Question 1

The steps in the accounting cycle are different for a merchandising company than for a service company.

Accepted Answer

A) True 
 B)False

Question 2

The number of years of income statement information to be presented is

Accepted Answer

A) 2 years under both GAAP and IFRS. 
B) 3 years under both GAAP and IFRS. 
C) 2 years under GAAP and 3 years under IFRS. 
D) 3 years under GAAP and 2 years under IFRS. 
A) 2 years under both GAAP and IFRS. 
B) 3 years under both GAAP and IFRS. 
C) 2 years under GAAP and 3 years under IFRS. 
D) 3 years under GAAP and 2 years under IFRS.

Question 3

All of the following items would be reported as other expenses and losses except

Accepted Answer

A) freight-out. 
B) casualty losses. 
C) interest expense. 
D) loss from employees' strikes. 
A) freight-out. 
B) casualty losses. 
C) interest expense. 
D) loss from employees' strikes.

Question 4

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Accepted Answer

A) True 
 B)False

Question 5

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

Accepted Answer

A) True 
 B)False

Question 6

On October 4, 2015, JT Corporation had credit sales transactions of $4,000 from merchandise having cost $2,400. The entries to record the day's credit transactions include a

Accepted Answer

A) debit of $4,000 to Inventory. 
B) credit of $4,000 to Sales Revenue. 
C) debit of $2,400 to Inventory. 
D) credit of $2,400 to Cost of Goods Sold. 
A) debit of $4,000 to Inventory. 
B) credit of $4,000 to Sales Revenue. 
C) debit of $2,400 to Inventory. 
D) credit of $2,400 to Cost of Goods Sold.

Question 7

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales Revenue 
D) Selling Expense 
A) Sales Returns and Allowances 
B) Sales Discounts 
C) Sales Revenue 
D) Selling Expense

Question 8

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Accepted Answer

A) $1,750 
B) $2,000 
C) $2,250 
D) $2,450 
A) $1,750 
B) $2,000 
C) $2,250 
D) $2,450

Question 9

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Accepted Answer

A) a sales discount. 
B) free delivery. 
C) a sales allowance. 
D) a sales return. 
A) a sales discount. 
B) free delivery. 
C) a sales allowance. 
D) a sales return.

Question 10

Under IFRS, income statement items are generally described as

Accepted Answer

A) administration, distribution, manufacturing, etc. 
B) salaries, depreciation, utilities, etc. 
C) administration, depreciation, manufacturing, etc. 
D) salaries, distribution, utilities, etc. 
A) administration, distribution, manufacturing, etc. 
B) salaries, depreciation, utilities, etc. 
C) administration, depreciation, manufacturing, etc. 
D) salaries, distribution, utilities, etc.

Question 11

With respect to the income statement,

Accepted Answer

A) contra-revenue accounts do not appear on the income statement. 
B) sales discounts increase the amount of sales. 
C) contra-revenue accounts increase the amount of operating expenses. 
D) sales discounts are included in the calculation of gross profit. 
A) contra-revenue accounts do not appear on the income statement. 
B) sales discounts increase the amount of sales. 
C) contra-revenue accounts increase the amount of operating expenses. 
D) sales discounts are included in the calculation of gross profit.

Question 12

Sales revenue less cost of goods sold is called

Accepted Answer

A) gross profit. 
B) net profit. 
C) net income. 
D) marginal income. 
A) gross profit. 
B) net profit. 
C) net income. 
D) marginal income.

Question 13

Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

Accepted Answer

A) True 
 B)False

Question 14

The basic accounting entries for merchandising are

Accepted Answer

A) the same under GAAP and under IFRS. 
B) required under GAAP but not under IFRS. 
C) required under IFRS but not under GAAP. 
D) required under IFRS with some differences as compared to GAAP. 
A) the same under GAAP and under IFRS. 
B) required under GAAP but not under IFRS. 
C) required under IFRS but not under GAAP. 
D) required under IFRS with some differences as compared to GAAP.

Question 15

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 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) $6,272 
B) $6,400 
C) $7,840 
D) $7,872 
A) $6,272 
B) $6,400 
C) $7,840 
D) $7,872

Question 16

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 nonoperating income (loss) for the month of August, 2015 is

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000.

Question 17

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Accepted Answer

A) True 
 B)False

Question 18

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

Accepted Answer

A) True 
 B)False

Question 19

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 20

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

Accepted Answer

A) Accounts Payable. 
B) Inventory. 
C) Purchases. 
D) Purchase Returns and Allowances. 
A) Accounts Payable. 
B) Inventory. 
C) Purchases. 
D) Purchase Returns and Allowances.

The steps in the accounting cycle are different for a merchandising company than for a service company.

The number of years of income statement information to be presented is

All of the following items would be reported as other expenses and losses except

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

On October 4, 2015, JT Corporation had credit sales transactions of $4,000 from merchandise having cost $2,400. The entries to record the day's credit transactions include a

Which of the following accounts has a normal credit balance?

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Under IFRS, income statement items are generally described as

With respect to the income statement,

Sales revenue less cost of goods sold is called

Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

The basic accounting entries for merchandising are

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

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 steps in the accounting cycle are different for a merchandising company than for a service company.

The number of years of income statement information to be presented is

All of the following items would be reported as other expenses and losses except

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

On October 4, 2015, JT Corporation had credit sales transactions of $4,000 from merchandise having cost $2,400. The entries to record the day's credit transactions include a

Which of the following accounts has a normal credit balance?

Company A sells $2,500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

As an incentive for customers to pay their accounts promptly, a business may offer its customers

Under IFRS, income statement items are generally described as

With respect to the income statement,

Sales revenue less cost of goods sold is called

Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

The basic accounting entries for merchandising are

Kern Company sells merchandise on account for $8,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,600 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Under a periodic inventory system, freight-in on merchandise purchases should be charged to the Inventory account.

Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

In a periodic inventory system, a return of defective merchandise to a supplier is recorded by crediting

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