Question 1

After gross profit is calculated, operating expenses are deducted to determine

Accepted Answer

A) gross margin. 
B) net income. 
C) gross profit on sales. 
D) net margin. 
A) gross margin. 
B) net income. 
C) gross profit on sales. 
D) net margin. B

Question 2

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

Accepted Answer

A) $24,000. 
B) $27,000. 
C) $45,000. 
D) $90,000. 
A) $24,000. 
B) $27,000. 
C) $45,000. 
D) $90,000. C

Question 3

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Accepted Answer

A) True 
 B)False  False

Question 4

The collection of a $6,000 account within the 2 percent discount period will result in a

Accepted Answer

A) debit to Sales Discounts for $120. 
B) debit to Accounts Receivable for $5,880. 
C) credit to Cash for $5,880. 
D) credit to Accounts Receivable for $5,880. 
A) debit to Sales Discounts for $120. 
B) debit to Accounts Receivable for $5,880. 
C) credit to Cash for $5,880. 
D) credit to Accounts Receivable for $5,880.

Question 5

Detailed records of goods held for resale are not maintained under a

Accepted Answer

A) perpetual inventory system. 
B) periodic inventory system. 
C) double entry accounting system. 
D) single entry accounting system. 
A) perpetual inventory system. 
B) periodic inventory system. 
C) double entry accounting system. 
D) single entry accounting system.

Question 6

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

Accepted Answer

A) $0. 
B) $10,000. 
C) $24,000. 
D) $46,000. 
A) $0. 
B) $10,000. 
C) $24,000. 
D) $46,000.

Question 7

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Accepted Answer

A) $3,920 
B) $4,000 
C) $4,900 
D) $4,920 
A) $3,920 
B) $4,000 
C) $4,900 
D) $4,920

Question 8

A merchandising company using a perpetual system may record an adjusting entry by

Accepted Answer

A) debiting Income Summary. 
B) crediting Income Summary. 
C) debiting Cost of Goods Sold. 
D) debiting Sales Revenue. 
A) debiting Income Summary. 
B) crediting Income Summary. 
C) debiting Cost of Goods Sold. 
D) debiting Sales Revenue.

Question 9

A Sales Returns and Allowances account is not debited if a customer

Accepted Answer

A) returns defective merchandise. 
B) receives a credit for merchandise of inferior quality. 
C) utilizes a prompt payment incentive. 
D) returns goods that are not in accordance with specifications. 
A) returns defective merchandise. 
B) receives a credit for merchandise of inferior quality. 
C) utilizes a prompt payment incentive. 
D) returns goods that are not in accordance with specifications.

Question 10

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Accepted Answer

A) $475,000. 
B) $500,000. 
C) $525,000. 
D) Unable to determine. 
A) $475,000. 
B) $500,000. 
C) $525,000. 
D) Unable to determine.

Question 11

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 12

In a perpetual inventory system, the Cost of Goods Sold account is used

Accepted Answer

A) only when a cash sale of merchandise occurs. 
B) only when a credit sale of merchandise occurs. 
C) only when a sale of merchandise occurs. 
D) whenever there is a sale of merchandise or a return of merchandise sold. 
A) only when a cash sale of merchandise occurs. 
B) only when a credit sale of merchandise occurs. 
C) only when a sale of merchandise occurs. 
D) whenever there is a sale of merchandise or a return of merchandise sold.

Question 13

Sales minus operating expenses equals gross profit.

Accepted Answer

A) True 
 B)False

Question 14

Sales revenues are recognized during the period cash is collected from the buyer.

Accepted Answer

A) True 
 B)False

Question 15

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Accepted Answer

A) True 
 B)False

Question 16

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

Accepted Answer

A) 20% 
B) 24% 
C) 18% 
D) 36% 
A) 20% 
B) 24% 
C) 18% 
D) 36%

Question 17

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A) discount. 
B) return. 
C) contra asset. 
D) allowance. 
A) discount. 
B) return. 
C) contra asset. 
D) allowance.

Question 18

If a company determines cost of goods sold each time a sale occurs, it

Accepted Answer

A) must have a computer accounting system. 
B) uses a combination of the perpetual and periodic inventory systems. 
C) uses a periodic inventory system. 
D) uses a perpetual inventory system. 
A) must have a computer accounting system. 
B) uses a combination of the perpetual and periodic inventory systems. 
C) uses a periodic inventory system. 
D) uses a perpetual inventory system.

Question 19

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 20

Cobb Company's accounting records show the following at the year ending on December 31, 2015:   Using the periodic system, the cost of goods sold is

Accepted Answer

A) $378,000. 
B) $383,000. 
C) $393,600. 
D) $404,200. 
A) $378,000. 
B) $383,000. 
C) $393,600. 
D) $404,200.

After gross profit is calculated, operating expenses are deducted to determine

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

The collection of a $6,000 account within the 2 percent discount period will result in a

Detailed records of goods held for resale are not maintained under a

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

A merchandising company using a perpetual system may record an adjusting entry by

A Sales Returns and Allowances account is not debited if a customer

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

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

In a perpetual inventory system, the Cost of Goods Sold account is used

Sales minus operating expenses equals gross profit.

Sales revenues are recognized during the period cash is collected from the buyer.

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

If a company determines cost of goods sold each time a sale occurs, it

Which of the following expressions is incorrect?

Cobb Company's accounting records show the following at the year ending on December 31, 2015: Using the periodic system, the cost of goods sold is

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 5: Accounting for Merchandising Operations

After gross profit is calculated, operating expenses are deducted to determine

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

The collection of a $6,000 account within the 2 percent discount period will result in a

Detailed records of goods held for resale are not maintained under a

Ezra Company has sales revenue of $60,000, cost of goods sold of $36,000 and operating expenses of $14,000 for the year ended December 31. Ezra's gross profit is

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

A merchandising company using a perpetual system may record an adjusting entry by

A Sales Returns and Allowances account is not debited if a customer

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

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

In a perpetual inventory system, the Cost of Goods Sold account is used

Sales minus operating expenses equals gross profit.

Sales revenues are recognized during the period cash is collected from the buyer.

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Scott Company purchased merchandise with an invoice price of $3,000 and credit terms of 1/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms?

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

If a company determines cost of goods sold each time a sale occurs, it

Which of the following expressions is incorrect?

Cobb Company's accounting records show the following at the year ending on December 31, 2015: Using the periodic system, the cost of goods sold is

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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