Question 1

A periodic inventory system

Accepted Answer

A) Was historically used by companies that sold large quantities of low-value items. 
B) Gives more timely information. 
C) Does not use a Purchases account. 
D) Is widely used in practice. 
E) Provides point of sale data. 
A) Was historically used by companies that sold large quantities of low-value items. 
B) Gives more timely information. 
C) Does not use a Purchases account. 
D) Is widely used in practice. 
E) Provides point of sale data.

Question 2

Gross profit is also called gross margin

Accepted Answer

A) True 
 B)False

Question 3

Classified multiple-step income statements

Accepted Answer

A) Are required by Canada Revenue Agency. 
B) Are generally used for internal reporting. 
C) List cost of goods sold as an operating expense. 
D) Do not report gross profit. 
E) Are required for the perpetual system. 
A) Are required by Canada Revenue Agency. 
B) Are generally used for internal reporting. 
C) List cost of goods sold as an operating expense. 
D) Do not report gross profit. 
E) Are required for the perpetual system.

Question 4

Describe the attributes of inventory as an asset of a merchandising company

Accepted Answer

Merchandise inventor

Question 5

Merchandise inventory is

Accepted Answer

A) Products a company owns for resale to customers. 
B) Includes supplies. 
C) Included on a service company's balance sheet. 
D) Reported on the income statement as an expense. 
E) Reported on the balance sheet under plant and equipment. 
A) Products a company owns for resale to customers. 
B) Includes supplies. 
C) Included on a service company's balance sheet. 
D) Reported on the income statement as an expense. 
E) Reported on the balance sheet under plant and equipment.

Question 6

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used, a credit balance in the account means that the government owes money to thebusiness.

Accepted Answer

A) True 
 B)False

Question 7

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

An income statement on which the cost of goods sold and operating expenses are added together and subtracted from net sales in one step to get net income is a(n):

Accepted Answer

A) Single-step income statement. 
B) Balanced income statement. 
C) Multiple-step income statement. 
D) Merchandise income statement. 
E) Unclassified income statement. 
A) Single-step income statement. 
B) Balanced income statement. 
C) Multiple-step income statement. 
D) Merchandise income statement. 
E) Unclassified income statement.

Question 9

Transportation-in increases cost of goods purchased

Accepted Answer

A) True 
 B)False

Question 10

Is Roller Skate Store using a periodic or perpetual inventory system? Explain

Accepted Answer

A perpetual system is used sin

Question 11

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be debited to advertising expense?

Accepted Answer

A) $4,000 
B) $4,480 
C) $4,280 
D) $4,200 
E) None of these answers is correct. 
A) $4,000 
B) $4,480 
C) $4,280 
D) $4,200 
E) None of these answers is correct.

Question 12

Trade discounts are entered into the accounting system

Accepted Answer

A) True 
 B)False

Question 13

A merchandising company

Accepted Answer

A) Earns net income from buying and selling merchandise. 
B) Reports cost of goods sold on the income statement. 
C) Buys products from manufacturers and sells them to consumers. 
D) Buys products from manufacturers and sells to retailers. 
E) All of these answers are correct. 
A) Earns net income from buying and selling merchandise. 
B) Reports cost of goods sold on the income statement. 
C) Buys products from manufacturers and sells them to consumers. 
D) Buys products from manufacturers and sells to retailers. 
E) All of these answers are correct.

Question 14

In a periodic inventory system

Accepted Answer

A) A continuous record of the amount of inventory on hand is maintained. 
B) The company records the cost of new merchandise in the permanent Purchases account. 
C) The cost of merchandise on hand is determined by relating the quantities on hand to records showing each item's original cost. 
D) The inventory value is not based on a physical count. 
E) None of these answers apply. 
A) A continuous record of the amount of inventory on hand is maintained. 
B) The company records the cost of new merchandise in the permanent Purchases account. 
C) The cost of merchandise on hand is determined by relating the quantities on hand to records showing each item's original cost. 
D) The inventory value is not based on a physical count. 
E) None of these answers apply.

Question 15

Discuss the difference between the periodic and perpetual inventory systems

Accepted Answer

Under the periodic system the cost of in

Question 16

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be credited to accounts payable?

Accepted Answer

A) $4,240 
B) $4,200 
C) $4,480 
D) $4,000 
E) None of these answers is correct. 
A) $4,240 
B) $4,200 
C) $4,480 
D) $4,000 
E) None of these answers is correct.

Question 17

For a merchandiser, each sales transaction involves

Accepted Answer

A) Recognizing cash discounts. 
B) Recognizing the cost of merchandise sold to a customer. 
C) Recognizing purchase discounts. 
D) Revenue received in the form of a liability from a customer. 
E) Recording accounts payable. 
A) Recognizing cash discounts. 
B) Recognizing the cost of merchandise sold to a customer. 
C) Recognizing purchase discounts. 
D) Revenue received in the form of a liability from a customer. 
E) Recording accounts payable.

Question 18

A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Accepted Answer

A) True 
 B)False

Question 19

Calculate the gross profit ratio for the year ended December 31, 2015. Interpret the ratio.

Accepted Answer

Gross profit ratio =
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Question 20

A credit memorandum informs a customer of a credit to its Accounts Payable account from a sales return or allowance.

Accepted Answer

A) True 
 B)False

A periodic inventory system

Gross profit is also called gross margin

Classified multiple-step income statements

Describe the attributes of inventory as an asset of a merchandising company

Merchandise inventory is

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used, a credit balance in the account means that the government owes money to thebusiness.

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

An income statement on which the cost of goods sold and operating expenses are added together and subtracted from net sales in one step to get net income is a(n):

Transportation-in increases cost of goods purchased

Is Roller Skate Store using a periodic or perpetual inventory system? Explain

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be debited to advertising expense?

Trade discounts are entered into the accounting system

A merchandising company

In a periodic inventory system

Discuss the difference between the periodic and perpetual inventory systems

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be credited to accounts payable?

For a merchandiser, each sales transaction involves

A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Calculate the gross profit ratio for the year ended December 31, 2015. Interpret the ratio.

A credit memorandum informs a customer of a credit to its Accounts Payable account from a sales return or allowance.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Appendix

Filters

Exam 5: Accounting for Merchandising Activities

A periodic inventory system

Gross profit is also called gross margin

Classified multiple-step income statements

Describe the attributes of inventory as an asset of a merchandising company

Merchandise inventory is

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used, a credit balance in the account means that the government owes money to thebusiness.

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

An income statement on which the cost of goods sold and operating expenses are added together and subtracted from net sales in one step to get net income is a(n):

Transportation-in increases cost of goods purchased

Is Roller Skate Store using a periodic or perpetual inventory system? Explain

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be debited to advertising expense?

Trade discounts are entered into the accounting system

A merchandising company

In a periodic inventory system

Discuss the difference between the periodic and perpetual inventory systems

The agreed cost of an item to be purchased by a business on credit is $4,000and 7% provincial sales tax (PST). When this transaction isrecorded, what amount will be credited to accounts payable?

For a merchandiser, each sales transaction involves

A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Calculate the gross profit ratio for the year ended December 31, 2015. Interpret the ratio.

A credit memorandum informs a customer of a credit to its Accounts Payable account from a sales return or allowance.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Appendix

Filters