Question 1

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

Accepted Answer

A) True 
 B)False

Question 2

Gross profit rate is computed by dividing cost of goods sold by net sales.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a true statement about inventory systems?

Accepted Answer

A) Periodic inventory systems require more detailed inventory records. 
B) Perpetual inventory systems require more detailed inventory records. 
C) A periodic system requires cost of goods sold be determined after each sale. 
D) A perpetual system determines cost of goods sold only at the end of the accounting period. 
A) Periodic inventory systems require more detailed inventory records. 
B) Perpetual inventory systems require more detailed inventory records. 
C) A periodic system requires cost of goods sold be determined after each sale. 
D) A perpetual system determines cost of goods sold only at the end of the accounting period.

Question 4

In the balance sheet, ending inventory is reported

Accepted Answer

A) in current assets immediately following accounts receivable. 
B) in current assets immediately following prepaid expenses. 
C) in current assets immediately following cash. 
D) under property, plant, and equipment. 
A) in current assets immediately following accounts receivable. 
B) in current assets immediately following prepaid expenses. 
C) in current assets immediately following cash. 
D) under property, plant, and equipment.

Question 5

Net purchases plus freight-in determines

Accepted Answer

A) cost of goods sold. 
B) cost of goods available for sale. 
C) cost of goods purchased. 
D) total goods available for sale. 
A) cost of goods sold. 
B) cost of goods available for sale. 
C) cost of goods purchased. 
D) total goods available for sale.

Question 6

Gross profit for a merchandiser is net sales minus

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) sales discounts. 
D) cost of goods available for sale. 
A) operating expenses. 
B) cost of goods sold. 
C) sales discounts. 
D) cost of goods available for sale.

Question 7

When goods are returned that relate to a prior cash sale,

Accepted Answer

A) the Sales Returns and Allowances account should not be used. 
B) the cash account will be credited. 
C) Sales Returns and Allowances will be credited. 
D) Accounts Receivable will be credited. 
A) the Sales Returns and Allowances account should not be used. 
B) the cash account will be credited. 
C) Sales Returns and Allowances will be credited. 
D) Accounts Receivable will be credited.

Question 8

The use of IFRS results in more transactions affecting

Accepted Answer

A) net income but not other comprehensive income. 
B) other comprehensive income, but not net income. 
C) but net income and other comprehensive income. 
D) neither net income nor other comprehensive income. 
A) net income but not other comprehensive income. 
B) other comprehensive income, but not net income. 
C) but net income and other comprehensive income. 
D) neither net income nor other comprehensive income.

Question 9

The major difference between the balance sheets of a service company and a merchandising company is inventory.

Accepted Answer

A) True 
 B)False

Question 10

The operating cycle of a merchandiser is

Accepted Answer

A) always one year in length. 
B) generally longer than it is for a service company. 
C) about the same as for a service company. 
D) generally shorter than it is for a service company. 
A) always one year in length. 
B) generally longer than it is for a service company. 
C) about the same as for a service company. 
D) generally shorter than it is for a service company.

Question 11

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $26,000. 
B) $116,000. 
C) $128,000. 
D) $134,000. 
A) $26,000. 
B) $116,000. 
C) $128,000. 
D) $134,000.

Question 12

The multiple-step form of income statement is easier to read than the single-step form.

Accepted Answer

A) True 
 B)False

Question 13

The Inventory account balance appearing in a perpetual inventory worksheet represents the

Accepted Answer

A) ending inventory. 
B) beginning inventory. 
C) cost of merchandise purchased. 
D) cost of merchandise sold. 
A) ending inventory. 
B) beginning inventory. 
C) cost of merchandise purchased. 
D) cost of merchandise sold.

Question 14

A multiple-step income statement provides users with more information about a company's income performance.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not be considered a merchandising company?

Accepted Answer

A) Retailer 
B) Wholesaler 
C) Service firm 
D) All of these are considered a merchandising company. 
A) Retailer 
B) Wholesaler 
C) Service firm 
D) All of these are considered a merchandising company.

Question 16

Which of the following would not be classified as a contra account?

Accepted Answer

A) Sales Revenue 
B) Sales Returns and Allowances 
C) Accumulated Depreciation 
D) Sales Discounts 
A) Sales Revenue 
B) Sales Returns and Allowances 
C) Accumulated Depreciation 
D) Sales Discounts

Question 17

Costner's Market recorded the following events involving a recent purchase of merchandise: Received goods for $40,000, terms 2/10, n/30.
Returned $800 of the shipment for credit.
Paid $200 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory

Accepted Answer

A) increased by $38,416. 
B) increased by $38,612. 
C) increased by $38,616. 
D) increased by $39,400. 
A) increased by $38,416. 
B) increased by $38,612. 
C) increased by $38,616. 
D) increased by $39,400.

Question 18

Inventory is reported as a long-term asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

Accepted Answer

A) Gross profit 
B) Operating expenses 
C) Sales revenues 
D) Cost of goods sold 
A) Gross profit 
B) Operating expenses 
C) Sales revenues 
D) Cost of goods sold

Question 20

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

Accepted Answer

A) True 
 B)False

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

Gross profit rate is computed by dividing cost of goods sold by net sales.

Which of the following is a true statement about inventory systems?

In the balance sheet, ending inventory is reported

Net purchases plus freight-in determines

Gross profit for a merchandiser is net sales minus

When goods are returned that relate to a prior cash sale,

The use of IFRS results in more transactions affecting

The major difference between the balance sheets of a service company and a merchandising company is inventory.

The operating cycle of a merchandiser is

Financial information is presented below: Gross profit would be

The multiple-step form of income statement is easier to read than the single-step form.

The Inventory account balance appearing in a perpetual inventory worksheet represents the

A multiple-step income statement provides users with more information about a company's income performance.

Which of the following would not be considered a merchandising company?

Which of the following would not be classified as a contra account?

Inventory is reported as a long-term asset on the balance sheet.

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

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

Exam 5: Accounting for Merchandising Operations

In a multiple-step income statement, income from operations excludes other revenues and gains and other expenses and losses.

Gross profit rate is computed by dividing cost of goods sold by net sales.

Which of the following is a true statement about inventory systems?

In the balance sheet, ending inventory is reported

Net purchases plus freight-in determines

Gross profit for a merchandiser is net sales minus

When goods are returned that relate to a prior cash sale,

The use of IFRS results in more transactions affecting

The major difference between the balance sheets of a service company and a merchandising company is inventory.

The operating cycle of a merchandiser is

Financial information is presented below: Gross profit would be

The multiple-step form of income statement is easier to read than the single-step form.

The Inventory account balance appearing in a perpetual inventory worksheet represents the

A multiple-step income statement provides users with more information about a company's income performance.

Which of the following would not be considered a merchandising company?

Which of the following would not be classified as a contra account?

Inventory is reported as a long-term asset on the balance sheet.

Indicate which one of the following would appear on the income statement of both a merchandising company and a service company.

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

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