Question 1

Describe the recording process for purchases of merchandise inventory using a perpetual inventory system.

Accepted Answer

Purchases net of trade discounts are add

Question 2

A business sold some inventory that had cost $5,000 before taxes. The sale is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

Accepted Answer

A)  $5,000 
B)  $5,300 
C)  $5,350 
D)  $5,600 
E)  None of these answers is correct. 
A)  $5,000 
B)  $5,300 
C)  $5,350 
D)  $5,600 
E)  None of these answers is correct.

Question 3

A periodic inventory system

Accepted Answer

A)  Gives more timely information 
B)  Is widely used in practice 
C)  Was historically used by companies that sold large quantities of low-value items 
D)  Provides point of sale data 
E)  Does not use a Purchases account 
A)  Gives more timely information 
B)  Is widely used in practice 
C)  Was historically used by companies that sold large quantities of low-value items 
D)  Provides point of sale data 
E)  Does not use a Purchases account

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

Accepted Answer

A) True 
 B)False

Question 6

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below.
  
-Is Blade Runner Store using a periodic or perpetual inventory system? Explain.

Accepted Answer

A perpetual system is used sin

Question 7

Merchandise inventory refers to products a company owns for purposes of selling to customers.

Accepted Answer

A) True 
 B)False

Question 8

The normal balance of the following accounts is a debit

Accepted Answer

A)  Sales discounts and interest revenue 
B)  Sales returns and allowances and purchase discounts. 
C)  Sales returns and allowances, cost of goods sold 
D)  Transportation-in and income summary 
E)  Cost of goods sold, and purchase discounts 
A)  Sales discounts and interest revenue 
B)  Sales returns and allowances and purchase discounts. 
C)  Sales returns and allowances, cost of goods sold 
D)  Transportation-in and income summary 
E)  Cost of goods sold, and purchase discounts

Question 9

Gross profit is derived from

Accepted Answer

A)  Sales 
B)  Beginning inventory 
C)  Ending inventory 
D)  Cost of goods sold 
E)  All of the above 
A)  Sales 
B)  Beginning inventory 
C)  Ending inventory 
D)  Cost of goods sold 
E)  All of the above

Question 10

A perpetual inventory system gives a continuous record of the amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 11

Z-Mart uses the perpetual inventory system and recorded the following journal entry:   The transaction was

Accepted Answer

A)  A purchase 
B)  A return 
C)  A return and payment of the account payable 
D)  A payment of the account payable and recognition of a cash discount taken 
E)  A purchase and recognition of a cash discount taken 
A)  A purchase 
B)  A return 
C)  A return and payment of the account payable 
D)  A payment of the account payable and recognition of a cash discount taken 
E)  A purchase and recognition of a cash discount taken

Question 12

Transportation-in increases cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 13

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period, then,

Accepted Answer

A)  The cost of goods sold was larger than net purchases. 
B)  Profit was larger than gross profit. 
C)  The cost of goods sold was smaller than net purchases. 
D)  The cost of goods available for sale was smaller than the cost of goods sold. 
E)  Gross profit was larger than the cost of goods sold. 
A)  The cost of goods sold was larger than net purchases. 
B)  Profit was larger than gross profit. 
C)  The cost of goods sold was smaller than net purchases. 
D)  The cost of goods available for sale was smaller than the cost of goods sold. 
E)  Gross profit was larger than the cost of goods sold.

Question 14

The purchaser usually records a purchase return by a credit memorandum.

Accepted Answer

A) True 
 B)False

Question 15

Merchandise inventory is included in the Plant and Equipment section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Z-Mart did not take advantage of a supplier's offer of 2/10, n/30, and paid the invoice at the end of the month. By not taking the discount Z-Mart lost the equivalent of 18% annual interest on the amount of the purchase.

Accepted Answer

A) True 
 B)False

Question 17

In a perpetual inventory system, the cost of inventory purchased is recorded in the Purchases account.

Accepted Answer

A) True 
 B)False

Question 18

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

Sales are recorded at list price less an

Question 19

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below.
  
-Calculate the gross profit ratio for the year ended December 31, 2020. Interpret the ratio.

Accepted Answer

Gross profit ratio = GP ratio

Question 20

Businesses normally get a full credit for both the goods and services tax (GST) and/or Harmonized Sales Tax (HST), and the provincial sales tax (PST) that they have paid.

Accepted Answer

A) True 
 B)False

Describe the recording process for purchases of merchandise inventory using a perpetual inventory system.

A business sold some inventory that had cost $5,000 before taxes. The sale is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

A periodic inventory system

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

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below. -Is Blade Runner Store using a periodic or perpetual inventory system? Explain.

Merchandise inventory refers to products a company owns for purposes of selling to customers.

The normal balance of the following accounts is a debit

Gross profit is derived from

A perpetual inventory system gives a continuous record of the amount of inventory on hand.

Z-Mart uses the perpetual inventory system and recorded the following journal entry: The transaction was

Transportation-in increases cost of goods purchased.

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period, then,

The purchaser usually records a purchase return by a credit memorandum.

Merchandise inventory is included in the Plant and Equipment section of the balance sheet.

Z-Mart did not take advantage of a supplier's offer of 2/10, n/30, and paid the invoice at the end of the month. By not taking the discount Z-Mart lost the equivalent of 18% annual interest on the amount of the purchase.

In a perpetual inventory system, the cost of inventory purchased is recorded in the Purchases account.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below. -Calculate the gross profit ratio for the year ended December 31, 2020. Interpret the ratio.

Businesses normally get a full credit for both the goods and services tax (GST) and/or Harmonized Sales Tax (HST), and the provincial sales tax (PST) that they have paid.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters

Exam 5: Accounting for Merchandising Activities

Describe the recording process for purchases of merchandise inventory using a perpetual inventory system.

A business sold some inventory that had cost $5,000 before taxes. The sale is subject to 5% goods and services tax (GST) and 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

A periodic inventory system

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

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below. -Is Blade Runner Store using a periodic or perpetual inventory system? Explain.

Merchandise inventory refers to products a company owns for purposes of selling to customers.

The normal balance of the following accounts is a debit

Gross profit is derived from

A perpetual inventory system gives a continuous record of the amount of inventory on hand.

Z-Mart uses the perpetual inventory system and recorded the following journal entry: The transaction was

Transportation-in increases cost of goods purchased.

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period, then,

The purchaser usually records a purchase return by a credit memorandum.

Merchandise inventory is included in the Plant and Equipment section of the balance sheet.

Z-Mart did not take advantage of a supplier's offer of 2/10, n/30, and paid the invoice at the end of the month. By not taking the discount Z-Mart lost the equivalent of 18% annual interest on the amount of the purchase.

In a perpetual inventory system, the cost of inventory purchased is recorded in the Purchases account.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Accounts and their balances from the trial balance of Blade Runner Store for the year ended December 31, 2020 are below. -Calculate the gross profit ratio for the year ended December 31, 2020. Interpret the ratio.

Businesses normally get a full credit for both the goods and services tax (GST) and/or Harmonized Sales Tax (HST), and the provincial sales tax (PST) that they have paid.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Property, Plant and Equipment Intangibles

Payroll Liabilities

Accounting Information Systems

Filters