C) 43%. 
D) 57%. 
E) 56%.

Question 11

Products that a company owns and intends to sell are called _____________________.

Accepted Answer

Merchandis

Question 12

All of the following statements regarding inventory shrinkage are true except:

Accepted Answer

A) Inventory shrinkage refers to the loss of inventory. 
B) Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts. 
C) Inventory shrinkage is recognized by debiting an operating expense. 
D) Inventory shrinkage is recognized by debiting Cost of Goods Sold. 
E) Inventory shrinkage can be caused by theft or deterioration. 
A) Inventory shrinkage refers to the loss of inventory. 
B) Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts. 
C) Inventory shrinkage is recognized by debiting an operating expense. 
D) Inventory shrinkage is recognized by debiting Cost of Goods Sold. 
E) Inventory shrinkage can be caused by theft or deterioration.

Question 13

A ___________ inventory system updates the accounting record for inventory only at the end of an accounting period.

Accepted Answer

The answer of A ___________ inventory system updates the accounting...

Question 14

A company has net sales of $825,000 and cost of goods sold of $547,000.Its net income is $98,500.The company's gross margin and operating expenses,respectively,are:

Accepted Answer

A) $209,000 and $191,470 
B) $278,000 and $179,500 
C) $278,000 and $98,500 
D) $179,500 and $98,500 
E) $645,500 and $179,500 
A) $209,000 and $191,470 
B) $278,000 and $179,500 
C) $278,000 and $98,500 
D) $179,500 and $98,500 
E) $645,500 and $179,500

Question 15

Merchandise inventory:

Accepted Answer

A) Is a long-term asset. 
B) Is a current asset. 
C) Includes supplies the company will use in future periods. 
D) Is classified with investments on the balance sheet. 
E) Must be sold within one month. 
A) Is a long-term asset. 
B) Is a current asset. 
C) Includes supplies the company will use in future periods. 
D) Is classified with investments on the balance sheet. 
E) Must be sold within one month.

Question 16

The gross margin ratio:

Accepted Answer

A) Is also called the net profit ratio. 
B) Indicates the percent of sales revenue remaining after covering the cost of the goods sold. 
C) Is also called the profit margin. 
D) Is a measure of liquidity and should exceed 2.0 to be acceptable. 
E) Should be greater than 1 for merchandising companies. 
A) Is also called the net profit ratio. 
B) Indicates the percent of sales revenue remaining after covering the cost of the goods sold. 
C) Is also called the profit margin. 
D) Is a measure of liquidity and should exceed 2.0 to be acceptable. 
E) Should be greater than 1 for merchandising companies.

Question 17

KLM Corporation's quick assets are $5,888,000,its current assets are $11,700,000 and its current liabilities are $8,000,000.Its acid-test ratio equals:

Accepted Answer

A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20. 
A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20.

Question 18

The operating cycle for a merchandiser that sells only for cash moves from:

Accepted Answer

A) Purchases of merchandise to inventory to cash sales. 
B) Purchases of merchandise to inventory to accounts receivable to cash sales. 
C) Inventory to purchases of merchandise to cash sales. 
D) Accounts receivable to purchases of merchandise to inventory to cash sales. 
E) Accounts receivable to inventory to cash sales. 
A) Purchases of merchandise to inventory to cash sales. 
B) Purchases of merchandise to inventory to accounts receivable to cash sales. 
C) Inventory to purchases of merchandise to cash sales. 
D) Accounts receivable to purchases of merchandise to inventory to cash sales. 
E) Accounts receivable to inventory to cash sales.

Question 19

The gross margin ratio equals net sales less ___________ divided by net sales.

Accepted Answer

The answer of The gross margin ratio equals net sales...

Question 20

Zenith Company's Merchandise Inventory account at the end of year 2015 has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 5: Accounting for Merchandising Operations

A company has sales of $375,000 and its gross profit is $157,500.Its cost of goods sold equals:

Liquidity problems are likely to exist when a company's acid-test ratio:

A company purchases merchandise with a catalog price of $20,000.The company receives a 35% trade discount from the seller.The seller also offers credit terms of 2/10,n/30.Assuming no returns were made and that payment was made within the discount period,what is the net cost of the merchandise?

Austin's Pub Supply uses the periodic inventory system and had the following sales transactions during August: Prepare the journal entries that Austin's Pub Supply must make to record these transactions.

Sales less sales discounts less sales returns and allowances equals:

Beginning inventory plus net purchases is:

From the adjusted trial balance for Brookstone Art Supplies given below,prepare a multiple-step income statement in good form.

Mega Skateboard Supplier had net sales of $2.8 million,its cost of goods sold was $1.6 million,and its net income was $0.9 million.Its gross margin ratio equals:

Products that a company owns and intends to sell are called _____________________.

All of the following statements regarding inventory shrinkage are true except:

A ___________ inventory system updates the accounting record for inventory only at the end of an accounting period.

A company has net sales of $825,000 and cost of goods sold of $547,000.Its net income is $98,500.The company's gross margin and operating expenses,respectively,are:

Merchandise inventory:

The gross margin ratio:

KLM Corporation's quick assets are $5,888,000,its current assets are $11,700,000 and its current liabilities are $8,000,000.Its acid-test ratio equals:

The operating cycle for a merchandiser that sells only for cash moves from:

The gross margin ratio equals net sales less ___________ divided by net sales.

Zenith Company's Merchandise Inventory account at the end of year 2015 has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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