Question 1

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Accepted Answer

A) 25%. 
B) 35%. 
C) 65%. 
D) 100%. 
A) 25%. 
B) 35%. 
C) 65%. 
D) 100%.

Question 2

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A) $630 
B) $720 
C) $810 
D) $882 
A) $630 
B) $720 
C) $810 
D) $882

Question 3

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

Accepted Answer

A) seller. 
B) buyer. 
C) transportation company. 
D) buyer and the seller. 
A) seller. 
B) buyer. 
C) transportation company. 
D) buyer and the seller.

Question 4

An enterprise which sells goods to customers is known as a

Accepted Answer

A) proprietorship. 
B) corporation. 
C) retailer. 
D) service firm. 
A) proprietorship. 
B) corporation. 
C) retailer. 
D) service firm.

Question 5

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Purchases 
B) Sales Returns and Allowances 
C) Freight-In 
D) Purchase Discounts 
A) Purchases 
B) Sales Returns and Allowances 
C) Freight-In 
D) Purchase Discounts

Question 6

The Inventory account is used in each of the following except the entry to record

Accepted Answer

A) goods purchased on account. 
B) the return of goods purchased. 
C) payment of freight on goods sold. 
D) payment within the discount period. 
A) goods purchased on account. 
B) the return of goods purchased. 
C) payment of freight on goods sold. 
D) payment within the discount period.

Question 7

Goldblum Company has the following account balances:   The cost of goods purchased for the period is

Accepted Answer

A) $80,800. 
B) $88,000. 
C) $94,000. 
D) $104,000. 
A) $80,800. 
B) $88,000. 
C) $94,000. 
D) $104,000.

Question 8

A sales discount does not

Accepted Answer

A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra-revenue account. 
D) increase an operating expense account. 
A) provide the purchaser with a cash saving. 
B) reduce the amount of cash received from a credit sale. 
C) increase a contra-revenue account. 
D) increase an operating expense account.

Question 9

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A) $39,000 and $23,400. 
B) $39,000 and $24,000. 
C) $40,000 and $23,400. 
D) $40,000 and $24,000. 
A) $39,000 and $23,400. 
B) $39,000 and $24,000. 
C) $40,000 and $23,400. 
D) $40,000 and $24,000.

Question 10

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

Accepted Answer

A) True 
 B)False

Question 11

All of the following are contra revenue accounts except

Accepted Answer

A) sales revenue. 
B) sales allowances. 
C) sales discounts. 
D) sales returns. 
A) sales revenue. 
B) sales allowances. 
C) sales discounts. 
D) sales returns.

Question 12

Net income is gross profit less

Accepted Answer

A) financing expenses. 
B) operating expenses. 
C) other expenses and losses. 
D) other expenses. 
A) financing expenses. 
B) operating expenses. 
C) other expenses and losses. 
D) other expenses.

Question 13

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

Accepted Answer

A) True 
 B)False

Question 14

Freight costs paid by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A) in the selling expense of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra-revenue account of the seller. 
A) in the selling expense of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra-revenue account of the seller.

Question 15

In a worksheet for a merchandising company, Inventory would appear in the

Accepted Answer

A) trial balance and adjusted trial balance columns only. 
B) trial balance and balance sheet columns only. 
C) trial balance, adjusted trial balance, and balance sheet columns. 
D) trial balance, adjusted trial balance, and income statement columns. 
A) trial balance and adjusted trial balance columns only. 
B) trial balance and balance sheet columns only. 
C) trial balance, adjusted trial balance, and balance sheet columns. 
D) trial balance, adjusted trial balance, and income statement columns.

Question 16

The Income statement is

Accepted Answer

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

Question 17

Inventory is classified as a current asset in a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Accepted Answer

A) Purchases. 
B) Purchase Returns. 
C) Purchase Allowance. 
D) Inventory. 
A) Purchases. 
B) Purchase Returns. 
C) Purchase Allowance. 
D) Inventory.

Question 19

Purchase Returns and Allowances and Purchase Discounts are subtracted from Purchases to produce net purchases.

Accepted Answer

A) True 
 B)False

Question 20

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Accepted Answer

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

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

An enterprise which sells goods to customers is known as a

Which of the following accounts has a normal credit balance?

The Inventory account is used in each of the following except the entry to record

Goldblum Company has the following account balances: The cost of goods purchased for the period is

A sales discount does not

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

All of the following are contra revenue accounts except

Net income is gross profit less

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

Freight costs paid by a seller on merchandise sold to customers will cause an increase

In a worksheet for a merchandising company, Inventory would appear in the

The Income statement is

Inventory is classified as a current asset in a classified balance sheet.

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Purchase Returns and Allowances and Purchase Discounts are subtracted from Purchases to produce net purchases.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

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

If a company has net sales of $700,000 and cost of goods sold of $455,000, the gross profit percentage is

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

An enterprise which sells goods to customers is known as a

Which of the following accounts has a normal credit balance?

The Inventory account is used in each of the following except the entry to record

Goldblum Company has the following account balances: The cost of goods purchased for the period is

A sales discount does not

Dawson's Fashions sold merchandise for $40,000 cash during the month of July. Returns that month totaled $1,000. If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

In a worksheet, cost of goods sold will be shown in the trial balance (Dr.), adjusted trial balance (Dr.) and income statement (Dr.) columns.

All of the following are contra revenue accounts except

Net income is gross profit less

A company's unadjusted balance in Inventory will usually not agree with the actual amount of inventory on hand at year-end.

Freight costs paid by a seller on merchandise sold to customers will cause an increase

In a worksheet for a merchandising company, Inventory would appear in the

The Income statement is

Inventory is classified as a current asset in a classified balance sheet.

In a perpetual inventory system, a return of defective merchandise by a purchaser is recorded by crediting

Purchase Returns and Allowances and Purchase Discounts are subtracted from Purchases to produce net purchases.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

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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