Question 1

Sales revenue

Accepted Answer

A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected. 
A) may be recorded before cash is collected. 
B) will always equal cash collections in a month. 
C) only results from credit sales. 
D) is only recorded after cash is collected.

Question 2

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

Accepted Answer

A) $1,500,000 and 66.7%. 
B) $2,250,000 and 40%. 
C) $1,500,000 and 40%. 
D) $2,250,000 and 60%. 
A) $1,500,000 and 66.7%. 
B) $2,250,000 and 40%. 
C) $1,500,000 and 40%. 
D) $2,250,000 and 60%.

Question 3

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are

Accepted Answer

A) credit, credit, debit. 
B) debit, credit, credit. 
C) debit, credit, debit. 
D) debit, debit, debit. 
A) credit, credit, debit. 
B) debit, credit, credit. 
C) debit, credit, debit. 
D) debit, debit, debit.

Question 4

A merchandising company has different types of adjusting entries than a service company.

Accepted Answer

A) True 
 B)False

Question 5

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $104,000. 
B) $116,000. 
C) $130,000. 
D) $142,000. 
A) $104,000. 
B) $116,000. 
C) $130,000. 
D) $142,000.

Question 6

Retailers and wholesalers are both considered merchandisers.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) .347. 
B) .397. 
C) .473. 
D) .542. 
A) .347. 
B) .397. 
C) .473. 
D) .542.

Question 8

Under IFRS, companies must classify income statement items by

Accepted Answer

A) function. 
B) nature. 
C) nature or function 
D) date incurred. 
A) function. 
B) nature. 
C) nature or function 
D) date incurred.

Question 9

The sales revenue section of an income statement for a retailer would not include

Accepted Answer

A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold. 
A) Sales discounts. 
B) Sales revenue. 
C) Net sales. 
D) Cost of goods sold.

Question 10

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

Accepted Answer

A) True 
 B)False

Question 11

A merchandising company using a perpetual system will make

Accepted Answer

A) the same number of adjusting entries as a service company does. 
B) one more adjusting entry than a service company does. 
C) one less adjusting entry than a service company does. 
D) different types of adjusting entries compared to a service company. 
A) the same number of adjusting entries as a service company does. 
B) one more adjusting entry than a service company does. 
C) one less adjusting entry than a service company does. 
D) different types of adjusting entries compared to a service company.

Question 12

Under GAAP, 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 13

The following information is available for Dennehy Company:   Dennehy's cost of goods sold is

Accepted Answer

A) $262,500. 
B) $285,000. 
C) $292,500. 
D) $345,000. 
A) $262,500. 
B) $285,000. 
C) $292,500. 
D) $345,000.

Question 14

Under GAAP, companies generally classify income statement items by

Accepted Answer

A) function. 
B) nature. 
C) nature or function 
D) date incurred. 
A) function. 
B) nature. 
C) nature or function 
D) date incurred.

Question 15

Companies cannot use the

Accepted Answer

A) periodic inventory system under GAAP. 
B) periodic inventory system under IFRS. 
C) perpetual system under IFRS. 
D) both periodic and perpetual can be used under GAAP and IFRS. 
A) periodic inventory system under GAAP. 
B) periodic inventory system under IFRS. 
C) perpetual system under IFRS. 
D) both periodic and perpetual can be used under GAAP and IFRS.

Question 16

Operating expenses are different for merchandising and service enterprises.

Accepted Answer

A) True 
 B)False

Question 17

A merchandising company that sells directly to consumers is a

Accepted Answer

A) retailer. 
B) wholesaler. 
C) broker. 
D) service company. 
A) retailer. 
B) wholesaler. 
C) broker. 
D) service company.

Question 18

Income from operations appears on

Accepted Answer

A) both a multiple-step and a single-step income statement. 
B) neither a multiple-step nor a single-step income statement. 
C) a single-step income statement. 
D) a multiple-step income statement. 
A) both a multiple-step and a single-step income statement. 
B) neither a multiple-step nor a single-step income statement. 
C) a single-step income statement. 
D) a multiple-step income statement.

Question 19

A credit granted to a customer for returned goods requires a debit to

Accepted Answer

A) Sales Revenue and a credit to Cash. 
B) Sales Returns and Allowances and a credit to Accounts Receivable. 
C) Accounts Receivable and a credit to a contra-revenue account. 
D) Cash and a credit to Sales Returns and Allowances. 
A) Sales Revenue and a credit to Cash. 
B) Sales Returns and Allowances and a credit to Accounts Receivable. 
C) Accounts Receivable and a credit to a contra-revenue account. 
D) Cash and a credit to Sales Returns and Allowances.

Question 20

Income from operations will always result if

Accepted Answer

A) the cost of goods sold exceeds operating expenses. 
B) revenues exceed cost of goods sold. 
C) revenues exceed operating expenses. 
D) gross profit exceeds operating expenses. 
A) the cost of goods sold exceeds operating expenses. 
B) revenues exceed cost of goods sold. 
C) revenues exceed operating expenses. 
D) gross profit exceeds operating expenses.

Sales revenue

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are

A merchandising company has different types of adjusting entries than a service company.

Financial information is presented below: Gross profit would be

Retailers and wholesalers are both considered merchandisers.

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

Under IFRS, companies must classify income statement items by

The sales revenue section of an income statement for a retailer would not include

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

A merchandising company using a perpetual system will make

Under GAAP, income statement items are generally described as

The following information is available for Dennehy Company: Dennehy's cost of goods sold is

Under GAAP, companies generally classify income statement items by

Companies cannot use the

Operating expenses are different for merchandising and service enterprises.

A merchandising company that sells directly to consumers is a

Income from operations appears on

A credit granted to a customer for returned goods requires a debit to

Income from operations will always result if

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

Sales revenue

At the beginning of the year, Hunt Company had an inventory of $750,000. During the year, the company purchased goods costing $2,400,000. If Hunt Company reported ending inventory of $900,000 and sales of $3,750,000, the company's cost of goods sold and gross profit rate must be

The respective normal account balances of Purchases, Purchase Discounts, and Freight-in are

A merchandising company has different types of adjusting entries than a service company.

Financial information is presented below: Gross profit would be

Retailers and wholesalers are both considered merchandisers.

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

Under IFRS, companies must classify income statement items by

The sales revenue section of an income statement for a retailer would not include

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

A merchandising company using a perpetual system will make

Under GAAP, income statement items are generally described as

The following information is available for Dennehy Company: Dennehy's cost of goods sold is

Under GAAP, companies generally classify income statement items by

Companies cannot use the

Operating expenses are different for merchandising and service enterprises.

A merchandising company that sells directly to consumers is a

Income from operations appears on

A credit granted to a customer for returned goods requires a debit to

Income from operations will always result if

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