Question 1

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Accepted Answer

A) Cash received on account with a discount 
B) Payment of freight costs on a purchase 
C) Return of merchandise sold 
D) Sale of merchandise on credit 
A) Cash received on account with a discount 
B) Payment of freight costs on a purchase 
C) Return of merchandise sold 
D) Sale of merchandise on credit

Question 2

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 3

A company shows the following balances:   What is the gross profit percentage?

Accepted Answer

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

Question 4

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 5

Freight terms of FOB Destination means that the seller pays the freight costs.

Accepted Answer

A) True 
 B)False

Question 6

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Accepted Answer

A) True 
 B)False

Question 7

Sales Returns and Allowances is increased when

Accepted Answer

A) an employee does a good job. 
B) goods are sold on credit. 
C) goods that were sold on credit are returned. 
D) customers refuse to pay their accounts. 
A) an employee does a good job. 
B) goods are sold on credit. 
C) goods that were sold on credit are returned. 
D) customers refuse to pay their accounts.

Question 8

Sales revenues are usually considered recognized when

Accepted Answer

A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made. 
A) cash is received from credit sales. 
B) an order is received. 
C) goods have been transferred from the seller to the buyer. 
D) adjusting entries are made.

Question 9

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Accepted Answer

A) True 
 B)False

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

A periodic inventory system requires a detailed inventory record of inventory items.

Accepted Answer

A) True 
 B)False

Question 12

Gross profit represents the merchandising profit of a company.

Accepted Answer

A) True 
 B)False

Question 13

Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

Accepted Answer

A) True 
 B)False

Question 14

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) with each sale. 
A) on a daily basis. 
B) on a monthly basis. 
C) on an annual basis. 
D) with each sale.

Question 15

The gross profit rate is computed by dividing gross profit by

Accepted Answer

A) cost of goods sold. 
B) net income. 
C) net sales. 
D) sales revenue. 
A) cost of goods sold. 
B) net income. 
C) net sales. 
D) sales revenue.

Question 16

For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.

Accepted Answer

A) True 
 B)False

Question 17

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 18

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

Accepted Answer

A) $189,000. 
B) $204,000. 
C) $219,000. 
D) $249,000. 
A) $189,000. 
B) $204,000. 
C) $219,000. 
D) $249,000.

Question 19

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Accepted Answer

A) True 
 B)False

Question 20

In terms of liquidity, inventory is

Accepted Answer

A) more liquid than cash. 
B) more liquid than accounts receivable. 
C) more liquid than prepaid expenses. 
D) less liquid than store equipment. 
A) more liquid than cash. 
B) more liquid than accounts receivable. 
C) more liquid than prepaid expenses. 
D) less liquid than store equipment.

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Net sales is sales revenue less

A company shows the following balances: What is the gross profit percentage?

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

Freight terms of FOB Destination means that the seller pays the freight costs.

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Sales Returns and Allowances is increased when

Sales revenues are usually considered recognized when

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Gross profit does not appear

A periodic inventory system requires a detailed inventory record of inventory items.

Gross profit represents the merchandising profit of a company.

Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

In a perpetual inventory system, cost of goods sold is recorded

The gross profit rate is computed by dividing gross profit by

For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.

The primary source of revenue for a wholesaler is

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

In terms of liquidity, inventory 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

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Net sales is sales revenue less

A company shows the following balances: What is the gross profit percentage?

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

Freight terms of FOB Destination means that the seller pays the freight costs.

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Sales Returns and Allowances is increased when

Sales revenues are usually considered recognized when

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Gross profit does not appear

A periodic inventory system requires a detailed inventory record of inventory items.

Gross profit represents the merchandising profit of a company.

Sales Returns and Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

In a perpetual inventory system, cost of goods sold is recorded

The gross profit rate is computed by dividing gross profit by

For a merchandising company, all accounts that affect the determination of income are closed to the Income Summary account.

The primary source of revenue for a wholesaler is

McKendrick Shoe Store has a beginning inventory of $45,000. During the period, purchases were $195,000; purchase returns, $6,000; and freight-in $15,000. A physical count of inventory at the end of the period revealed that $30,000 was still on hand. The cost of goods available for sale was

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

In terms of liquidity, inventory 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

Filters