Question 1

The acid-test ratio is defined as current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

A company had net sales of $752,000 and cost of goods sold of $543,000.Its net income was $17,530.The company's gross margin ratio equals:

Accepted Answer

A) 18.9% 
B) 24.5% 
C) 27.8% 
D) 34.7% 
E) 35.2% 
A) 18.9% 
B) 24.5% 
C) 27.8% 
D) 34.7% 
E) 35.2%

Question 4

Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases.Prepare general journal entries to record the following transactions for Johnnycake:

Accepted Answer

The answer of Johnnycake Restaurant uses a periodic inventory system...

Question 5

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Accepted Answer

A) 4.2%. 
B) 24.1%. 
C) 75.9%. 
D) $83,750. 
E) $264,050. 
A) 4.2%. 
B) 24.1%. 
C) 75.9%. 
D) $83,750. 
E) $264,050.

Question 6

A company has a gross margin ratio of 40%.Cost of Goods Sold equals $360,000.Its selling,general and administrative expenses total $87,500.Its sales for the period equals

Accepted Answer

A) $240,000. 
B) $87,500. 
C) $152,500. 
D) $360,000. 
E) $600,000. 
A) $240,000. 
B) $87,500. 
C) $152,500. 
D) $360,000. 
E) $600,000.

Question 7

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 16,it paid the full amount due.The correct journal entry to record the purchase on August 7 is:

Accepted Answer

A) Debit Merchandise Inventory $9,750; credit Cash $9,750. 
B) Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750. 
C) Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250. 
D) Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750. 
E) Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750. 
A) Debit Merchandise Inventory $9,750; credit Cash $9,750. 
B) Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750. 
C) Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250. 
D) Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750. 
E) Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750.

Question 8

The following statements regarding merchandise inventory are true except:

Accepted Answer

A) Merchandise inventory is reported on the balance sheet as a current asset. 
B) Merchandise inventory refers to products a company owns and intends to sell. 
C) Merchandise inventory may include the costs of freight in and making them ready for sale. 
D) Merchandise inventory appears on the balance sheet of a service company. 
E) Purchasing merchandise inventory is part of the operating cycle for a business. 
A) Merchandise inventory is reported on the balance sheet as a current asset. 
B) Merchandise inventory refers to products a company owns and intends to sell. 
C) Merchandise inventory may include the costs of freight in and making them ready for sale. 
D) Merchandise inventory appears on the balance sheet of a service company. 
E) Purchasing merchandise inventory is part of the operating cycle for a business.

Question 9

Non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals are called ________.

Accepted Answer

other reve

Question 10

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Accepted Answer

A) True 
 B)False

Question 11

All of the following statements related to U.S.GAAP and IFRS are true except:

Accepted Answer

A) Accounting for basic inventory transactions is the same under the two systems. 
B) The closing process for merchandisers is the same under both systems. 
C) U.S.GAAP offers little guidance about the presentation order of expenses. 
D) Neither system requires separate disclosure of items when their size,nature,or frequency are important. 
E) Neither system defines operating income. 
A) Accounting for basic inventory transactions is the same under the two systems. 
B) The closing process for merchandisers is the same under both systems. 
C) U.S.GAAP offers little guidance about the presentation order of expenses. 
D) Neither system requires separate disclosure of items when their size,nature,or frequency are important. 
E) Neither system defines operating income.

Question 12

A company uses the perpetual inventory system and recorded the following entry: $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$ This entry reflects a:

Accepted Answer

A) Purchase of merchandise on credit. 
B) Return of merchandise. 
C) Sale of merchandise on credit. 
D) Payment of the account payable less a 2% cash discount taken. 
E) Payment of the account payable less a 1% cash discount taken. 
A) Purchase of merchandise on credit. 
B) Return of merchandise. 
C) Sale of merchandise on credit. 
D) Payment of the account payable less a 2% cash discount taken. 
E) Payment of the account payable less a 1% cash discount taken.

Question 13

Sales returns:

Accepted Answer

A) Refer to merchandise that customers return to the seller after the sale. 
B) Refer to reductions in the selling price of merchandise sold to customers. 
C) Represent cash discounts. 
D) Represent trade discounts. 
E) Are not recorded under the perpetual inventory system until the end of each accounting period. 
A) Refer to merchandise that customers return to the seller after the sale. 
B) Refer to reductions in the selling price of merchandise sold to customers. 
C) Represent cash discounts. 
D) Represent trade discounts. 
E) Are not recorded under the perpetual inventory system until the end of each accounting period.

Question 14

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it was entitled to.The cash paid on June 24 equals:

Accepted Answer

A) $8,924. 
B) $9,700. 
C) $10,000. 
D) $9,800. 
E) $8,724. 
A) $8,924. 
B) $9,700. 
C) $10,000. 
D) $9,800. 
E) $8,724.

Question 15

Harley's Antique Shop had net sales of $772,000.The gross profit was $415,000.Calculate Harley's cost of goods sold.

Accepted Answer

Cost of Goods Sold =

Question 16

Each sale of merchandise has two parts: the revenue side and the cost side.

Accepted Answer

A) True 
 B)False

Question 17

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 18

A company has a gross margin ratio of 45% on net sales of $850,000.Its selling,general and administrative expenses total $212,500.Its cost of goods sold for the period equals:

Accepted Answer

A) $382,500. 
B) $467,500. 
C) $170,000. 
D) $212,000. 
E) $76,500. 
A) $382,500. 
B) $467,500. 
C) $170,000. 
D) $212,000. 
E) $76,500.

Question 19

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

Accepted Answer

A) True 
 B)False

Question 20

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45,and FOB shipping point.The freight charge,$500,was added to the invoice amount.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

Accepted Answer

A) $9,224. 
B) $10,200. 
C) $10,500. 
D) $10,300. 
E) $9,424. 
A) $9,224. 
B) $10,200. 
C) $10,500. 
D) $10,300. 
E) $9,424.

The acid-test ratio is defined as current assets divided by current liabilities.

Merchandise inventory is reported in the long-term assets section of the balance sheet.

A company had net sales of $752,000 and cost of goods sold of $543,000.Its net income was $17,530.The company's gross margin ratio equals:

Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases.Prepare general journal entries to record the following transactions for Johnnycake:

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

A company has a gross margin ratio of 40%.Cost of Goods Sold equals $360,000.Its selling,general and administrative expenses total $87,500.Its sales for the period equals

The following statements regarding merchandise inventory are true except:

Non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals are called ________.

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

All of the following statements related to U.S.GAAP and IFRS are true except:

A company uses the perpetual inventory system and recorded the following entry: Accounts Payable 2,500 Merchandise Inventory 50 Cash 2,450 This entry reflects a:

Sales returns:

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it was entitled to.The cash paid on June 24 equals:

Harley's Antique Shop had net sales of $772,000.The gross profit was $415,000.Calculate Harley's cost of goods sold.

Each sale of merchandise has two parts: the revenue side and the cost side.

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:

A company has a gross margin ratio of 45% on net sales of $850,000.Its selling,general and administrative expenses total $212,500.Its cost of goods sold for the period equals:

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

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

The acid-test ratio is defined as current assets divided by current liabilities.

Merchandise inventory is reported in the long-term assets section of the balance sheet.

A company had net sales of $752,000 and cost of goods sold of $543,000.Its net income was $17,530.The company's gross margin ratio equals:

Johnnycake Restaurant uses a periodic inventory system and the gross method of accounting for purchases.Prepare general journal entries to record the following transactions for Johnnycake:

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

A company has a gross margin ratio of 40%.Cost of Goods Sold equals $360,000.Its selling,general and administrative expenses total $87,500.Its sales for the period equals

The following statements regarding merchandise inventory are true except:

Non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals are called ________.

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

All of the following statements related to U.S.GAAP and IFRS are true except:

A company uses the perpetual inventory system and recorded the following entry: Accounts Payable 2,500 Merchandise Inventory 50 Cash 2,450 This entry reflects a:

Sales returns:

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it was entitled to.The cash paid on June 24 equals:

Harley's Antique Shop had net sales of $772,000.The gross profit was $415,000.Calculate Harley's cost of goods sold.

Each sale of merchandise has two parts: the revenue side and the cost side.

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:

A company has a gross margin ratio of 45% on net sales of $850,000.Its selling,general and administrative expenses total $212,500.Its cost of goods sold for the period equals:

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

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