Question 1

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Accepted Answer

A) True 
 B)False

Question 2

Fill in the blanks (a)through (g)for the Morrison Company for each of the income statements for years 1,2,and 3.

Accepted Answer

@#IMG-DLM& (a)2,770 + 375 − 2400 = 745 (b)375,the

Question 3

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Accepted Answer

A) True 
 B)False

Question 4

The profit margin ratio is the same as the gross profit ratio.

Accepted Answer

A) True 
 B)False

Question 5

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Accepted Answer

A) Reflects an increase in amount due from a customer. 
B) Recognizes that a customer returned merchandise and/or received an allowance. 
C) Records the cost side of a sales return. 
D) Is recorded when a customer takes a discount. 
E) Reflects a decrease in amount due to a supplier. 
A) Reflects an increase in amount due from a customer. 
B) Recognizes that a customer returned merchandise and/or received an allowance. 
C) Records the cost side of a sales return. 
D) Is recorded when a customer takes a discount. 
E) Reflects a decrease in amount due to a supplier.

Question 6

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

Accepted Answer

The answer of A ________ is an intermediary that buys...

Question 7

Expenses related to accounting,human resource management,and financial management are known as selling expenses.

Accepted Answer

A) True 
 B)False

Question 8

On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system and the gross method of accounting for sales.On March 15,Babson returns some of the merchandise.The selling price of the merchandise is $600 and the cost of the merchandise returned is $350.Babson pays the invoice on March 20,and takes the appropriate discount.The journal entry that Klein makes on March 20 is:

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,800 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 4,500 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 7,056 & \
\hline \text { Sales discounts } & 144 & \
\hline \text { Accounts receivable } & & 7,200 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,056 & \
\hline \text { Accounts receivable } & & 7,056 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,644 & \
\hline \text { Sales discounts } & 156 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,800 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 4,500 & \
\hline \text { Accounts receivable } & & 4,500 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 7,056 & \
\hline \text { Sales discounts } & 144 & \
\hline \text { Accounts receivable } & & 7,200 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,056 & \
\hline \text { Accounts receivable } & & 7,056 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 7,644 & \
\hline \text { Sales discounts } & 156 & \
\hline \text { Accounts receivable } & & 7,800 \
\hline
\end{array}$

Question 9

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 26,it paid the full amount due.The correct journal entry to record the merchandise return on August 11 is:

Accepted Answer

A) Debit Accounts Payable $1,500; credit Cash $1,500. 
B) Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500. 
C) Debit Merchandise Inventory $1,500; credit Sales Returns $1,500. 
D) Debit Merchandise Inventory $1,500; credit Cash $1,500. 
E) Debit Accounts Payable $1,500; credit Purchase Returns $1,500. 
A) Debit Accounts Payable $1,500; credit Cash $1,500. 
B) Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500. 
C) Debit Merchandise Inventory $1,500; credit Sales Returns $1,500. 
D) Debit Merchandise Inventory $1,500; credit Cash $1,500. 
E) Debit Accounts Payable $1,500; credit Purchase Returns $1,500.

Question 10

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 11

The following statements are true regarding the operating cycle of a merchandising company except:

Accepted Answer

A) The operating cycle begins with the purchase of merchandise. 
B) The operating cycle is shortened by credit sales. 
C) The operating cycle ends with the collection of cash from the sale of merchandise. 
D) The operating cycle can vary in length among different merchandising companies. 
E) The operating cycle sometimes involves accounts receivable. 
A) The operating cycle begins with the purchase of merchandise. 
B) The operating cycle is shortened by credit sales. 
C) The operating cycle ends with the collection of cash from the sale of merchandise. 
D) The operating cycle can vary in length among different merchandising companies. 
E) The operating cycle sometimes involves accounts receivable.

Question 12

Gross profit is also called gross margin.

Accepted Answer

A) True 
 B)False

Question 13

On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system and the gross method of accounting for sales.On March 15,Babson returns some of the merchandise.The selling price of the merchandise is $600 and the cost of the merchandise returned is $350.Babson pays the invoice on March 20,and takes the appropriate discount.The amount that Klein receives from Babson on March 20 is:

Accepted Answer

A) $7,800. 
B) $7,644. 
C) $7,044. 
D) $7,056. 
E) $7,200. 
A) $7,800. 
B) $7,644. 
C) $7,044. 
D) $7,056. 
E) $7,200.

Question 14

Preston Office Furniture uses the periodic inventory system and the gross method of accounting for sales.It had the following transactions during the month of May:
   Prepare the required journal entries that Preston Office Furniture must make to record these transactions.

Accepted Answer

The answer of Preston Office Furniture uses the periodic inventory...

Question 15

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 16

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

Accepted Answer

A) 5%. 
B) 9.6%. 
C) 35%. 
D) 65%. 
E) 285.7%. 
A) 5%. 
B) 9.6%. 
C) 35%. 
D) 65%. 
E) 285.7%.

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

A company has sales of $695,000 and cost of goods sold of $278,000.Its gross profit (loss)equals:

Accepted Answer

A) $(417,000). 
B) $695,000. 
C) $278,000. 
D) $417,000. 
E) $973,000. 
A) $(417,000). 
B) $695,000. 
C) $278,000. 
D) $417,000. 
E) $973,000.

Question 19

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.Assuming the company uses a perpetual inventory system,and records purchases using the gross method,the correct journal entry to record the merchandise return on July 7 is:

Accepted Answer

A) Debit Merchandise Inventory $1,600; credit Cash $1,600. 
B) Debit Merchandise Inventory $200; credit Accounts Payable $200. 
C) Debit Merchandise Inventory $200; credit Sales Returns $200. 
D) Debit Accounts Payable $200; credit Merchandise Inventory $200. 
E) Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600. 
A) Debit Merchandise Inventory $1,600; credit Cash $1,600. 
B) Debit Merchandise Inventory $200; credit Accounts Payable $200. 
C) Debit Merchandise Inventory $200; credit Sales Returns $200. 
D) Debit Accounts Payable $200; credit Merchandise Inventory $200. 
E) Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

Question 20

Austin's Pub Supply uses the periodic inventory system and the gross method of accounting for sales.The company 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...

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Fill in the blanks (a)through (g)for the Morrison Company for each of the income statements for years 1,2,and 3.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

The profit margin ratio is the same as the gross profit ratio.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

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

Expenses related to accounting,human resource management,and financial management are known as selling expenses.

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

The following statements are true regarding the operating cycle of a merchandising company except:

Gross profit is also called gross margin.

Preston Office Furniture uses the periodic inventory system and the gross method of accounting for sales.It had the following transactions during the month of May: Prepare the required journal entries that Preston Office Furniture must make to record these transactions.

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

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:

A company has sales of $695,000 and cost of goods sold of $278,000.Its gross profit (loss)equals:

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

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 4: Reporting and Analyzing Merchandising Operations

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Fill in the blanks (a)through (g)for the Morrison Company for each of the income statements for years 1,2,and 3.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

The profit margin ratio is the same as the gross profit ratio.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

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

Expenses related to accounting,human resource management,and financial management are known as selling expenses.

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

The following statements are true regarding the operating cycle of a merchandising company except:

Gross profit is also called gross margin.

Preston Office Furniture uses the periodic inventory system and the gross method of accounting for sales.It had the following transactions during the month of May: Prepare the required journal entries that Preston Office Furniture must make to record these transactions.

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

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:

A company has sales of $695,000 and cost of goods sold of $278,000.Its gross profit (loss)equals:

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

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters