Question 1

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Accepted Answer

A) True 
 B)False  False

Question 2

Financial information is presented below:   The amount of net sales on the income statement would be

Accepted Answer

A)  $154,000. 
B)  $141,000. 
C)  $160,000. 
D)  $166,000. 
A)  $154,000. 
B)  $141,000. 
C)  $160,000. 
D)  $166,000. B

Question 3

Rhodes Company provides this information for the month of November, 2010: sales on credit $150,000; cash sales $50,000; sales discounts $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Accepted Answer

The answer of Rhodes Company provides this information for the...

Question 4

Income from operations is determined by subtracting total operating expenses from ________________.

Accepted Answer

The answer of Income from operations is determined by subtracting...

Question 5

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

A)  on a daily basis. 
B)  on a monthly basis. 
C)  on an annual basis. 
D)  with each sale. 
A)  on a daily basis. 
B)  on a monthly basis. 
C)  on an annual basis. 
D)  with each sale.

Question 6

Financial information is presented below:   The gross profit rate would be

Accepted Answer

A)  .454. 
B)  .546. 
C)  .500. 
D)  .538. 
A)  .454. 
B)  .546. 
C)  .500. 
D)  .538.

Question 7

Cartier Company purchased inventory from Pissaro Company. The shipping costs were $400 and the terms of the shipment were FOB shipping point. Cartier would have the following entry regarding the shipping charges:

Accepted Answer

The answer of Cartier Company purchased inventory from Pissaro Company....

Question 8

A credit sale of $800 is made on April 25, terms 2/10, n/30, on which a return of $50 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

A)  $735 
B)  $784 
C)  $800 d $750 
A)  $735 
B)  $784 
C)  $800 d $750

Question 9

Retailers and wholesalers are both considered merchandisers.

Accepted Answer

A) True 
 B)False

Question 10

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A)  the customer must pay the bill within 10 days. 
B)  the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C)  the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D)  two sales returns can be made within 10 days of the invoice date and no returns thereafter. 
A)  the customer must pay the bill within 10 days. 
B)  the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date. 
C)  the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date. 
D)  two sales returns can be made within 10 days of the invoice date and no returns thereafter.

Question 11

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Accepted Answer

A)  Cash received on account with a discount 
B)  Payment of freight costs on a purchase 
C)  Return of merchandise sold 
D)  Sale of merchandise on credit 
A)  Cash received on account with a discount 
B)  Payment of freight costs on a purchase 
C)  Return of merchandise sold 
D)  Sale of merchandise on credit

Question 12

Sales should be recorded in accordance with the matching principle.

Accepted Answer

A) True 
 B)False

Question 13

On October 1, Belton Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $200 each. During the month of October, the following transactions occurred.
Oct. 4 Purchased 30 bicycles at a cost of $200 each from Kuhn Bicycle Company, terms 2/10, n/30.
6 Sold 18 bicycles to Team America for $300 each, terms 2/10, n/30.
7 Received credit from Kuhn Bicycle Company for the return of 2 defective bicycles.
13 Issued a credit memo to Team America for the return of a defective bicycle.
14 Paid Kuhn Bicycle Company in full, less discount.
Instructions
Prepare the journal entries to record the transactions assuming the company uses a perpetual inventory system.

Accepted Answer

The answer of On October 1, Belton Bicycle Store had...

Question 14

All of the following items would be reported as other expenses and losses except

Accepted Answer

A)  freight-out. 
B)  casualty losses. 
C)  interest expense. 
D)  loss from employees' strikes. 
A)  freight-out. 
B)  casualty losses. 
C)  interest expense. 
D)  loss from employees' strikes.

Question 15

The adjusted trial balance of Werly Book Company appears below.   
Instructions
Using the information given, prepare the year-end closing entries.

Accepted Answer

The answer of The adjusted trial balance of Werly Book...

Question 16

The following information is available for Potts Company:   
Instructions
Using the above information, prepare the closing entries for Potts Company.

Accepted Answer

The answer of The following information is available for Potts...

Question 17

Financial information is presented below for two different companies.   
Instructions
Determine the missing amounts.

Accepted Answer

The answer of Financial information is presented below for two...

Question 18

A credit sale of $900 is made on July 15, terms 2/10, n/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?

Accepted Answer

A)  $900 
B)  $833 
C)  $850 d $882 
A)  $900 
B)  $833 
C)  $850 d $882

Question 19

Merchandise inventory is classified as a current asset in a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Operations

Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.

Financial information is presented below: The amount of net sales on the income statement would be

Rhodes Company provides this information for the month of November, 2010: sales on credit $150,000; cash sales $50,000; sales discounts $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Income from operations is determined by subtracting total operating expenses from ________________.

In a perpetual inventory system, cost of goods sold is recorded

Financial information is presented below: The gross profit rate would be

Cartier Company purchased inventory from Pissaro Company. The shipping costs were $400 and the terms of the shipment were FOB shipping point. Cartier would have the following entry regarding the shipping charges:

A credit sale of $800 is made on April 25, terms 2/10, n/30, on which a return of $50 is granted on April 28. What amount is received as payment in full on May 4?

Retailers and wholesalers are both considered merchandisers.

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Sales should be recorded in accordance with the matching principle.

All of the following items would be reported as other expenses and losses except

The adjusted trial balance of Werly Book Company appears below. Instructions Using the information given, prepare the year-end closing entries.

The following information is available for Potts Company: Instructions Using the above information, prepare the closing entries for Potts Company.

Financial information is presented below for two different companies. Instructions Determine the missing amounts.

A credit sale of $900 is made on July 15, terms 2/10, n/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?

Merchandise inventory is classified as a current asset in a classified balance sheet.

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

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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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