Question 1

The sales discount account is a contra account to Sales.

Accepted Answer

A) True 
 B)False

Question 2

For a retail firm, the inventory sold is shown on the income statement as:

Accepted Answer

A)  cost of goods sold. 
B)  purchases. 
C)  purchases returns and allowances. 
D)  net purchases. 
A)  cost of goods sold. 
B)  purchases. 
C)  purchases returns and allowances. 
D)  net purchases.

Question 3

On the income statement, sales discounts are normally deducted from sales to yield the cost of merchandise sold.

Accepted Answer

A) True 
 B)False

Question 4

A sale of $600 on account subject to a sales tax of 5% would increase account receivable by $570.

Accepted Answer

A) True 
 B)False

Question 5

When someone purchases merchandise and incurs the cost of transportation, these costs of purchasing inventory are added to the cost of the inventory.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following best explains inventory shrinkage under the perpetual inventory system?

Accepted Answer

A)  It is the discount taken by the buyer for early payment of an invoice. 
B)  It is the damaged merchandise returned by the buyer to the seller. 
C)  It is the amount that is entered on a cash register and recorded in the accounts by increasing inventory. 
D)  It is the difference between the physical count of inventory and the balance of the inventory account. 
A)  It is the discount taken by the buyer for early payment of an invoice. 
B)  It is the damaged merchandise returned by the buyer to the seller. 
C)  It is the amount that is entered on a cash register and recorded in the accounts by increasing inventory. 
D)  It is the difference between the physical count of inventory and the balance of the inventory account.

Question 7

Which of the following is true of the perpetual inventory system?

Accepted Answer

A)  The amount of merchandise available for sale is continuously updated in the inventory records. 
B)  Physical inventory is used to determine the cost of inventory on hand at the end of the period. 
C)  The inventory does not show the amount of merchandise sold. 
D)  The inventory account is updated for each purchase and sale, and related items in the subsidiary ledger are updated on a monthly basis. 
A)  The amount of merchandise available for sale is continuously updated in the inventory records. 
B)  Physical inventory is used to determine the cost of inventory on hand at the end of the period. 
C)  The inventory does not show the amount of merchandise sold. 
D)  The inventory account is updated for each purchase and sale, and related items in the subsidiary ledger are updated on a monthly basis.

Question 8

During the previous year, Nightwork Co's.net sales was$135,000, cost of goods sold was $60,750, operating expenses were $81,000, and other revenues were $13,550.What was Nightwork's gross profit?

Accepted Answer

A)  $74,250 
B)  $60,700 
C)  $(6,750) 
D)  $6800 
A)  $74,250 
B)  $60,700 
C)  $(6,750) 
D)  $6800

Question 9

Which of the following businesses is a retail business?

Accepted Answer

A)  H&R Block 
B)  Becker Law Office 
C)  Little Tykes Day care 
D)  Kohl's 
A)  H&R Block 
B)  Becker Law Office 
C)  Little Tykes Day care 
D)  Kohl's

Question 10

Surist, Inc. 
Surist, Inc.purchased merchandise for $300,000, received credit for purchase returns of $20,000, availed purchase discounts of $5,000, and paid transportation in of $12,000.
-
?
Refer to Surist, Inc.What is the total cost of merchandise purchased?

Accepted Answer

A)  $312,000 
B)  $287,000 
C)  $263,000 
D)  $288,000 
A)  $312,000 
B)  $287,000 
C)  $263,000 
D)  $288,000

Question 11

The excess of net revenue from sales over the cost of goods sold is called _____.

Accepted Answer

A)  accounts receivable 
B)  operating income 
C)  accounts payable 
D)  gross profit 
A)  accounts receivable 
B)  operating income 
C)  accounts payable 
D)  gross profit

Question 12

Under the indirect method for preparing the statement of cash flows, decreases in current assets are _____ net income in the cash flows from operating activities section.

Accepted Answer

A)  subtracted from 
B)  added to 
C)  not used in calculating 
D)  cannot tell from the information given 
A)  subtracted from 
B)  added to 
C)  not used in calculating 
D)  cannot tell from the information given

Question 13

Which of the following statements is true?

Accepted Answer

A)  The revenue activities of a service business involve providing services to customers. 
B)  The revenue activities of a retail business involve the building of a product. 
C)  The revenue activities of a service business involve the building of a product. 
D)  The revenue activities of a retail business involve providing services to customers. 
A)  The revenue activities of a service business involve providing services to customers. 
B)  The revenue activities of a retail business involve the building of a product. 
C)  The revenue activities of a service business involve the building of a product. 
D)  The revenue activities of a retail business involve providing services to customers.

Question 14

Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the seller's accounts on November 15.If the credit terms are 1/10, n/30, the discount period begins with what date?

Accepted Answer

A)  November 12 
B)  November 15 
C)  November 17 
D)  November 22 
A)  November 12 
B)  November 15 
C)  November 17 
D)  November 22

Question 15

Merchandise inventory shrinkage will decrease Retained Earnings.

Accepted Answer

A) True 
 B)False

Question 16

A payment of dividends decreases which section on the statement of cash flows?

Accepted Answer

A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  None of these 
A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  None of these

Question 17

When the terms of sale are FOB shipping point, the buyer should pay the transportation charges.

Accepted Answer

A) True 
 B)False

Question 18

The form of income statement that emphasizes total revenues and total expenses in determining net income is called the _____.

Accepted Answer

A)  operating income statement. 
B)  multiple-step statement. 
C)  cash flow statement. 
D)  single-step statement. 
A)  operating income statement. 
B)  multiple-step statement. 
C)  cash flow statement. 
D)  single-step statement.

Question 19

Revenue from sources other than the primary operating activity of a business is called other revenue.

Accepted Answer

A) True 
 B)False

Question 20

The credit terms of a sale are normally indicated on a(n):

Accepted Answer

A)  purchase order. 
B)  invoice. 
C)  bill of lading. 
D)  check. 
A)  purchase order. 
B)  invoice. 
C)  bill of lading. 
D)  check.

The sales discount account is a contra account to Sales.

For a retail firm, the inventory sold is shown on the income statement as:

On the income statement, sales discounts are normally deducted from sales to yield the cost of merchandise sold.

A sale of $600 on account subject to a sales tax of 5% would increase account receivable by $570.

When someone purchases merchandise and incurs the cost of transportation, these costs of purchasing inventory are added to the cost of the inventory.

Which of the following best explains inventory shrinkage under the perpetual inventory system?

Which of the following is true of the perpetual inventory system?

During the previous year, Nightwork Co's.net sales was$135,000, cost of goods sold was $60,750, operating expenses were $81,000, and other revenues were $13,550.What was Nightwork's gross profit?

Which of the following businesses is a retail business?

Surist, Inc. Surist, Inc.purchased merchandise for $300,000, received credit for purchase returns of $20,000, availed purchase discounts of $5,000, and paid transportation in of $12,000. - ? Refer to Surist, Inc.What is the total cost of merchandise purchased?

The excess of net revenue from sales over the cost of goods sold is called _____.

Under the indirect method for preparing the statement of cash flows, decreases in current assets are _____ net income in the cash flows from operating activities section.

Which of the following statements is true?

Merchandise inventory shrinkage will decrease Retained Earnings.

A payment of dividends decreases which section on the statement of cash flows?

When the terms of sale are FOB shipping point, the buyer should pay the transportation charges.

The form of income statement that emphasizes total revenues and total expenses in determining net income is called the _____.

Revenue from sources other than the primary operating activity of a business is called other revenue.

The credit terms of a sale are normally indicated on a(n):

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

The sales discount account is a contra account to Sales.

For a retail firm, the inventory sold is shown on the income statement as:

On the income statement, sales discounts are normally deducted from sales to yield the cost of merchandise sold.

A sale of $600 on account subject to a sales tax of 5% would increase account receivable by $570.

When someone purchases merchandise and incurs the cost of transportation, these costs of purchasing inventory are added to the cost of the inventory.

Which of the following best explains inventory shrinkage under the perpetual inventory system?

Which of the following is true of the perpetual inventory system?

During the previous year, Nightwork Co's.net sales was$135,000, cost of goods sold was $60,750, operating expenses were $81,000, and other revenues were $13,550.What was Nightwork's gross profit?

Which of the following businesses is a retail business?

Surist, Inc. Surist, Inc.purchased merchandise for $300,000, received credit for purchase returns of $20,000, availed purchase discounts of $5,000, and paid transportation in of $12,000. - ? Refer to Surist, Inc.What is the total cost of merchandise purchased?

The excess of net revenue from sales over the cost of goods sold is called _____.

Under the indirect method for preparing the statement of cash flows, decreases in current assets are _____ net income in the cash flows from operating activities section.

Which of the following statements is true?

Merchandise inventory shrinkage will decrease Retained Earnings.

A payment of dividends decreases which section on the statement of cash flows?

When the terms of sale are FOB shipping point, the buyer should pay the transportation charges.

The form of income statement that emphasizes total revenues and total expenses in determining net income is called the _____.

Revenue from sources other than the primary operating activity of a business is called other revenue.

The credit terms of a sale are normally indicated on a(n):

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