Question 1

Under a perpetual inventory system,

Accepted Answer

A)  accounting records continuously disclose the amount of inventory 
B)  increases in inventory resulting from purchases are debited to Purchases 
C)  a physical count is required to determine cost of merchandise on hand 
D)  the purchases returns and allowances account is credited when goods are returned to vendors 
A)  accounting records continuously disclose the amount of inventory 
B)  increases in inventory resulting from purchases are debited to Purchases 
C)  a physical count is required to determine cost of merchandise on hand 
D)  the purchases returns and allowances account is credited when goods are returned to vendors

Question 2

Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold was $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Accepted Answer

A)  $10,500 
B)  $30,772 
C)  $7,972 
D)  $31,400 
A)  $10,500 
B)  $30,772 
C)  $7,972 
D)  $31,400

Question 3

Using the following information, what is the amount of net income??? $$\begin{array} { | l | r | l | l | r | } 
\hline \text { Purchases } & \$ 32,000 && \text { Selling expenses } & \$ 960 \
\hline \begin{array} { l } 
\text { Merchandise inventory, } \
\text { September 1 }
\end{array} & 5,700 & & \begin{array} { l } 
\text { Merchandise inventory, } \
\text { September 30 }
\end{array} & 6,370 \
\hline \text { Administrative expenses } & 910 & & \text { Sales } & 63,000 \
\hline \text { Rent revenue } & 1,200 & & \text { Interest expense } & 1,040 \
\hline
\end{array}$$

Accepted Answer

A)  $29,800 
B)  $29,960 
C)  $28,760 
D)  $31,670 
A)  $29,800 
B)  $29,960 
C)  $28,760 
D)  $31,670

Question 4

A sale of $750 on account subject to a sales tax of 6% would be recorded as an account receivable of $750.

Accepted Answer

A) True 
 B)False

Question 5

Sales to customers who use bank credit cards such as MasterCard and VISA are usually recorded by a

Accepted Answer

A)  debit to Bank Credit Card Sales, a debit to Credit Card Expense, and a credit to Sales 
B)  debit to Cash and a credit to Sales 
C)  debit to Cash, a credit to Credit Card Expense, and a credit to Sales 
D)  debit to Sales, a debit to Credit Card Expense, and a credit to Cash 
A)  debit to Bank Credit Card Sales, a debit to Credit Card Expense, and a credit to Sales 
B)  debit to Cash and a credit to Sales 
C)  debit to Cash, a credit to Credit Card Expense, and a credit to Sales 
D)  debit to Sales, a debit to Credit Card Expense, and a credit to Cash

Question 6

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 7

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 8

The chart of accounts for a merchandising business would include an account called Delivery Expense.

Accepted Answer

A) True 
 B)False

Question 9

Corbit Corp. sold merchandise for $10,000 cash. The cost of merchandise sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be

Accepted Answer

The answer of Corbit Corp. sold merchandise for $10,000 cash....

Question 10

Customer Refunds Payable is an account used to record merchandise returns from customers.

Accepted Answer

A) True 
 B)False

Question 11

Multiple-step income statements show

Accepted Answer

A)  gross profit but not income from operations 
B)  neither gross profit nor income from operations 
C)  both gross profit and income from operations 
D)  income from operations but not gross profit 
A)  gross profit but not income from operations 
B)  neither gross profit nor income from operations 
C)  both gross profit and income from operations 
D)  income from operations but not gross profit

Question 12

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight in.

Accepted Answer

A) True 
 B)False

Question 13

Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory of the buyer.

Accepted Answer

A) True 
 B)False

Question 14

On March 4, Micro Sales makes $4,850 in sales on bank credit cards that charge a 2.5% service charge and deposits the funds into Micro Sales' bank accounts at the end of the business day. Journalize the sales and recognition of expense as a single journal entry.

Accepted Answer

​ @#IMG-DLM& The sales can be debited to Cash sinc

Question 15

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. Pound Co. paid the invoice within the discount period. What is the amount of sales from the above transactions?

Accepted Answer

A)  $25,500 
B)  $26,010 
C)  $24,990 
D)  $16,000 
A)  $25,500 
B)  $26,010 
C)  $24,990 
D)  $16,000

Question 16

What is the major difference between a periodic and a perpetual inventory system?

Accepted Answer

A)  Under the periodic inventory system, the purchase of inventory will be debited to the purchases account. 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month. 
D)  All of these choices are correct. 
A)  Under the periodic inventory system, the purchase of inventory will be debited to the purchases account. 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month. 
D)  All of these choices are correct.

Question 17

$$\text { Match each of the following terms } ( a - h ) \text { with the correct definition below. }$$
-Statement where net income is determined by deducting all expenses from all revenues.
a. Credit terms
b. FOB destination
c. FOB shipping point
d. Periodic inventory system
e. Perpetual inventory system
f. Inventory shrinkage
g. Single-step income statement
h. Multiple-step income statement

Accepted Answer

The answer of \[\text { Match each of the following...

Question 18

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is a

Accepted Answer

A)  debit to Cost of Merchandise Sold and a credit to Sales 
B)  debit to Cost of Merchandise Sold and a credit to Merchandise Inventory 
C)  debit to Merchandise Inventory and a credit to Cost of Merchandise Sold 
D)  debit to Accounts Receivable and a credit to Merchandise Inventory 
A)  debit to Cost of Merchandise Sold and a credit to Sales 
B)  debit to Cost of Merchandise Sold and a credit to Merchandise Inventory 
C)  debit to Merchandise Inventory and a credit to Cost of Merchandise Sold 
D)  debit to Accounts Receivable and a credit to Merchandise Inventory

Question 19

When merchandise is sold for $600 plus a 6% sales tax, the sales account should be credited for $636.

Accepted Answer

A) True 
 B)False

Question 20

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are not readily available.

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Merchandising Businesses

Under a perpetual inventory system,

Using the following information, what is the amount of net income??? Purchases \ 32,000 Selling expenses \ 960 Merchandise inventory, September 1 5,700 Merchandise inventory, September 30 6,370 Administrative expenses 910 Sales 63,000 Rent revenue 1,200 Interest expense 1,040

A sale of $750 on account subject to a sales tax of 6% would be recorded as an account receivable of $750.

Sales to customers who use bank credit cards such as MasterCard and VISA are usually recorded by a

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

The chart of accounts for a merchandising business would include an account called Delivery Expense.

Corbit Corp. sold merchandise for $10,000 cash. The cost of merchandise sold was $7,590. The journal entries to record this transaction under the perpetual inventory system would be

Customer Refunds Payable is an account used to record merchandise returns from customers.

Multiple-step income statements show

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight in.

Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory of the buyer.

On March 4, Micro Sales makes $4,850 in sales on bank credit cards that charge a 2.5% service charge and deposits the funds into Micro Sales' bank accounts at the end of the business day. Journalize the sales and recognition of expense as a single journal entry.

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. Pound Co. paid the invoice within the discount period. What is the amount of sales from the above transactions?

What is the major difference between a periodic and a perpetual inventory system?

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is a

When merchandise is sold for $600 plus a 6% sales tax, the sales account should be credited for $636.

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are not readily available.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

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