Question 1

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Accepted Answer

A) True 
 B)False

Question 2

Using the following data taken from Payton Inc. which uses a periodic inventory system, prepare the cost of merchandise sold section of the income statement for the year ended May 31. $$\begin{array} { | l | l | } 
\hline \text { Merchandise inventory, June 1 } & \$ 393,250 \
\hline \text { Merchandise inventory, May } 31 & 380,100 \
\hline \text { Purchases } & 1,579,600 \
\hline \text { Purchases returns and allowances } & 81,200 \
\hline \text { Purchases discounts } & 16,500 \
\hline \text { Sales } & 2,060,000 \
\hline \text { Freight-in } & 59,250 \
\hline
\end{array}$$

Accepted Answer

The answer of Using the following data taken from Payton...

Question 3

If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination.

Accepted Answer

A) True 
 B)False

Question 4

Match each of the following terms a-h) with the correct definition below.
-Statement where net income is determined by deducting all expenses from all revenues.

Accepted Answer

A) Credit terms 
B) FOB destination 
C) FOB shipping point 
D) Periodic inventory system 
E) Perpetual inventory system
F)Inventory shrinkage
G)Single-step income statement
H)Multiple-step income statement 
A) Credit terms 
B) FOB destination 
C) FOB shipping point 
D) Periodic inventory system 
E) Perpetual inventory system
F)Inventory shrinkage
G)Single-step income statement
H)Multiple-step income statement

Question 5

Which of the following accounts will not be found in the Cost of Merchandise Sold section of the income statement for a company using the periodic inventory method?

Accepted Answer

A)  Purchases 
B)  Freight-In 
C)  Selling Expense 
D)  Merchandise Inventory 
A)  Purchases 
B)  Freight-In 
C)  Selling Expense 
D)  Merchandise Inventory

Question 6

If merchandise sells for $3,500, with terms of 3/15, n/45 and the cost of the inventory sold is $2,100, the amount charged to sales is

Accepted Answer

A)  $3,395 
B)  $3,500 
C)  $2,037 
D)  $2,100 
A)  $3,395 
B)  $3,500 
C)  $2,037 
D)  $2,100

Question 7

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 8

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

Accepted Answer

@#IMG-DLM& OR Rearranged in th

Question 9

Which of the following accounts usually has a debit balance?

Accepted Answer

A)  Accounts Payable 
B)  Sales Tax Payable 
C)  Sales 
D)  Merchandise Inventory 
A)  Accounts Payable 
B)  Sales Tax Payable 
C)  Sales 
D)  Merchandise Inventory

Question 10

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

Accepted Answer

A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased 
A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased

Question 11

During the current year, merchandise is sold for $117,500 cash and $241,750 on account. The cost of the merchandise sold is $157,400. What is the amount of the gross profit?

Accepted Answer

$117,500 +

Question 12

?If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Accepted Answer

A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned 
A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned

Question 13

Sellers and buyers are required to record trade discounts.

Accepted Answer

A) True 
 B)False

Question 14

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory. Journalize the following transactions:
May 4, Bargain Wholesalers sells inventory to Pet World Supplies for $8,250.00 with terms 1/10, n/30. The cost of the merchandise is $5,755.00.
May 7, Bargain Wholesalers sells an additional $10,985.00 in inventory to Pet World Supplies with terms 1/10, n/30. The cost of the merchandise is $6,925.00.
May 13, Bargain Wholesalers receives a check from Pet World Supplies paying the balance due on both invoices.
Journal

Accepted Answer

The answer of Bargain Wholesalers sells pet supplies to retailers...

Question 15

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

Accepted Answer

A)  2% 
B)  24% 
C)  20% 
D)  36% 
A)  2% 
B)  24% 
C)  20% 
D)  36%

Question 16

If merchandise sold on account is returned to the seller, the seller acknowledges the return by issuing a

Accepted Answer

A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo 
A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo

Question 17

Customer Refunds Payable is an account used to record merchandise returns from customers.

Accepted Answer

A) True 
 B)False

Question 18

Gross profit minus selling expenses equals net income.

Accepted Answer

A) True 
 B)False

Question 19

The chart of accounts for a merchandising business would include an account called Delivery Expense.

Accepted Answer

A) True 
 B)False

Question 20

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Accepted Answer

A)  gross profit 
B)  income from operations 
C)  net income 
D)  gross sales 
A)  gross profit 
B)  income from operations 
C)  net income 
D)  gross sales

Exam 5: Accounting for Merchandising Businesses

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination.

Match each of the following terms a-h) with the correct definition below. -Statement where net income is determined by deducting all expenses from all revenues.

Which of the following accounts will not be found in the Cost of Merchandise Sold section of the income statement for a company using the periodic inventory method?

If merchandise sells for $3,500, with terms of 3/15, n/45 and the cost of the inventory sold is $2,100, the amount charged to sales is

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

Which of the following accounts usually has a debit balance?

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

During the current year, merchandise is sold for $117,500 cash and $241,750 on account. The cost of the merchandise sold is $157,400. What is the amount of the gross profit?

?If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Sellers and buyers are required to record trade discounts.

Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately

If merchandise sold on account is returned to the seller, the seller acknowledges the return by issuing a

Customer Refunds Payable is an account used to record merchandise returns from customers.

Gross profit minus selling expenses equals net income.

The chart of accounts for a merchandising business would include an account called Delivery Expense.

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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