Question 1

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

Accepted Answer

The answer of Cost of goods sold is deducted from...

Question 2

The gross profit rate is computed by dividing gross profit by

Accepted Answer

A)  cost of goods sold. 
B)  net income. 
C)  net sales. 
D)  sales. 
A)  cost of goods sold. 
B)  net income. 
C)  net sales. 
D)  sales.

Question 3

Company A sells $500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Accepted Answer

A)  $350 
B)  $490 
C)  $450 
D)  $400 
A)  $350 
B)  $490 
C)  $450 
D)  $400

Question 4

Which of the following is a true statement about inventory systems?

Accepted Answer

A)  Periodic inventory systems require more detailed inventory records. 
B)  Perpetual inventory systems require more detailed inventory records. 
C)  A periodic system requires cost of goods sold be determined after each sale. 
D)  A perpetual system determines cost of goods sold only at the end of the accounting period. 
A)  Periodic inventory systems require more detailed inventory records. 
B)  Perpetual inventory systems require more detailed inventory records. 
C)  A periodic system requires cost of goods sold be determined after each sale. 
D)  A perpetual system determines cost of goods sold only at the end of the accounting period.

Question 5

A merchandising company has different types of adjusting entries than a service company.

Accepted Answer

A) True 
 B)False

Question 6

Financial information is presented below:
Operating Expenses $ 45,000
Sales 150,000
Cost of Goods Sold 77,000
The gross profit rate would be

Accepted Answer

A)  .700. 
B)  .187. 
C)  .300. 
D)  .487. 
A)  .700. 
B)  .187. 
C)  .300. 
D)  .487.

Question 7

On October 4, 2010, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a

Accepted Answer

A)  debit of $2,800 to Merchandise Inventory. 
B)  credit of $2,800 to Sales. 
C)  debit of $1,900 to Merchandise Inventory. 
D)  credit of $1,900 to Cost of Goods Sold. 
A)  debit of $2,800 to Merchandise Inventory. 
B)  credit of $2,800 to Sales. 
C)  debit of $1,900 to Merchandise Inventory. 
D)  credit of $1,900 to Cost of Goods Sold.

Question 8

When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the ________________ account and a credit to the ________________ account.

Accepted Answer

Sales Retu

Question 9

The income statement for Guinn Company for the year ended December 31, 2010 is as follows:
Prepare the entries to close the revenue and expense accounts at December 31, 2010. You may omit explanations for the transactions.

Accepted Answer

The answer of The income statement for Guinn Company for...

Question 10

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 11

Which of the following expressions is incorrect?

Accepted Answer

A)  Gross profit - operating expenses = net income 
B)  Sales - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit 
A)  Gross profit - operating expenses = net income 
B)  Sales - cost of goods sold - operating expenses = net income 
C)  Net income + operating expenses = gross profit 
D)  Operating expenses - cost of goods sold = gross profit

Question 12

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A)  $280 
B)  $392 
C)  $360 
D)  $320 
A)  $280 
B)  $392 
C)  $360 
D)  $320

Question 13

Income from operations will always result if

Accepted Answer

A)  the cost of goods sold exceeds operating expenses. 
B)  revenues exceed cost of goods sold. 
C)  revenues exceed operating expenses. 
D)  gross profit exceeds operating expenses. 
A)  the cost of goods sold exceeds operating expenses. 
B)  revenues exceed cost of goods sold. 
C)  revenues exceed operating expenses. 
D)  gross profit exceeds operating expenses.

Question 14

Income from operations appears on

Accepted Answer

A)  both a multiple-step and a single-step income statement. 
B)  neither a multiple-step nor a single-step income statement. 
C)  a single-step income statement. 
D)  a multiple-step income statement. 
A)  both a multiple-step and a single-step income statement. 
B)  neither a multiple-step nor a single-step income statement. 
C)  a single-step income statement. 
D)  a multiple-step income statement.

Question 15

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Accepted Answer

contra rev

Question 16

Two categories of expenses for merchandising companies are

Accepted Answer

A)  cost of goods sold and financing expenses. 
B)  operating expenses and financing expenses. 
C)  cost of goods sold and operating expenses. 
D)  sales and cost of goods sold. 
A)  cost of goods sold and financing expenses. 
B)  operating expenses and financing expenses. 
C)  cost of goods sold and operating expenses. 
D)  sales and cost of goods sold.

Question 17

The Sales Returns and Allowances account does not provide information to management about

Accepted Answer

A)  possible inferior merchandise. 
B)  the percentage of credit sales versus cash sales. 
C)  inefficiencies in filling orders. 
D)  errors in overbilling customers. 
A)  possible inferior merchandise. 
B)  the percentage of credit sales versus cash sales. 
C)  inefficiencies in filling orders. 
D)  errors in overbilling customers.

Question 18

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point. The freight costs will be paid by the

Accepted Answer

A)  seller. 
B)  buyer. 
C)  transportation company. 
D)  buyer and the seller. 
A)  seller. 
B)  buyer. 
C)  transportation company. 
D)  buyer and the seller.

Question 19

The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned.

Accepted Answer

A) True 
 B)False

Question 20

Financial information is presented below:   Gross profit would be

Accepted Answer

A)  $77,000. 
B)  $64,000. 
C)  $70,000. 
D)  $83,000. 
A)  $77,000. 
B)  $64,000. 
C)  $70,000. 
D)  $83,000.

Exam 5: Accounting for Merchandising Operations

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

The gross profit rate is computed by dividing gross profit by

Company A sells $500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Which of the following is a true statement about inventory systems?

A merchandising company has different types of adjusting entries than a service company.

Financial information is presented below: Operating Expenses $ 45,000 Sales 150,000 Cost of Goods Sold 77,000 The gross profit rate would be

On October 4, 2010, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a

When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the ________________ account and a credit to the ________________ account.

The income statement for Guinn Company for the year ended December 31, 2010 is as follows: Prepare the entries to close the revenue and expense accounts at December 31, 2010. You may omit explanations for the transactions.

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

Which of the following expressions is incorrect?

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Income from operations will always result if

Income from operations appears on

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Two categories of expenses for merchandising companies are

The Sales Returns and Allowances account does not provide information to management about

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point. The freight costs will be paid by the

The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned.

Financial information is presented below: Gross profit would be

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

Filters

When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the account and a credit to the account.

Sales Returns and Allowances and Sales Discounts are both accounts and have _ normal balances.