Question 1

Large businesses that make sales to customers who use credit cards, such as American Express, generally treat these sales as credit sales.

Accepted Answer

A) True 
 B)False

Question 2

Closing entries for a merchandising business are not similar to those for a service business.

Accepted Answer

A) True 
 B)False

Question 3

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the merchandise inventory account?

Accepted Answer

A)  $21,000 
B)  $20,580 
C)  $30,000 
D)  $29,400 
A)  $21,000 
B)  $20,580 
C)  $30,000 
D)  $29,400

Question 4

Using the letter preceding each account, arrange the following selected accounts in the order they would normally appear in a chart of accounts of a company that uses a multiple-step income statement.
(a)Accounts Payable
(b)Accounts Receivable
(c)Merchandise Inventory
(d)Miscellaneous Selling Expense
(e)Interest Expense
(f)Misc. Admin. Expense
(g)Freight Out

Accepted Answer

(b) 
(c)

Question 5

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Accepted Answer

A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned 
A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned

Question 6

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Accepted Answer

A) True 
 B)False

Question 7

Record the following transactions for Sparky's Pet Shop using the general journal form provided below. Assume Sparky's uses a perpetual inventory system. Omit transaction descriptions from entries.? $$\begin{array} { | c | l | } 
\hline \textbf { Date } & ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \textbf { Transaction } } \
\hline \text { Aug. } 1 & \text { Purchased } \$ 6,000 \text { of merchandise on account, terms } 2 / 10 , \mathrm { n } / 30 . \
\hline 3 & \text { Returned } \$ 1,500 \text { of merchandise purchased on August } 1 \text { due to defects. } \
\hline 7 & \begin{array} { l } 
\text { Recorded cash sales for the first week of August, } \$ 9,750 ; \text { cost of the } \
\text { merchandise was } \$ 4,000 .
\end{array} \
\hline 10 & \begin{array} { l } 
\text { Made sale on account to a local breeder for } \$ 500 , \text { terms } 1 / 10 , \text { net } 30 ; \text { cost of } \
\text { the merchandise was } \$ 200 .
\end{array} \
\hline 11 & \text { Paid for the merchandise purchased on August } 1 , \text { less return. } \
\hline 20 & \text { Received payment from sale of August } 10 . \text { The customer took the discount. } \
\hline
\end{array}$$

Accepted Answer

None

Question 8

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.

Accepted Answer

A) True 
 B)False

Question 9

Using the following data taken from Connor Inc., determine the gross profit to be reported on the income statement for the year ended May 31.? $$\begin{array} { | l | r | } 
\hline \text { Merchandise inventory, June 1 } & \$ 393,250 \
\hline \text { Merchandise inventory, May } 31 & 380,100 \
\hline \text { Purchases } & 1,579,600 \
\hline \text { Purchases returns and allowances } & 81,200 \
\hline \text { Purchases discounts } & 16,500 \
\hline \text { Sales } & 2,060,000 \
\hline \text { Freight in } & 59,250 \
\hline
\end{array}$$

Accepted Answer

Gross Profit = Sales

Question 10

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

Accepted Answer

A) True 
 B)False

Question 11

Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a credit to Sales.

Accepted Answer

A) True 
 B)False

Question 12

In a merchandise business, sales minus operating expenses equals net income.

Accepted Answer

A) True 
 B)False

Question 13

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Accepted Answer

A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned 
A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned

Question 14

Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?

Accepted Answer

A)  Accounts Receivable-Stanton, debit $20,000; Sales, credit $20,000 
B)  Accounts Receivable-Stanton, debit $19,600; Sales, credit $19,600, and
Accounts Receivable-Stanton, debit $500; Cash, credit $500 
C)  Accounts Receivable-Stanton, debit $20,100; Sales, credit $20,100 
D)  Accounts Receivable-Stanton, debit $20,000; Sales, credit $20,000, and
Delivery Expense, debit $500; Cash, credit $500 
A)  Accounts Receivable-Stanton, debit $20,000; Sales, credit $20,000 
B)  Accounts Receivable-Stanton, debit $19,600; Sales, credit $19,600, and
Accounts Receivable-Stanton, debit $500; Cash, credit $500 
C)  Accounts Receivable-Stanton, debit $20,100; Sales, credit $20,100 
D)  Accounts Receivable-Stanton, debit $20,000; Sales, credit $20,000, and
Delivery Expense, debit $500; Cash, credit $500

Question 15

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the carrier, the terms are stated as FOB destination.

Accepted Answer

A) True 
 B)False

Question 16

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated on May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

Accepted Answer

A)  $194, May 15 
B)  $194, May 16 
C)  $97, May 15 
D)  $97, May 16 
A)  $194, May 15 
B)  $194, May 16 
C)  $97, May 15 
D)  $97, May 16

Question 17

$$\text { Match each of the following terms } ( a - h ) \text { with the correct definition below. }$$
-Losses of inventory due to theft, damage, spoilage, etc., that cause the actual inventory on hand to be less than that on record.
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

When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a

Accepted Answer

A)  debit to Merchandise Inventory and a credit to Cash 
B)  debit to Cash and a credit to Merchandise Inventory 
C)  debit to Cash and a credit to Sales 
D)  debit to Sales and a credit to Accounts Payable 
A)  debit to Merchandise Inventory and a credit to Cash 
B)  debit to Cash and a credit to Merchandise Inventory 
C)  debit to Cash and a credit to Sales 
D)  debit to Sales and a credit to Accounts Payable

Question 19

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Accepted Answer

A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo 
A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo

Question 20

Based on the information below, journalize the entries for the seller and the buyer. Both use a perpetual inventory system.
(a)Seller sold merchandise on account to the buyer, $4,750, terms 2/10, net 30, FOB shipping point. The cost of the merchandise is $2,850. The seller prepays the freight of $75.
(b)Buyer returns $700 of merchandise as defective. The cost of the merchandise is $420.
(c)Buyer pays within the discount period.

Accepted Answer

The answer of Based on the information below, journalize the...

Large businesses that make sales to customers who use credit cards, such as American Express, generally treat these sales as credit sales.

Closing entries for a merchandising business are not similar to those for a service business.

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the merchandise inventory account?

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a credit to Sales.

In a merchandise business, sales minus operating expenses equals net income.

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the carrier, the terms are stated as FOB destination.

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated on May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

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

Filters

Exam 6: Accounting for Merchandising Businesses

Large businesses that make sales to customers who use credit cards, such as American Express, generally treat these sales as credit sales.

Closing entries for a merchandising business are not similar to those for a service business.

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the merchandise inventory account?

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold.

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a credit to Sales.

In a merchandise business, sales minus operating expenses equals net income.

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Pierce Company sold merchandise to Stanton Company on account FOB shipping point, 2/10, net 30, for $20,000. Pierce prepaid the $500 shipping charge. Which of the following entries does Pierce make to record this sale?

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the carrier, the terms are stated as FOB destination.

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated on May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

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

Filters