Question 1

Two categories of expenses for merchandising companies are

Accepted Answer

A)  cost of goods sold and financing expenses. 
B)  operating expenses and financing expenses. 
C)  cost of goods sold and operating expenses. 
D)  sales and cost of goods sold. 
A)  cost of goods sold and financing expenses. 
B)  operating expenses and financing expenses. 
C)  cost of goods sold and operating expenses. 
D)  sales and cost of goods sold.

Question 2

Financial information is presented below: $$\begin{array} { l r } 
\text { Operating Expenses } & \$ 90,000 \
\text { Sales Returns and Allowances } & 25,000 \
\text { Sales Discounts } & 15,000 \
\text { Sales } & 400,000 \
\text { Cost of Goods Sold } & 212,400
\end{array}$$ Gross profit would be

Accepted Answer

A)  $147600. 
B)  $57600. 
C)  $270000. 
D)  $187600. 
A)  $147600. 
B)  $57600. 
C)  $270000. 
D)  $187600.

Question 3

Sales revenue should be recorded in accordance with the matching principle.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Which one of the following is shown on a multiple-step but not on a single-step income statement?

Accepted Answer

A)  Net sales 
B)  Net income 
C)  Gross profit 
D)  Cost of goods sold 
A)  Net sales 
B)  Net income 
C)  Gross profit 
D)  Cost of goods sold

Question 6

Assume that Swann Company uses a periodic inventory system and has these account balances: Purchases $630000; Purchase Returns and Allowances $25000; Purchase Discounts $11000; and Freight-In $19000; beginning inventory of $45000; ending inventory of $55000; and net sales of $750000. Determine the cost of goods sold.

Accepted Answer

None

Question 7

Mantle Company's accounting records show the following at the year ending on December 31 2016: $$\begin{array} { l r } 
\text { Purchase Discounts } & \$ 16,500 \
\text { Freight - In } & 22,100 \
\text { Purchases } & 413,000 \
\text { Beginning Inventory } & 47,000 \
\text { Ending Inventory } & 57,600 \
\text { Purchase Returns } & 15,600
\end{array}$$ Using the periodic system the cost of goods purchased is

Accepted Answer

A)  $380900. 
B)  $423000. 
C)  $403000. 
D)  $413600. 
A)  $380900. 
B)  $423000. 
C)  $403000. 
D)  $413600.

Question 8

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 9

Financial information is presented below: $$\begin{array} { l r } 
\text { Operating Expenses } & \$ 90,000 \
\text { Sales Returns and Allowances } & 25,000 \
\text { Sales Discounts } & 15,000 \
\text { Sales Revenue } & 400,000 \
\text { Cost of Goods Sold } & 212,400
\end{array}$$ The gross profit rate would be

Accepted Answer

A)  .590. 
B)  .410. 
C)  .469. 
D)  .531. 
A)  .590. 
B)  .410. 
C)  .469. 
D)  .531.

Question 10

Financial information is presented below: Operating Expenses $\quad \$ 65,000$
Sales Revenue $\quad \quad \quad 220,000$
Cost of Goods Sold $\quad 138,000$ The gross profit rate would be

Accepted Answer

A)  .077. 
B)  .400. 
C)  .627. 
D)  .923. 
A)  .077. 
B)  .400. 
C)  .627. 
D)  .923.

Question 11

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 12

Under a perpetual inventory system inventory shrinkage and lost or stolen goods are more readily determined.

Accepted Answer

A) True 
 B)False

Question 13

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 14

For the income statement IFRS requires

Accepted Answer

A)  single-step approach. 
B)  multiple-step approach. 
C)  single-step approach or multiple-step approach. 
D)  no specific income statement approach. 
A)  single-step approach. 
B)  multiple-step approach. 
C)  single-step approach or multiple-step approach. 
D)  no specific income statement approach.

Question 15

If a company determines cost of goods sold each time a sale occurs it

Accepted Answer

A)  must have a computer accounting system. 
B)  uses a combination of the perpetual and periodic inventory systems. 
C)  uses a periodic inventory system. 
D)  uses a perpetual inventory system. 
A)  must have a computer accounting system. 
B)  uses a combination of the perpetual and periodic inventory systems. 
C)  uses a periodic inventory system. 
D)  uses a perpetual inventory system.

Question 16

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 17

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 18

On July 9 Elijah Company sells goods on credit to Miley Company for $7000 terms 1/10 n/60. Elijah receives payment on July 18. The entry by Elijah on July 18 is: a. 
$\begin{array}{lrr}
  \text {  Cash } &7,000\
 \text {  Accounts Receivable} & &7,000\
\end{array}$

b. 
$\begin{array}{lrr}
  \text {  Cash} &7,000\
 \text {Sales Discounts  } &&70\
 \text { Accounts Receivable  } &&6,930
\end{array}$

c. 
$\begin{array}{lrr}
  \text { Cash } &6,930\
 \text { Sales Discounts } &70\
 \text { Accounts Receivable } &&7,000
\end{array}$

d. 
$\begin{array}{lrr}
  \text {Cash  } &7,070\
 \text { Sales Discounts } &&70\
 \text { Accounts Receivable } &&7,000
\end{array}$

Accepted Answer

The answer of On July 9 Elijah Company sells goods...

Question 19

During 2016 Wu Han Co. generated revenues of $95000. The company's expenses were as follows: cost of goods sold of $47000 operating expenses of $16000 and a loss on the sale of equipment of $5000. Wu Han's income from operations is

Accepted Answer

A)  $37000. 
B)  $32000. 
C)  $48000. 
D)  $95000. 
A)  $37000. 
B)  $32000. 
C)  $48000. 
D)  $95000.

Question 20

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.

Exam 5: Accounting for Merchandising Operations

Two categories of expenses for merchandising companies are

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 25,000 Sales Discounts 15,000 Sales 400,000 Cost of Goods Sold 212,400 Gross profit would be

Sales revenue should be recorded in accordance with the matching principle.

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

Which one of the following is shown on a multiple-step but not on a single-step income statement?

Mantle Company's accounting records show the following at the year ending on December 31 2016: Purchase Discounts \ 16,500 Freight - In 22,100 Purchases 413,000 Beginning Inventory 47,000 Ending Inventory 57,600 Purchase Returns 15,600 Using the periodic system the cost of goods purchased is

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

Financial information is presented below: Operating Expenses \ 90,000 Sales Returns and Allowances 25,000 Sales Discounts 15,000 Sales Revenue 400,000 Cost of Goods Sold 212,400 The gross profit rate would be

Financial information is presented below: Operating Expenses $65,000\quad \$ 65,000$65,000 Sales Revenue 220,000\quad \quad \quad 220,000220,000 Cost of Goods Sold 138,000\quad 138,000138,000 The gross profit rate would be

The operating cycle of a merchandiser is

Under a perpetual inventory system inventory shrinkage and lost or stolen goods are more readily determined.

A sales invoice is a source document that

For the income statement IFRS requires

If a company determines cost of goods sold each time a sale occurs it

Gross profit for a merchandiser is net sales minus

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

During 2016 Wu Han Co. generated revenues of $95000. The company's expenses were as follows: cost of goods sold of $47000 operating expenses of $16000 and a loss on the sale of equipment of $5000. Wu Han's income from operations is

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

Financial information is presented below: Operating Expenses $\quad \$ 65,000$ Sales Revenue $\quad \quad \quad 220,000$ Cost of Goods Sold $\quad 138,000$ The gross profit rate would be