Question 1

With respect to the income statement,

Accepted Answer

A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit. 
A)  contra-revenue accounts do not appear on the income statement. 
B)  sales discounts increase the amount of sales. 
C)  contra-revenue accounts increase the amount of operating expenses. 
D)  sales discounts are included in the calculation of gross profit.

Question 2

Instructions
State the missing items identified by ?.
1. Gross profit - Operating expenses = ?
2. Cost of goods sold + Gross profit on sales = ?
3. Sales - (? + ?) = Net sales
4. Income from operations + ? - ? = Net income
5. Net sales - Cost of goods sold = ?

Accepted Answer

1. Income from operations (or

Question 3

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

Accepted Answer

A) True 
 B)False

Question 4

A periodic inventory system requires a detailed inventory record of inventory items.

Accepted Answer

A) True 
 B)False

Question 5

Detailed records of goods held for resale are not maintained under a

Accepted Answer

A)  perpetual inventory system. 
B)  periodic inventory system. 
C)  double entry accounting system. 
D)  single entry accounting system. 
A)  perpetual inventory system. 
B)  periodic inventory system. 
C)  double entry accounting system. 
D)  single entry accounting system.

Question 6

The operating expense section of an income statement for a wholesaler would not include

Accepted Answer

A)  freight-out. 
B)  utilities expense. 
C)  cost of goods sold. 
D)  insurance expense. 
A)  freight-out. 
B)  utilities expense. 
C)  cost of goods sold. 
D)  insurance expense.

Question 7

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance. 
A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance.

Question 8

The collection of a $600 account after the 2 percent discount period will result in a

Accepted Answer

A)  debit to Cash for $588. 
B)  credit to Accounts Receivable for $600. 
C)  credit to Cash for $600. 
D)  debit to Sales Discounts for $12. 
A)  debit to Cash for $588. 
B)  credit to Accounts Receivable for $600. 
C)  credit to Cash for $600. 
D)  debit to Sales Discounts for $12.

Question 9

Prepare the necessary journal entries to record the following transactions, assuming a periodic inventory system:
(a) Purchased $400,000 of merchandise on account, terms 2/10, n/30.
(b) Returned $40,000 of damaged merchandise for credit.
(c) Paid for the merchandise purchased within 10 days.

Accepted Answer

The answer of Prepare the necessary journal entries to record...

Question 10

The primary source of revenue for a wholesaler is

Accepted Answer

A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns. 
A)  investment income. 
B)  service fees. 
C)  the sale of merchandise. 
D)  the sale of fixed assets the company owns.

Question 11

Sampson Company's accounting records show the following at the year ending on December 31, 2010:   Using the periodic system, the cost of goods sold is

Accepted Answer

A)  $201,110. 
B)  $198,910. 
C)  $190,510. 
D)  $209,510. 
A)  $201,110. 
B)  $198,910. 
C)  $190,510. 
D)  $209,510.

Question 12

When the physical count of RNA Company inventory had a cost of $3,400 at year end and the unadjusted balance in Merchandise Inventory was $3,500, RNA will have to make the following entry:

Accepted Answer

The answer of When the physical count of RNA Company...

Question 13

A perpetual inventory system would likely be used by a(n)

Accepted Answer

A)  automobile dealership. 
B)  hardware store. 
C)  drugstore. 
D)  convenience store. 
A)  automobile dealership. 
B)  hardware store. 
C)  drugstore. 
D)  convenience store.

Question 14

A credit memorandum is used as documentation for a journal entry that requires a debit to

Accepted Answer

A)  Sales and a credit to Cash. 
B)  Sales Returns and Allowances and a credit to Accounts Receivable. 
C)  Accounts Receivable and a credit to a contra-revenue account. 
D)  Cash and a credit to Sales Returns and Allowances. 
A)  Sales and a credit to Cash. 
B)  Sales Returns and Allowances and a credit to Accounts Receivable. 
C)  Accounts Receivable and a credit to a contra-revenue account. 
D)  Cash and a credit to Sales Returns and Allowances.

Question 15

Bryant Company sold goods on account to Kolmer Enterprises with terms of 2/10, n/30. The goods had a cost of $600 and a selling price of $900. Both Bryant and Kolmer use a perpetual inventory system. Record the sale on the books of Bryant and the purchase on the books of Kolmer.

Accepted Answer

Journal en

Question 16

During 2010, Yoder Enterprises generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a loss on the sale of equipment of $2,000.
Yoder's gross profit is

Accepted Answer

A)  $60,000. 
B)  $30,000. 
C)  $18,000. 
D)  $16,000. 
A)  $60,000. 
B)  $30,000. 
C)  $18,000. 
D)  $16,000.

Question 17

Sales revenue less cost of goods sold is called

Accepted Answer

A)  gross profit. 
B)  net profit. 
C)  net income. 
D)  marginal income. 
A)  gross profit. 
B)  net profit. 
C)  net income. 
D)  marginal income.

Question 18

A ________________ buys and sells goods rather than performing services to earn a profit.

Accepted Answer

merchandis

Question 19

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

Accepted Answer

A)  .535. 
B)  .489. 
C)  .511. 
D)  .553. 
A)  .535. 
B)  .489. 
C)  .511. 
D)  .553.

Question 20

Merchandise Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

Accepted Answer

The answer of Merchandise Inventory on hand can be obtained...

Exam 5: Accounting for Merchandising Operations

With respect to the income statement,

Instructions State the missing items identified by ?. 1. Gross profit - Operating expenses = ? 2. Cost of goods sold + Gross profit on sales = ? 3. Sales - (? + ?) = Net sales 4. Income from operations + ? - ? = Net income 5. Net sales - Cost of goods sold = ?

Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts promptly.

A periodic inventory system requires a detailed inventory record of inventory items.

Detailed records of goods held for resale are not maintained under a

The operating expense section of an income statement for a wholesaler would not include

If a customer agrees to retain merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

The collection of a $600 account after the 2 percent discount period will result in a

Prepare the necessary journal entries to record the following transactions, assuming a periodic inventory system: (a) Purchased $400,000 of merchandise on account, terms 2/10, n/30. (b) Returned $40,000 of damaged merchandise for credit. (c) Paid for the merchandise purchased within 10 days.

The primary source of revenue for a wholesaler is

Sampson Company's accounting records show the following at the year ending on December 31, 2010: Using the periodic system, the cost of goods sold is

When the physical count of RNA Company inventory had a cost of $3,400 at year end and the unadjusted balance in Merchandise Inventory was $3,500, RNA will have to make the following entry:

A perpetual inventory system would likely be used by a(n)

A credit memorandum is used as documentation for a journal entry that requires a debit to

Bryant Company sold goods on account to Kolmer Enterprises with terms of 2/10, n/30. The goods had a cost of $600 and a selling price of $900. Both Bryant and Kolmer use a perpetual inventory system. Record the sale on the books of Bryant and the purchase on the books of Kolmer.

During 2010, Yoder Enterprises generated revenues of $60,000. The company's expenses were as follows: cost of goods sold of $30,000, operating expenses of $12,000 and a loss on the sale of equipment of $2,000. Yoder's gross profit is

Sales revenue less cost of goods sold is called

A ________________ buys and sells goods rather than performing services to earn a profit.

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

Merchandise Inventory on hand can be obtained from detailed inventory records when a ________________ inventory system is maintained.

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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