Question 1

The respective normal account balances of Sales, Sales Returns and Allowances, and Sales Discounts are

Accepted Answer

A) credit, credit, credit. 
B) debit, credit, debit. 
C) credit, debit, debit. 
D) credit, debit, credit. 
A) credit, credit, credit. 
B) debit, credit, debit. 
C) credit, debit, debit. 
D) credit, debit, credit. C

Question 2

If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the

Accepted Answer

A) Inventory account is increased. 
B) Inventory account is not affected. 
C) Freight-Out account is increased. 
D) Delivery Expense account is increased. 
A) Inventory account is increased. 
B) Inventory account is not affected. 
C) Freight-Out account is increased. 
D) Delivery Expense account is increased. A

Question 3

A perpetual inventory system would most 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. A

Question 4

In a single-step income statement, only one step is required in determining net income.

Accepted Answer

A) True 
 B)False

Question 5

The collection of an $800 account beyond the 2 percent discount period will result in a

Accepted Answer

A) debit to Cash for $784. 
B) credit to Accounts Receivable for $800. 
C) credit to Cash for $800. 
D) debit to Sales Discounts for $16. 
A) debit to Cash for $784. 
B) credit to Accounts Receivable for $800. 
C) credit to Cash for $800. 
D) debit to Sales Discounts for $16.

Question 6

A sales invoice is used as documentation for a journal entry that requires a debit to

Accepted Answer

A) Cash and a credit to Sales Revenue. 
B) Sales Returns and Allowances and a credit to Accounts Receivable. 
C) Accounts Receivable and a credit to Sales Revenue. 
D) Cash and a credit to Sales Returns and Allowances. 
A) Cash and a credit to Sales Revenue. 
B) Sales Returns and Allowances and a credit to Accounts Receivable. 
C) Accounts Receivable and a credit to Sales Revenue. 
D) Cash and a credit to Sales Returns and Allowances.

Question 7

The collection of a $500 account beyond the 2 percent discount period will result in a

Accepted Answer

A) debit to Cash for $490. 
B) debit to Accounts Receivable for $500. 
C) debit to Cash for $500. 
D) debit to Sales Discounts for $10. 
A) debit to Cash for $490. 
B) debit to Accounts Receivable for $500. 
C) debit to Cash for $500. 
D) debit to Sales Discounts for $10.

Question 8

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $160,000. 
B) $ 40,000. 
C) $ 50,000. 
D) $ 10,000. 
A) $160,000. 
B) $ 40,000. 
C) $ 50,000. 
D) $ 10,000.

Question 9

The periodic inventory system provides an up to date balance of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts is classified as a contra revenue account?

Accepted Answer

A) Sales Revenue 
B) Cost of Goods Sold 
C) Sales Returns and Allowances 
D) Purchase Discounts 
A) Sales Revenue 
B) Cost of Goods Sold 
C) Sales Returns and Allowances 
D) Purchase Discounts

Question 11

Erin Corporation purchases $500 of merchandise on credit.Using the periodic inventory approach, Erin would record this transaction as:

Accepted Answer

The answer of Erin Corporation purchases $500 of merchandise on...

Question 12

What is a difference between the profit margin and the gross profit rate?

Accepted Answer

A) None, these are interchangeable terms. 
B) The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income. 
C) The gross profit rate will normally be higher than the profit margin ratio. 
D) A profit margin of 7% means that 7 cents of each net sales dollar ends up in net income and a gross profit rate of 7% means that the cost of the goods were 7% of the selling price. 
A) None, these are interchangeable terms. 
B) The gross profit rate is computed by dividing net sales by gross profit and the profit margin is computed by dividing net sales by net income. 
C) The gross profit rate will normally be higher than the profit margin ratio. 
D) A profit margin of 7% means that 7 cents of each net sales dollar ends up in net income and a gross profit rate of 7% means that the cost of the goods were 7% of the selling price.

Question 13

American Importers reports net income of $60,000 and cost of goods sold of $540,000.If the company's gross profit rate was 40%, net sales were

Accepted Answer

A) $900,000. 
B) $1,350,000. 
C) $1,410,000. 
D) $990,000. 
A) $900,000. 
B) $1,350,000. 
C) $1,410,000. 
D) $990,000.

Question 14

Financial information is presented below:   Gross profit would be

Accepted Answer

A) $61,000. 
B) $64,000. 
C) $54,000. 
D) $67,000. 
A) $61,000. 
B) $64,000. 
C) $54,000. 
D) $67,000.

Question 15

When a seller records a return of goods, the account that is credited is

Accepted Answer

A) Sales Revenue. 
B) Sales Returns and Allowances. 
C) Inventory. 
D) Accounts Receivable. 
A) Sales Revenue. 
B) Sales Returns and Allowances. 
C) Inventory. 
D) Accounts Receivable.

Question 16

Taylor Corporation purchases $1,500 of merchandise on account from Enterprise Company, terms 2/10, n/30.Taylor and Enterprise both use periodic inventory systems.Taylor's entry record this transaction is:

Accepted Answer

The answer of Taylor Corporation purchases $1,500 of merchandise on...

Question 17

The Sales Returns and Allowances account is classified as a(n)

Accepted Answer

A) asset account. 
B) contra asset account. 
C) expense account. 
D) contra revenue account. 
A) asset account. 
B) contra asset account. 
C) expense account. 
D) contra revenue account.

Question 18

Which of the following expressions is incorrect?

Accepted Answer

A) Gross profit - Operating expenses = Net income 
B) Sales revenue - 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 revenue - 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 19

Under a perpetual inventory system, cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 20

If net sales are $750,000 and cost of goods sold is $600,000, the gross profit rate is 20%.

Accepted Answer

A) True 
 B)False

The respective normal account balances of Sales, Sales Returns and Allowances, and Sales Discounts are

If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the

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

In a single-step income statement, only one step is required in determining net income.

The collection of an $800 account beyond the 2 percent discount period will result in a

A sales invoice is used as documentation for a journal entry that requires a debit to

The collection of a $500 account beyond the 2 percent discount period will result in a

Financial information is presented below: Gross profit would be

The periodic inventory system provides an up to date balance of inventory on hand.

Which of the following accounts is classified as a contra revenue account?

Erin Corporation purchases $500 of merchandise on credit.Using the periodic inventory approach, Erin would record this transaction as:

What is a difference between the profit margin and the gross profit rate?

American Importers reports net income of $60,000 and cost of goods sold of $540,000.If the company's gross profit rate was 40%, net sales were

Financial information is presented below: Gross profit would be

When a seller records a return of goods, the account that is credited is

Taylor Corporation purchases $1,500 of merchandise on account from Enterprise Company, terms 2/10, n/30.Taylor and Enterprise both use periodic inventory systems.Taylor's entry record this transaction is:

The Sales Returns and Allowances account is classified as a(n)

Which of the following expressions is incorrect?

Under a perpetual inventory system, cost of goods sold is determined each time a sale occurs.

If net sales are $750,000 and cost of goods sold is $600,000, the gross profit rate is 20%.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 5: Merchandising Operations and the Multiple-Step Income Statement

The respective normal account balances of Sales, Sales Returns and Allowances, and Sales Discounts are

If a purchaser using a perpetual inventory system pays the transportation costs for goods purchased, then the

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

In a single-step income statement, only one step is required in determining net income.

The collection of an $800 account beyond the 2 percent discount period will result in a

A sales invoice is used as documentation for a journal entry that requires a debit to

The collection of a $500 account beyond the 2 percent discount period will result in a

Financial information is presented below: Gross profit would be

The periodic inventory system provides an up to date balance of inventory on hand.

Which of the following accounts is classified as a contra revenue account?

Erin Corporation purchases $500 of merchandise on credit.Using the periodic inventory approach, Erin would record this transaction as:

What is a difference between the profit margin and the gross profit rate?

American Importers reports net income of $60,000 and cost of goods sold of $540,000.If the company's gross profit rate was 40%, net sales were

Financial information is presented below: Gross profit would be

When a seller records a return of goods, the account that is credited is

Taylor Corporation purchases $1,500 of merchandise on account from Enterprise Company, terms 2/10, n/30.Taylor and Enterprise both use periodic inventory systems.Taylor's entry record this transaction is:

The Sales Returns and Allowances account is classified as a(n)

Which of the following expressions is incorrect?

Under a perpetual inventory system, cost of goods sold is determined each time a sale occurs.

If net sales are $750,000 and cost of goods sold is $600,000, the gross profit rate is 20%.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters