Question 1

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A) the customer must pay the bill within 10 days. 
B) the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C) the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D) two sales returns can be made within 10 days of the invoice date and no returns thereafter. 
A) the customer must pay the bill within 10 days. 
B) the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C) the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D) two sales returns can be made within 10 days of the invoice date and no returns thereafter.

Question 2

Cost of goods available for sale is computed by adding

Accepted Answer

A) beginning inventory to net purchases. 
B) beginning inventory to the cost of goods purchased. 
C) net purchases and freight-in. 
D) purchases to beginning inventory. 
A) beginning inventory to net purchases. 
B) beginning inventory to the cost of goods purchased. 
C) net purchases and freight-in. 
D) purchases to beginning inventory.

Question 3

During August, 2015, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's net income for August, 2015 is

Accepted Answer

A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000. 
A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000.

Question 4

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

Accepted Answer

A) Sales Discounts for $40. 
B) Cash for $1,960. 
C) Accounts Receivable for $2,000. 
D) Sales Revenue for $2,000. 
A) Sales Discounts for $40. 
B) Cash for $1,960. 
C) Accounts Receivable for $2,000. 
D) Sales Revenue for $2,000.

Question 5

Financial information is presented below:   The gross profit rate would be

Accepted Answer

A) .363. 
B) .400. 
C) .456. 
D) .503. 
A) .363. 
B) .400. 
C) .456. 
D) .503.

Question 6

During August, 2015, Baxter's Supply Store generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $36,000 and operating expenses of $4,000. The company also had rent revenue of $1,000 and a gain on the sale of a delivery truck of $2,000. Baxter's gross profit for August, 2015 is

Accepted Answer

A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000. 
A) $20,000. 
B) $21,000. 
C) $23,000. 
D) $24,000.

Question 7

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

Accepted Answer

A) True 
 B)False

Question 8

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 24?

Accepted Answer

A) $3,332 
B) $3,440 
C) $3,528 
A) $3,332 
B) $3,440 
C) $3,528

Question 9

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Accepted Answer

A) Inventory account. 
B) Purchases account. 
C) Supplies account. 
D) Cost of Goods Sold account. 
A) Inventory account. 
B) Purchases account. 
C) Supplies account. 
D) Cost of Goods Sold account.

Question 10

Gross profit is a measure of the overall profitability of a company.

Accepted Answer

A) True 
 B)False

Question 11

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 12

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:

Accepted Answer

A) a $3,600 credit to Cost of Goods Sold. 
B) a $6,000 credit to Cash. 
C) a $3,600 credit to Inventory. 
A) a $3,600 credit to Cost of Goods Sold. 
B) a $6,000 credit to Cash. 
C) a $3,600 credit to Inventory.

Question 15

On a classified balance sheet, inventory is classified as

Accepted Answer

A) an intangible asset. 
B) property, plant, and equipment. 
C) a current asset. 
D) a long-term investment. 
A) an intangible asset. 
B) property, plant, and equipment. 
C) a current asset. 
D) a long-term investment.

Question 16

Which of the following is not a true statement about a multiple-step income statement?

Accepted Answer

A) Operating expenses are similar for merchandising and service enterprises. 
B) There may be a section for nonoperating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold. 
A) Operating expenses are similar for merchandising and service enterprises. 
B) There may be a section for nonoperating activities. 
C) There may be a section for operating assets. 
D) There is a section for cost of goods sold.

Question 17

Sales revenue should be recorded in accordance with the matching principle.

Accepted Answer

A) True 
 B)False

Question 18

For the income statement, IFRS requires

Accepted Answer

A) single-step approach. 
B) multiple-step approach. 
C) single-step approach or multiple-step approach. 
D) no specific income statement approach. 
A) single-step approach. 
B) multiple-step approach. 
C) single-step approach or multiple-step approach. 
D) no specific income statement approach.

Question 19

Financial information is presented below:   The amount of net sales on the income statement would be

Accepted Answer

A) $290,000. 
B) $302,000. 
C) $308,000. 
D) $320,000. 
A) $290,000. 
B) $302,000. 
C) $308,000. 
D) $320,000.

Question 20

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?

Accepted Answer

A) $8,100 
B) $8,280 
C) $8,820 
D) $9,000 
A) $8,100 
B) $8,280 
C) $8,820 
D) $9,000

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Cost of goods available for sale is computed by adding

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

Financial information is presented below: The gross profit rate would be

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 24?

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Gross profit is a measure of the overall profitability of a company.

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

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

On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:

On a classified balance sheet, inventory is classified as

Which of the following is not a true statement about a multiple-step income statement?

Sales revenue should be recorded in accordance with the matching principle.

For the income statement, IFRS requires

Financial information is presented below: The amount of net sales on the income statement would be

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?

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

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Cost of goods available for sale is computed by adding

The entry to record the receipt of payment within the discount period on a sale of $2,000 with terms of 2/10, n/30 will include a credit to

Financial information is presented below: The gross profit rate would be

Under a periodic inventory system, the acquisition of inventory is charged to the Purchases account.

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 24?

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Gross profit is a measure of the overall profitability of a company.

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

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

On November 2, 2014, Kasdan Company has cash sales of $6,000 from merchandise having a cost of $3,600. The entries to record the day's cash sales will include:

On a classified balance sheet, inventory is classified as

Which of the following is not a true statement about a multiple-step income statement?

Sales revenue should be recorded in accordance with the matching principle.

For the income statement, IFRS requires

Financial information is presented below: The amount of net sales on the income statement would be

Glenn Company purchased merchandise inventory with an invoice price of $9,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Glenn Company pays within the discount period?

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