Question 1

A sales invoice is a source document that

Accepted Answer

A) provides support for goods purchased for resale. 
B) provides evidence of incurred operating expenses. 
C) provides evidence of credit sales. 
D) serves only as a customer receipt. 
A) provides support for goods purchased for resale. 
B) provides evidence of incurred operating expenses. 
C) provides evidence of credit sales. 
D) serves only as a customer receipt.

Question 2

Jake's Market recorded the following events involving a recent purchase of merchandise: Received goods for $60,000, terms 2/10, n/30.
Returned $1,200 of the shipment for credit.
Paid $300 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory increased by

Accepted Answer

A) $57,624. 
B) $57,918. 
C) $57,924. 
D) $59,100. 
A) $57,624. 
B) $57,918. 
C) $57,924. 
D) $59,100.

Question 3

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $30,000. 
B) $90,000. 
C) $165,000. 
D) $225,000. 
A) $30,000. 
B) $90,000. 
C) $165,000. 
D) $225,000.

Question 4

Under IFRS, companies can apply revaluation to

Accepted Answer

A) land, buildings, and intangible assets. 
B) land, buildings, but not intangible assets. 
C) intangible assets, but not land or buildings. 
D) no assets. 
A) land, buildings, and intangible assets. 
B) land, buildings, but not intangible assets. 
C) intangible assets, but not land or buildings. 
D) no assets.

Question 5

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

A) $3,675 
B) $3,750 
C) $3,920 
A) $3,675 
B) $3,750 
C) $3,920

Question 6

Which of the following accounts is not closed to Income Summary?

Accepted Answer

A) Cost of Goods Sold 
B) Inventory 
C) Sales Revenue 
D) Sales Discounts 
A) Cost of Goods Sold 
B) Inventory 
C) Sales Revenue 
D) Sales Discounts

Question 7

Comprehensive income under IFRS

Accepted Answer

A) includes unrealized gains and losses included in net income, in contrast to GAAP. 
B) includes unrealized gains and losses included in net income, similar to GAAP. 
C) excludes unrealized gains and losses included in net income, in contrast to GAAP. 
D) excludes unrealized gains and losses included in net income, similar to GAAP. 
A) includes unrealized gains and losses included in net income, in contrast to GAAP. 
B) includes unrealized gains and losses included in net income, similar to GAAP. 
C) excludes unrealized gains and losses included in net income, in contrast to GAAP. 
D) excludes unrealized gains and losses included in net income, similar to GAAP.

Question 8

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

Accepted Answer

A) .133. 
B) .400. 
C) .600. 
D) .733. 
A) .133. 
B) .400. 
C) .600. 
D) .733.

Question 9

If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods sold of $390,000, the gross profit rate is

Accepted Answer

A) 35%. 
B) 38% 
C) 62%. 
D) 65%. 
A) 35%. 
B) 38% 
C) 62%. 
D) 65%.

Question 10

Cost of goods sold is determined only at the end of the accounting period in

Accepted Answer

A) a perpetual inventory system. 
B) a periodic inventory system. 
C) both a perpetual and a periodic inventory system. 
D) neither a perpetual nor a periodic inventory system. 
A) a perpetual inventory system. 
B) a periodic inventory system. 
C) both a perpetual and a periodic inventory system. 
D) neither a perpetual nor a periodic inventory system.

Question 11

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

Accepted Answer

A) 36%. 
B) 37.5%. 
C) 40%. 
D) 41.7%. 
A) 36%. 
B) 37.5%. 
C) 40%. 
D) 41.7%.

Question 12

If a company is given credit terms of 2/10, n/30, it should

Accepted Answer

A) hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time. 
B) pay within the discount period and recognize a savings. 
C) pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill. 
D) recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price. 
A) hold off paying the bill until the end of the credit period, while investing the money at 10% annual interest during this time. 
B) pay within the discount period and recognize a savings. 
C) pay within the credit period but don't take the trouble to invest the cash while waiting to pay the bill. 
D) recognize that the supplier is desperate for cash and withhold payment until the end of the credit period while negotiating a lower sales price.

Question 13

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

Accepted Answer

A) $24,000. 
B) $27,000. 
C) $45,000. 
D) $90,000. 
A) $24,000. 
B) $27,000. 
C) $45,000. 
D) $90,000.

Question 14

The Sales Returns and Allowances account does not provide information to management about

Accepted Answer

A) possible inferior merchandise. 
B) the percentage of credit sales versus cash sales. 
C) inefficiencies in filling orders. 
D) errors in overbilling customers. 
A) possible inferior merchandise. 
B) the percentage of credit sales versus cash sales. 
C) inefficiencies in filling orders. 
D) errors in overbilling customers.

Question 15

Conrad Company reported the following balances at June 30, 2015:   Net sales for the month is

Accepted Answer

A) $7,800 
B) $15,300. 
C) $15,600. 
D) $16,200. 
A) $7,800 
B) $15,300. 
C) $15,600. 
D) $16,200.

Question 16

If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the

Accepted Answer

A) Inventory account will be increased. 
B) Inventory account will not be affected. 
C) seller will bear the freight cost. 
D) carrier will bear the freight cost. 
A) Inventory account will be increased. 
B) Inventory account will not be affected. 
C) seller will bear the freight cost. 
D) carrier will bear the freight cost.

Question 17

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 operating income for the month of 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.

A sales invoice is a source document that

Financial information is presented below: Gross profit would be

Under IFRS, companies can apply revaluation to

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Which of the following accounts is not closed to Income Summary?

Comprehensive income under IFRS

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

If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods sold of $390,000, the gross profit rate is

Cost of goods sold is determined only at the end of the accounting period in

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

If a company is given credit terms of 2/10, n/30, it should

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

The Sales Returns and Allowances account does not provide information to management about

Conrad Company reported the following balances at June 30, 2015: Net sales for the month is

If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the

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

A sales invoice is a source document that

Financial information is presented below: Gross profit would be

Under IFRS, companies can apply revaluation to

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Which of the following accounts is not closed to Income Summary?

Comprehensive income under IFRS

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

If a company has sales revenue of $630,000, net sales of $600,000, and cost of goods sold of $390,000, the gross profit rate is

Cost of goods sold is determined only at the end of the accounting period in

In the Augie Company, sales were $750,000, sales returns and allowances were $30,000, and cost of goods sold was $450,000. The gross profit rate was

If a company is given credit terms of 2/10, n/30, it should

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's net income is

The Sales Returns and Allowances account does not provide information to management about

Conrad Company reported the following balances at June 30, 2015: Net sales for the month is

If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the

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