Question 1

With respect to the income statement

Accepted Answer

A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit. 
A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit.

Question 2

The following information is available for Leno Company: $$\begin{array} { l r l r } 
\text { Sales Revenue } & \$ 390,000 & \text { Freight-In } & \$ 20,000 \
\text { Ending Inventory } & 35,500 & \text { Purchase Returns and Allowances } & 12,000 \
\text { Purchases } & 274,000 & \text { Beginning Inventory } & 43,000
\end{array}$$ Leno's cost of goods sold is

Accepted Answer

A)  $258500. 
B)  $282000. 
C)  $289500. 
D)  $337000. 
A)  $258500. 
B)  $282000. 
C)  $289500. 
D)  $337000.

Question 3

Bush Company had the following account balances at year-end: cost of goods sold $85000; inventory $15000; operating expenses $29000; sales revenue $135000; sales discounts $1300; and sales returns and allowances $2600. A physical count of inventory determines that inventory on hand is $14100.
Instructions
(a) Prepare the adjusting entry necessary as a result of the physical count.
(b) Prepare closing entries.

Accepted Answer

The answer of Bush Company had the following account balances...

Question 4

The primary source of revenue for a wholesaler is

Accepted Answer

A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns. 
A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns.

Question 5

Klum's Fashions sold merchandise for $46000 cash during the month of July. Returns that month totaled $1000. If the company's gross profit rate is 30% Klum's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A)  $45000 and $31500. 
B)  $45000 and $32000. 
C)  $46000 and $31500. 
D)  $46000 and $32200. 
A)  $45000 and $31500. 
B)  $45000 and $32000. 
C)  $46000 and $31500. 
D)  $46000 and $32200.

Question 6

Match between columns
                        Premises:  An incentive to encourage customers to pay their accounts early.
 Expenses incurred in the process of earning sales revenue.
 Freight terms that require the seller to pay the freight cost.
 Sales revenue less sales returns and allowances and sales discounts.
 A document that supports each credit purchase.
 Net sales less cost of goods sold.
 Freight cost to deliver goods to customers reported as a selling expense.
 Requires a physical count of goods on hand to compute cost of goods sold.
 Gross profit less total operating expenses.
 Freight terms that require the buyer to pay the freight cost.

Accepted Answer

The Answer of Net sales and Sales discounts and Purchase is...

Question 7

The income statement of Leang's Luggage includes the items listed below: $$\begin{array} { l r } 
\text { Net sales } & \$ 875,000 \
\text { Gross profit } & 305,000 \
\text { Beginning inventory } & 75,000 \
\text { Purchase discounts } & 12,000 \
\text { Purchase returns and allowances } & 8,000 \
\text { Freight-in } & 10,000 \
\text { Operating expenses } & 320,000 \
\text { Purchases } & 560,000
\end{array}$$ Instructions
Use the appropriate items listed above as a basis for determining:
(a) Cost of goods sold.
(b) Cost of goods available for sale.
(c) Ending inventory.

Accepted Answer

(a) Net sales - Cost of goods sold = Gro

Question 8

If net sales are $800000 and cost of goods sold is $600000 the gross profit rate is 25%.

Accepted Answer

A) True 
 B)False

Question 9

Financial information is presented below: $\begin{array}{lr}
\text { Operating Expenses } & \$ 92,800 \
\text { Sales Returns and Allowances } & 18,000 \
\text { Sales Discounts } & 12,000 \
\text { Sales Revenue } & 350,000 \
\text { Cost of Goods Sold } & 176,000
\end{array}$ Gross profit would be

Accepted Answer

A)  $51200. 
B)  $144000. 
C)  $156000. 
D)  $174000. 
A)  $51200. 
B)  $144000. 
C)  $156000. 
D)  $174000.

Question 10

Cost of goods available for sale is computed by adding

Accepted Answer

A)  freight-in to net purchases. 
B)  beginning inventory to net purchases. 
C)  beginning inventory to purchases and freight-in. 
D)  beginning inventory to cost of goods purchased. 
A)  freight-in to net purchases. 
B)  beginning inventory to net purchases. 
C)  beginning inventory to purchases and freight-in. 
D)  beginning inventory to cost of goods purchased.

Question 11

When goods are returned that relate to a prior cash sale

Accepted Answer

A)  the Sales Returns and Allowances account should not be used. 
B)  the cash account will be credited. 
C)  Sales Returns and Allowances will be credited. 
D)  Accounts Receivable will be credited. 
A)  the Sales Returns and Allowances account should not be used. 
B)  the cash account will be credited. 
C)  Sales Returns and Allowances will be credited. 
D)  Accounts Receivable will be credited.

Question 12

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

Accepted Answer

A) True 
 B)False

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

A periodic inventory system requires a detailed inventory record of inventory items.

Accepted Answer

A) True 
 B)False

Question 15

Under IFRS companies can choose which inventory system? $\begin{array} { l l l } 
& \text { Perpetual } & \text { Periodic } \\end{array}$
A)$\begin{array} { l l l }  & \text { Yes } &&&& \text { No } \\end{array}$
B)$\begin{array} { l l l } & \text { Yes }  &&&& \text { Yes } \\end{array}$
C)$\begin{array} { l l l } & \text { No }  &&&& \text { Yes } \\end{array}$
D)$\begin{array} { l l l } & \text { No }  &&&& \text { No }
\end{array}$

Accepted Answer

The answer of Under IFRS companies can choose which inventory...

Question 16

Under GAAP companies can choose which inventory system? 
$\begin{array} { l l l } 
& \text { Perpetual } & \text { Periodic } \\end{array}$
A)$\begin{array} { l l l } & & \text { Yes } &&& \text { No } \\end{array}$
B) $\begin{array} { l l l } && \text { Yes } &&& \text { Yes } \\end{array}$
C)$\begin{array} { l l l } && \text { No } &&& \text { Yes } \\end{array}$
D)$\begin{array} { l l l }  && \text { No } &&& \text { No }
\end{array}$

Accepted Answer

The answer of Under GAAP companies can choose which inventory...

Question 17

After gross profit is calculated operating expenses are deducted to determine

Accepted Answer

A)  gross margin. 
B)  net income. 
C)  gross profit on sales. 
D)  net margin. 
A)  gross margin. 
B)  net income. 
C)  gross profit on sales. 
D)  net margin.

Question 18

At the beginning of September 2016 Astrid Company reported Inventory of $8500. During the month the company made purchases of $35000. At September 30 2016 a physical count of inventory reported $8200 on hand. Cost of goods sold for the month is

Accepted Answer

A)  $35300. 
B)  $35000. 
C)  $34700. 
D)  $43500. 
A)  $35300. 
B)  $35000. 
C)  $34700. 
D)  $43500.

Question 19

The use of IFRS results in more transactions affecting

Accepted Answer

A)  net income but not other comprehensive income. 
B)  other comprehensive income but not net income. 
C)  but net income and other comprehensive income. 
D)  neither net income nor other comprehensive income. 
A)  net income but not other comprehensive income. 
B)  other comprehensive income but not net income. 
C)  but net income and other comprehensive income. 
D)  neither net income nor other comprehensive income.

Question 20

The terms 2/10 n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Operations

With respect to the income statement

The following information is available for Leno Company: Sales Revenue \ 390,000 Freight-In \ 20,000 Ending Inventory 35,500 Purchase Returns and Allowances 12,000 Purchases 274,000 Beginning Inventory 43,000 Leno's cost of goods sold is

The primary source of revenue for a wholesaler is

Klum's Fashions sold merchandise for $46000 cash during the month of July. Returns that month totaled $1000. If the company's gross profit rate is 30% Klum's will report monthly net sales revenue and cost of goods sold of

If net sales are $800000 and cost of goods sold is $600000 the gross profit rate is 25%.

Financial information is presented below: Operating Expenses \ 92,800 Sales Returns and Allowances 18,000 Sales Discounts 12,000 Sales Revenue 350,000 Cost of Goods Sold 176,000 Gross profit would be

Cost of goods available for sale is computed by adding

When goods are returned that relate to a prior cash sale

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

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

A periodic inventory system requires a detailed inventory record of inventory items.

Under IFRS companies can choose which inventory system? Perpetual Periodic A) Yes No B) Yes Yes C) No Yes D) No No

Under GAAP companies can choose which inventory system? Perpetual Periodic A) Yes No B) Yes Yes C) No Yes D) No No

After gross profit is calculated operating expenses are deducted to determine

At the beginning of September 2016 Astrid Company reported Inventory of $8500. During the month the company made purchases of $35000. At September 30 2016 a physical count of inventory reported $8200 on hand. Cost of goods sold for the month is

The use of IFRS results in more transactions affecting

The terms 2/10 n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

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

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