Question 1

Operating expenses are different for merchandising and service enterprises.

Accepted Answer

A) True 
 B)False

Question 2

Kate Company uses a perpetual inventory system and purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:

Accepted Answer

The answer of Kate Company uses a perpetual inventory system...

Question 3

When a seller grants credit for returned goods, the account that is credited is

Accepted Answer

A)  Sales Revenue. 
B)  Sales Returns and Allowances. 
C)  Inventory. 
D)  Accounts Receivable. 
A)  Sales Revenue. 
B)  Sales Returns and Allowances. 
C)  Inventory. 
D)  Accounts Receivable.

Question 4

Which of the following would not be classified as a contra account?

Accepted Answer

A)  Inventory 
B)  Sales Returns and Allowances 
C)  Accumulated Depreciation 
D)  Sales Discounts 
A)  Inventory 
B)  Sales Returns and Allowances 
C)  Accumulated Depreciation 
D)  Sales Discounts

Question 5

Which of the following expressions is incorrect?

Accepted Answer

A)  Gross profit - operating expenses = net income 
B)  Sales revenue - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit 
A)  Gross profit - operating expenses = net income 
B)  Sales revenue - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit

Question 6

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Purchases 
B)  Sales Returns and Allowances 
C)  Freight-In 
D)  Purchase Discounts 
A)  Purchases 
B)  Sales Returns and Allowances 
C)  Freight-In 
D)  Purchase Discounts

Question 7

A company shows the following balances: $$\begin{array} { l r } 
\text { Sales Revenue } & \$ 2,500,000 \
\text { Sales Returns and Allowances } & 450,000 \
\text { Sales Discounts } & 50,000 \
\text { Cost of Goods Sold } & 1,400,000
\end{array}$$ What is the gross profit rate?

Accepted Answer

A)  30% 
B)  44% 
C)  56% 
D)  70% 
A)  30% 
B)  44% 
C)  56% 
D)  70%

Question 8

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

Accepted Answer

The answer of Every sales transaction should be supported by...

Question 9

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

Accepted Answer

A)  sales revenue. 
B)  inventory. 
C)  sales discounts. 
D)  freight-out. 
A)  sales revenue. 
B)  inventory. 
C)  sales discounts. 
D)  freight-out.

Question 10

Gross profit does not appear

Accepted Answer

A)  on a multiple-step income statement. 
B)  on a single-step income statement. 
C)  to be relevant in analyzing the operation of a merchandiser. 
D)  on the income statement if the periodic inventory system is used because it cannot be calculated. 
A)  on a multiple-step income statement. 
B)  on a single-step income statement. 
C)  to be relevant in analyzing the operation of a merchandiser. 
D)  on the income statement if the periodic inventory system is used because it cannot be calculated.

Question 11

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 12

Sales revenue

Accepted Answer

A)  may be recorded before cash is collected. 
B)  will always equal cash collections in a month. 
C)  only results from credit sales. 
D)  is only recorded after cash is collected. 
A)  may be recorded before cash is collected. 
B)  will always equal cash collections in a month. 
C)  only results from credit sales. 
D)  is only recorded after cash is collected.

Question 13

During August, 2018, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's net income for August, 2018 is

Accepted Answer

A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000. 
A)  $20,000. 
B)  $21,000. 
C)  $23,000. 
D)  $24,000.

Question 14

An inexperienced accountant for Tilly Company made the following errors in recording merchandising transactions.
1. A $270 refund to a customer for faulty merchandise was debited to Sales Revenue $270 and credited to Cash $270.
2. A $310 credit purchase of supplies was debited to Inventory $310 and credited to Cash $310.
3. A cash payment of $40 for freight on merchandise purchases was debited to Freight-Out $400 and credited to Cash $400.
Instructions
Prepare separate correcting entries for each error, assuming that the incorrect entry is not reversed. (Omit explanations.)

Accepted Answer

The answer of An inexperienced accountant for Tilly Company made...

Question 15

The primary source of revenue for a wholesaler is

Accepted Answer

A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns. 
A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns.

Question 16

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

Accepted Answer

The contra accounts that have normal deb

Question 17

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 18

Net sales is sales revenue less

Accepted Answer

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

Question 19

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

Accepted Answer

A) True 
 B)False

Question 20

A multiple-step income statement provides users with more information about a company's income performance.

Accepted Answer

A) True 
 B)False

Operating expenses are different for merchandising and service enterprises.

Kate Company uses a perpetual inventory system and purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:

When a seller grants credit for returned goods, the account that is credited is

Which of the following would not be classified as a contra account?

Which of the following expressions is incorrect?

Which of the following accounts has a normal credit balance?

A company shows the following balances: Sales Revenue \ 2,500,000 Sales Returns and Allowances 450,000 Sales Discounts 50,000 Cost of Goods Sold 1,400,000 What is the gross profit rate?

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

Gross profit does not appear

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Sales revenue

The primary source of revenue for a wholesaler is

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Net sales is sales revenue less

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

A multiple-step income statement provides users with more information about a company's income performance.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 5: Accounting for Merchandising Operations

Operating expenses are different for merchandising and service enterprises.

Kate Company uses a perpetual inventory system and purchased inventory from Phoebe Company. The shipping costs were $500 and the terms of the shipment were FOB shipping point. Kate would have the following entry regarding the shipping charges:

When a seller grants credit for returned goods, the account that is credited is

Which of the following would not be classified as a contra account?

Which of the following expressions is incorrect?

Which of the following accounts has a normal credit balance?

A company shows the following balances: Sales Revenue \ 2,500,000 Sales Returns and Allowances 450,000 Sales Discounts 50,000 Cost of Goods Sold 1,400,000 What is the gross profit rate?

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

In preparing closing entries for a merchandising company, the Income Summary account will be credited for the balance of

Gross profit does not appear

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Sales revenue

The primary source of revenue for a wholesaler is

A merchandiser frequently has a need to use contra accounts related to the sale of goods. Identify the contra accounts that have normal debit balances and explain why they are not considered expenses.

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Net sales is sales revenue less

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

A multiple-step income statement provides users with more information about a company's income performance.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters