Question 1

Companies try to lengthen their operating cycles to increase net income

Accepted Answer

A) True 
 B)False

Question 2

Wholesalers

Accepted Answer

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

Question 3

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Accepted Answer

A) True 
 B)False

Question 4

Generally accepted accounting principles require companies to use a specific format for financial statements.

Accepted Answer

A) True 
 B)False

Question 5

The first step in preparing the multi-step income statement is to find

Accepted Answer

A) Operating loss. 
B) Gross profit. 
C) Net income. 
D) Net sales. 
E) Operating income. 
A) Operating loss. 
B) Gross profit. 
C) Net income. 
D) Net sales. 
E) Operating income.

Question 6

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 7

You work at a sporting goods storeand baseball bats with a mark-uppercentage of 85% (cost is $6).

Accepted Answer

A) Selling Price (bats)= $37.50; Selling Price (gloves)= $11.10 
B) Selling Price (bats)= $27.75; Selling Price (gloves)= $15.00 
C) Selling Price (bats)= $11.10; Selling Price (gloves)= $25.00 
D) Selling Price (bats)= $11.10; Selling Price (gloves)= $37.50 
E) None of these answers is correct. 
A) Selling Price (bats)= $37.50; Selling Price (gloves)= $11.10 
B) Selling Price (bats)= $27.75; Selling Price (gloves)= $15.00 
C) Selling Price (bats)= $11.10; Selling Price (gloves)= $25.00 
D) Selling Price (bats)= $11.10; Selling Price (gloves)= $37.50 
E) None of these answers is correct.

Question 8

The Merchandise Inventory account balance at the end of one period is the amount ofbeginning inventory in the next period.

Accepted Answer

A) True 
 B)False

Question 9

A sales discount of 1/15 means the seller will receive 85% of the selling price

Accepted Answer

A) True 
 B)False

Question 10

A business sold some inventory that had cost $5,000 before taxesand 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

Accepted Answer

A) $5,000 
B) $5,600 
C) $5,300 
D) $5,350 
E) None of these answers is correct. 
A) $5,000 
B) $5,600 
C) $5,300 
D) $5,350 
E) None of these answers is correct.

Question 11

Sales returns and allowances

Accepted Answer

A) Represent a reduction of the customer's account receivable. 
B) Provide information about dissatisfied customers and the possibility of lost future sales. 
C) Are omitted from published statements. 
D) Are usually recorded in separate contra-revenue accounts. 
E) All of these answers are correct. 
A) Represent a reduction of the customer's account receivable. 
B) Provide information about dissatisfied customers and the possibility of lost future sales. 
C) Are omitted from published statements. 
D) Are usually recorded in separate contra-revenue accounts. 
E) All of these answers are correct.

Question 12

Explain the difference between single-step and multiple-step income statements

Accepted Answer

A single-step income statement format in

Question 13

Describe the periodic and perpetual inventory systems

Accepted Answer

A periodic inventory system provides for

Question 14

The adjustment to reflect shrinkage is a debit to Income Summary and a credit toShrinkage Expense.

Accepted Answer

A) True 
 B)False

Question 15

A periodic inventory system

Accepted Answer

A) Does not require a physical count of inventory. 
B) Records the cost of new merchandise purchased in a permanent account. 
C) Records the cost of new merchandise purchased in a temporary account. 
D) Requires updating the inventory account every month. 
E) All of these answers are correct. 
A) Does not require a physical count of inventory. 
B) Records the cost of new merchandise purchased in a permanent account. 
C) Records the cost of new merchandise purchased in a temporary account. 
D) Requires updating the inventory account every month. 
E) All of these answers are correct.

Question 16

Z-Mart uses the perpetual inventory system and recorded the following journal entry:     The transaction was:

Accepted Answer

A) A purchase and recognition of a cash discount taken. 
B) A return and payment of the account payable. 
C) A return. 
D) A purchase. 
E) A payment of the account payable and recognition of a cash discount taken. 
A) A purchase and recognition of a cash discount taken. 
B) A return and payment of the account payable. 
C) A return. 
D) A purchase. 
E) A payment of the account payable and recognition of a cash discount taken.

Question 17

JEANSTOP sells jeans that cost it $33.99 per pair for $62.99 per pair. The percentage markup on cost is:

Accepted Answer

A) 29.2% 
B) 185.3% 
C) 46.0% 
D) 85.3% 
E) None of these answers is correct. 
A) 29.2% 
B) 185.3% 
C) 46.0% 
D) 85.3% 
E) None of these answers is correct.

Question 18

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

Accepted Answer

A) True 
 B)False

Question 19

In a perpetual inventory system, the cost of inventory purchased is recorded in thePurchases account.

Accepted Answer

A) True 
 B)False

Question 20

Cost of goods sold represents the cost of buying and preparing merchandise for sale

Accepted Answer

A) True 
 B)False

Companies try to lengthen their operating cycles to increase net income

Wholesalers

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Generally accepted accounting principles require companies to use a specific format for financial statements.

The first step in preparing the multi-step income statement is to find

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.

You work at a sporting goods storeand baseball bats with a mark-uppercentage of 85% (cost is $6).

The Merchandise Inventory account balance at the end of one period is the amount ofbeginning inventory in the next period.

A sales discount of 1/15 means the seller will receive 85% of the selling price

A business sold some inventory that had cost $5,000 before taxesand 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

Sales returns and allowances

Explain the difference between single-step and multiple-step income statements

Describe the periodic and perpetual inventory systems

The adjustment to reflect shrinkage is a debit to Income Summary and a credit toShrinkage Expense.

A periodic inventory system

Z-Mart uses the perpetual inventory system and recorded the following journal entry: The transaction was:

JEANSTOP sells jeans that cost it $33.99 per pair for $62.99 per pair. The percentage markup on cost is:

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

In a perpetual inventory system, the cost of inventory purchased is recorded in thePurchases account.

Cost of goods sold represents the cost of buying and preparing merchandise for sale

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

Companies try to lengthen their operating cycles to increase net income

Wholesalers

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Generally accepted accounting principles require companies to use a specific format for financial statements.

The first step in preparing the multi-step income statement is to find

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.

You work at a sporting goods storeand baseball bats with a mark-uppercentage of 85% (cost is $6).

The Merchandise Inventory account balance at the end of one period is the amount ofbeginning inventory in the next period.

A sales discount of 1/15 means the seller will receive 85% of the selling price

A business sold some inventory that had cost $5,000 before taxesand 7% provincial sales tax (PST). The business uses a perpetual inventory system. How much will be credited to the Merchandise Inventory account as a result of this sale?

Sales returns and allowances

Explain the difference between single-step and multiple-step income statements

Describe the periodic and perpetual inventory systems

The adjustment to reflect shrinkage is a debit to Income Summary and a credit toShrinkage Expense.

A periodic inventory system

Z-Mart uses the perpetual inventory system and recorded the following journal entry: The transaction was:

JEANSTOP sells jeans that cost it $33.99 per pair for $62.99 per pair. The percentage markup on cost is:

A debit to Sales Returns and Allowances and a credit to Accounts Receivable mean that a customer may have returned merchandise.

In a perpetual inventory system, the cost of inventory purchased is recorded in thePurchases account.

Cost of goods sold represents the cost of buying and preparing merchandise for sale

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