Question 1

Describe the difference between wholesalers and retailers

Accepted Answer

A wholesaler is a middleman who buys pro

Question 2

Merchandise inventory includes merchandise and office supplies

Accepted Answer

A) True 
 B)False

Question 3

Shrinkage

Accepted Answer

A) Is recognized by debiting Cost of Goods Sold. 
B) Is not able to be directly measured by a perpetual inventory system. 
C) Refers to the loss of inventory for merchandising companies. 
D) Can arise because of theft and deterioration of merchandise. 
E) All of these answers are correct. 
A) Is recognized by debiting Cost of Goods Sold. 
B) Is not able to be directly measured by a perpetual inventory system. 
C) Refers to the loss of inventory for merchandising companies. 
D) Can arise because of theft and deterioration of merchandise. 
E) All of these answers are correct.

Question 4

Merchandising companies must account for

Accepted Answer

A) Sales returns and allowances. 
B) Sales. 
C) Cost of goods sold. 
D) Sales discounts. 
E) All of these answers are correct. 
A) Sales returns and allowances. 
B) Sales. 
C) Cost of goods sold. 
D) Sales discounts. 
E) All of these answers are correct.

Question 5

The operating cycle of a merchandising company

Accepted Answer

A) Ends with the collection of cash from the sale of merchandise. 
B) Varies among types of businesses. 
C) Applies to both cash and credit sales. 
D) Begins with the purchase of merchandise. 
E) All of these answers are correct. 
A) Ends with the collection of cash from the sale of merchandise. 
B) Varies among types of businesses. 
C) Applies to both cash and credit sales. 
D) Begins with the purchase of merchandise. 
E) All of these answers are correct.

Question 6

Retailers

Accepted Answer

A) Buy products from manufacturers and wholesalers and sell to consumers. 
B) Buy products from wholesalers and sell to other wholesalers. 
C) Buy only from wholesalers. 
D) Buy products from manufacturers and sell to wholesalers. 
E) All of these answers are correct. 
A) Buy products from manufacturers and wholesalers and sell to consumers. 
B) Buy products from wholesalers and sell to other wholesalers. 
C) Buy only from wholesalers. 
D) Buy products from manufacturers and sell to wholesalers. 
E) All of these answers are correct.

Question 7

A perpetual inventory system

Accepted Answer

A) Gives a continuous record of the amount of inventory on hand. 
B) Is not widely used in practice. 
C) Was historically used by companies that sold large quantities of low-value items. 
D) Uses a Purchases account for the cost of new merchandise purchased. 
E) All of these answers are correct. 
A) Gives a continuous record of the amount of inventory on hand. 
B) Is not widely used in practice. 
C) Was historically used by companies that sold large quantities of low-value items. 
D) Uses a Purchases account for the cost of new merchandise purchased. 
E) All of these answers are correct.

Question 8

In a periodic inventory system, cost of goods sold is not recorded as each sale occurs

Accepted Answer

A) True 
 B)False

Question 9

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 recorded as GST Receivable?

Accepted Answer

A) $240 debit 
B) $200 credit 
C) $200 debit 
D) $240 credit 
E) None of these answers is correct. 
A) $240 debit 
B) $200 credit 
C) $200 debit 
D) $240 credit 
E) None of these answers is correct.

Question 10

The normal balance of the following accounts is a debit

Accepted Answer

A) Sales returns and allowances and purchase discounts. 
B) Cost of goods sold, and purchase discounts. 
C) Sales returns and allowances, cost of goods sold. 
D) Sales discounts and interest revenue. 
E) Transportation-in and income summary. 
A) Sales returns and allowances and purchase discounts. 
B) Cost of goods sold, and purchase discounts. 
C) Sales returns and allowances, cost of goods sold. 
D) Sales discounts and interest revenue. 
E) Transportation-in and income summary.

Question 11

Cost of goods sold is

Accepted Answer

A) An operating expense. 
B) The cost of goods sold to customers. 
C) The term used for the cost of buying and preparing merchandise. 
D) Also called gross margin. 
E) Another term for net sales. 
A) An operating expense. 
B) The cost of goods sold to customers. 
C) The term used for the cost of buying and preparing merchandise. 
D) Also called gross margin. 
E) Another term for net sales.

Question 12

For a business, goods and services tax (GST)and/or Harmonized Sales Tax (HST)paid is included in the amount recorded as an asset or an expense when a purchase is made.

Accepted Answer

A) True 
 B)False

Question 13

MicroAge sells cellphones at a selling price to include a 65% markup on cost. The cellphones cost MicroAge $290. The selling price is:

Accepted Answer

A) $214.81 
B) $487.05 
C) $478.50 
D) $391.50 
E) None of these answers is correct. 
A) $214.81 
B) $487.05 
C) $478.50 
D) $391.50 
E) None of these answers is correct.

Question 14

Gross profit is derived from

Accepted Answer

A) Cost of goods sold. 
B) Beginning inventory. 
C) Sales. 
D) Ending inventory. 
E) All of these answers are correct. 
A) Cost of goods sold. 
B) Beginning inventory. 
C) Sales. 
D) Ending inventory. 
E) All of these answers are correct.

Question 15

Z-Mart had sales of $498,100. Cost of goods sold was $143,400. What is the grossprofit?

Accepted Answer

A) $214,600. 
B) $501,900. 
C) $354,700. 
D) $215,100. 
E) 40%. 
A) $214,600. 
B) $501,900. 
C) $354,700. 
D) $215,100. 
E) 40%.

Question 16

The purchaser usually records a purchase return by a credit memorandum

Accepted Answer

A) True 
 B)False

Question 17

Sales of $350,000 and net sales of $323,000 may reflect sales discounts of $27,000

Accepted Answer

A) True 
 B)False

Question 18

To calculate the total cost of a merchandise purchase, the invoice account must beadjusted for which of the following?

Accepted Answer

A) Any discounts given to a purchaser by a supplier. 
B) Any freight costs paid by a purchaser. 
C) Any taxes or other costs necessary to make the goods ready for sale. 
D) Any returns and allowances received from a supplier. 
E) All of these answers are correct. 
A) Any discounts given to a purchaser by a supplier. 
B) Any freight costs paid by a purchaser. 
C) Any taxes or other costs necessary to make the goods ready for sale. 
D) Any returns and allowances received from a supplier. 
E) All of these answers are correct.

Question 19

In a perpetual inventory system, the net cost of purchases is accumulated in theInventory account.

Accepted Answer

A) True 
 B)False

Question 20

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

Sales are recorded at list price less an

Describe the difference between wholesalers and retailers

Merchandise inventory includes merchandise and office supplies

Shrinkage

Merchandising companies must account for

The operating cycle of a merchandising company

Retailers

A perpetual inventory system

In a periodic inventory system, cost of goods sold is not recorded as each sale occurs

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 recorded as GST Receivable?

The normal balance of the following accounts is a debit

Cost of goods sold is

For a business, goods and services tax (GST)and/or Harmonized Sales Tax (HST)paid is included in the amount recorded as an asset or an expense when a purchase is made.

MicroAge sells cellphones at a selling price to include a 65% markup on cost. The cellphones cost MicroAge $290. The selling price is:

Gross profit is derived from

Z-Mart had sales of $498,100. Cost of goods sold was $143,400. What is the grossprofit?

The purchaser usually records a purchase return by a credit memorandum

Sales of $350,000 and net sales of $323,000 may reflect sales discounts of $27,000

To calculate the total cost of a merchandise purchase, the invoice account must beadjusted for which of the following?

In a perpetual inventory system, the net cost of purchases is accumulated in theInventory account.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

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

Describe the difference between wholesalers and retailers

Merchandise inventory includes merchandise and office supplies

Shrinkage

Merchandising companies must account for

The operating cycle of a merchandising company

Retailers

A perpetual inventory system

In a periodic inventory system, cost of goods sold is not recorded as each sale occurs

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 recorded as GST Receivable?

The normal balance of the following accounts is a debit

Cost of goods sold is

For a business, goods and services tax (GST)and/or Harmonized Sales Tax (HST)paid is included in the amount recorded as an asset or an expense when a purchase is made.

MicroAge sells cellphones at a selling price to include a 65% markup on cost. The cellphones cost MicroAge $290. The selling price is:

Gross profit is derived from

Z-Mart had sales of $498,100. Cost of goods sold was $143,400. What is the grossprofit?

The purchaser usually records a purchase return by a credit memorandum

Sales of $350,000 and net sales of $323,000 may reflect sales discounts of $27,000

To calculate the total cost of a merchandise purchase, the invoice account must beadjusted for which of the following?

In a perpetual inventory system, the net cost of purchases is accumulated in theInventory account.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

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