Question 1

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

Accepted Answer

A)  sales invoice. 
B)  purchase invoice. 
C)  credit memorandum. 
D)  debit memorandum. 
A)  sales invoice. 
B)  purchase invoice. 
C)  credit memorandum. 
D)  debit memorandum.

Question 2

Merchandise with a list price of $7,500 and a cost of $7,000 is sold on account, terms 1/10, n/30.Prior to payment, merchandise with a list price of $1,000 and a cost of $800 is returned.The correct amount is paid within the discount period.
Record the following transactions, using the integrated financial statement framework that follows:
(a)Sold the merchandise.
(b)Received the returned merchandise
(c)Received the amount owed.
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Accepted Answer

The answer of Merchandise with a list price of $7,500...

Question 3

The cost of goods sold is subtracted from sales to arrive at _____.

Accepted Answer

A)  net sales 
B)  Fees earned 
C)  operating income 
D)  gross profit 
A)  net sales 
B)  Fees earned 
C)  operating income 
D)  gross profit

Question 4

In recording the cost of merchandise sold for cash using a perpetual inventory system, the effect on the accounts is:

Accepted Answer

A)  increase Cost of Merchandise Sold; increase Cash. 
B)  increase Cost of Merchandise Sold; decrease Merchandise Inventory. 
C)  increase Merchandise Inventory; decrease Cost of Merchandise Sold. 
D)  increase Accounts Receivable; decrease Merchandise Inventory. 
A)  increase Cost of Merchandise Sold; increase Cash. 
B)  increase Cost of Merchandise Sold; decrease Merchandise Inventory. 
C)  increase Merchandise Inventory; decrease Cost of Merchandise Sold. 
D)  increase Accounts Receivable; decrease Merchandise Inventory.

Question 5

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

Accepted Answer

A)  Selling expense 
B)  Miscellaneous expense 
C)  Administrative expense 
D)  Other expense 
A)  Selling expense 
B)  Miscellaneous expense 
C)  Administrative expense 
D)  Other expense

Question 6

When merchandise that was sold on account is returned, which accounts are affected?

Accepted Answer

A)  Cash, accounts receivable, cost of goods sold, and customer refunds payable 
B)  Customer refunds payable, accounts receivable, merchandise inventory, and estimated returns inventory 
C)  Customer refunds payable, accounts receivable, purchases, and estimated returns inventory 
D)  Customer refunds payable, accounts receivable, purchases, and merchandise inventory 
A)  Cash, accounts receivable, cost of goods sold, and customer refunds payable 
B)  Customer refunds payable, accounts receivable, merchandise inventory, and estimated returns inventory 
C)  Customer refunds payable, accounts receivable, purchases, and estimated returns inventory 
D)  Customer refunds payable, accounts receivable, purchases, and merchandise inventory

Question 7

If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as:

Accepted Answer

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

Question 8

Merchandise not sold at the end of the period is reported as:

Accepted Answer

A)  cost of goods sold. 
B)  old stock. 
C)  merchandise inventory. 
D)  net purchases. 
A)  cost of goods sold. 
B)  old stock. 
C)  merchandise inventory. 
D)  net purchases.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Accepted Answer

A)  selling expenses. 
B)  general expenses. 
C)  other expenses. 
D)  administrative expenses. 
A)  selling expenses. 
B)  general expenses. 
C)  other expenses. 
D)  administrative expenses.

Question 11

Which of the following is an example of an administrative expense?

Accepted Answer

A)  Cost of goods sold 
B)  Office supplies expense 
C)  Loss from disposing of fixed assets 
D)  Advertising expense 
A)  Cost of goods sold 
B)  Office supplies expense 
C)  Loss from disposing of fixed assets 
D)  Advertising expense

Question 12

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.

Accepted Answer

A) True 
 B)False

Question 13

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

Accepted Answer

A)  Increases Customer Refunds and Allowances and decreases Accounts Receivable 
B)  Decreases Cost of Merchandise Sold and increases Merchandise Inventory 
C)  Increases Purchase Returns and Allowances and decreases Merchandise Inventory 
D)  All of these occur. 
A)  Increases Customer Refunds and Allowances and decreases Accounts Receivable 
B)  Decreases Cost of Merchandise Sold and increases Merchandise Inventory 
C)  Increases Purchase Returns and Allowances and decreases Merchandise Inventory 
D)  All of these occur.

Question 14

In case of merchandise return, the inventory account is increased by the amount of cost of the goods returned, and:​

Accepted Answer

A)  ​the customer refunds payable account is increased by the same amount. 
B)  ​the estimated returns inventory account is decreased by the same amount. 
C)  ​the accounts receivable account is increased by the same amount. 
D)  ​retained earnings are decreased by the same amount. 
A)  ​the customer refunds payable account is increased by the same amount. 
B)  ​the estimated returns inventory account is decreased by the same amount. 
C)  ​the accounts receivable account is increased by the same amount. 
D)  ​retained earnings are decreased by the same amount.

Question 15

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

Accepted Answer

A) True 
 B)False

Question 16

The merchandise inventory account is found on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 18

What is one criticism of the single-step income statement?

Accepted Answer

A)  It is too complex. 
B)  It has too many subsections. 
C)  Gross profit and income from operations are not available for analysis. 
D)  Income taxes are given too much weight. 
A)  It is too complex. 
B)  It has too many subsections. 
C)  Gross profit and income from operations are not available for analysis. 
D)  Income taxes are given too much weight.

Question 19

Based on the information below, illustrate the effects on the accounts and financial statements of the Seller and the Buyer.Both use a perpetual inventory system.
(a)Seller sells Buyer on account merchandise costing $300 for $500, terms 2/10, net 30, FOB destination.The transportation charge is $50.
(b)Buyer returns as defective $100 worth of the $500 merchandise received.The seller's cost is $60.
(c)Buyer pays within the discount period.
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Accepted Answer

The answer of Based on the information below, illustrate the...

Question 20

Sales discounts are granted by the seller to customers for payment at the end of the month.

Accepted Answer

A) True 
 B)False

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

The cost of goods sold is subtracted from sales to arrive at _____.

In recording the cost of merchandise sold for cash using a perpetual inventory system, the effect on the accounts is:

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

When merchandise that was sold on account is returned, which accounts are affected?

If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as:

Merchandise not sold at the end of the period is reported as:

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

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Which of the following is an example of an administrative expense?

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

In case of merchandise return, the inventory account is increased by the amount of cost of the goods returned, and:

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

The merchandise inventory account is found on the balance sheet.

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

What is one criticism of the single-step income statement?

Sales discounts are granted by the seller to customers for payment at the end of the month.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 4: Accounting for Merchandising Businesses

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a:

The cost of goods sold is subtracted from sales to arrive at _____.

In recording the cost of merchandise sold for cash using a perpetual inventory system, the effect on the accounts is:

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

When merchandise that was sold on account is returned, which accounts are affected?

If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as:

Merchandise not sold at the end of the period is reported as:

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

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Which of the following is an example of an administrative expense?

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/eom.

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

In case of merchandise return, the inventory account is increased by the amount of cost of the goods returned, and:​

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

The merchandise inventory account is found on the balance sheet.

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

What is one criticism of the single-step income statement?

Sales discounts are granted by the seller to customers for payment at the end of the month.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

In case of merchandise return, the inventory account is increased by the amount of cost of the goods returned, and: