Question 1

Under ASPE, when returned merchandise is defective, the seller's sales account is debited.

Accepted Answer

A) True 
 B)False  False

Question 2

Cost of goods available for sale is considered an operating expense for a merchandising company.

Accepted Answer

A) True 
 B)False  False

Question 3

The gross profit amount is generally considered to be more informative than the gross profit margin.

Accepted Answer

A) True 
 B)False  False

Question 4

The primary source of revenue for a wholesaler is generated by

Accepted Answer

A) investments. 
B) providing services. 
C) the sale of merchandise. 
D) the sale of property, plant, and equipment the company owns. 
A) investments. 
B) providing services. 
C) the sale of merchandise. 
D) the sale of property, plant, and equipment the company owns.

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

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

Accepted Answer

A) True 
 B)False

Question 7

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 8

Under a perpetual inventory system, the following is determined each time a sale occurs:

Accepted Answer

A) Gross Profit. 
B) Cost of Goods Sold. 
C) Purchases. 
D) Accounts Receivable. 
A) Gross Profit. 
B) Cost of Goods Sold. 
C) Purchases. 
D) Accounts Receivable.

Question 9

The physical inventory count is used to determine

Accepted Answer

A) cost of inventory purchased during the period. 
B) cost of inventory sold during the period. 
C) the cost of inventory on hand. 
D) the cost of goods available for sale. 
A) cost of inventory purchased during the period. 
B) cost of inventory sold during the period. 
C) the cost of inventory on hand. 
D) the cost of goods available for sale.

Question 10

The operating expenses section of a multiple-step statement of income for a merchandising company would not include

Accepted Answer

A) freight out. 
B) utilities expense. 
C) cost of goods sold. 
D) loss on sale of equipment. 
A) freight out. 
B) utilities expense. 
C) cost of goods sold. 
D) loss on sale of equipment.

Question 11

Beginning inventory plus purchases equals

Accepted Answer

A) cost of goods available for sale. 
B) cost of goods sold. 
C) ending inventory. 
D) total inventory on hand. 
A) cost of goods available for sale. 
B) cost of goods sold. 
C) ending inventory. 
D) total inventory on hand.

Question 12

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Accepted Answer

A) credit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) debit to Cash for $1,000. 
D) credit to Accounts Receivable for $980. 
A) credit to Cash for $980. 
B) credit to Accounts Receivable for $1,000. 
C) debit to Cash for $1,000. 
D) credit to Accounts Receivable for $980.

Question 13

Profit margin is calculated by dividing net income by

Accepted Answer

A) gross profit. 
B) income from operations. 
C) sales. 
D) gross margin. 
A) gross profit. 
B) income from operations. 
C) sales. 
D) gross margin.

Question 14

A quantity discount is recorded separately, the same way as a purchase discount.

Accepted Answer

A) True 
 B)False

Question 15

After gross profit is calculated, operating expenses are deducted to determine

Accepted Answer

A) gross margin. 
B) net income (loss)before income tax. 
C) cost of goods sold. 
D) profit margin. 
A) gross margin. 
B) net income (loss)before income tax. 
C) cost of goods sold. 
D) profit margin.

Question 16

The largest current asset for a merchandiser is usually

Accepted Answer

A) inventory. 
B) prepaid expenses. 
C) cash. 
D) accounts receivable. 
A) inventory. 
B) prepaid expenses. 
C) cash. 
D) accounts receivable.

Question 17

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Purchases 
B) Freight Out 
C) Freight In 
D) Purchase Discounts 
A) Purchases 
B) Freight Out 
C) Freight In 
D) Purchase Discounts

Question 18

Mindful Corporation sells merchandise on account for $5,000 to Absent Corporation with credit terms of 2/10, n/30.Absent returns $750 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

Accepted Answer

A) $4,900 
B) $4,250 
C) $5,000 
D) $4,165 
A) $4,900 
B) $4,250 
C) $5,000 
D) $4,165

Question 19

A merchandiser will have income from operations of exactly $0 when

Accepted Answer

A) sales equals cost of goods sold. 
B) cost of goods sold equals gross profit. 
C) operating expenses equal sales. 
D) gross profit equals operating expenses. 
A) sales equals cost of goods sold. 
B) cost of goods sold equals gross profit. 
C) operating expenses equal sales. 
D) gross profit equals operating expenses.

Question 20

Use the following information to answer questions 
  
-What was the cost of goods available for sale?

Accepted Answer

A) $264,000 
B) $267,000 
C) $269,300 
D) $234,600 
A) $264,000 
B) $267,000 
C) $269,300 
D) $234,600

Under ASPE, when returned merchandise is defective, the seller's sales account is debited.

Cost of goods available for sale is considered an operating expense for a merchandising company.

The gross profit amount is generally considered to be more informative than the gross profit margin.

The primary source of revenue for a wholesaler is generated by

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

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Under a perpetual inventory system, the following is determined each time a sale occurs:

The physical inventory count is used to determine

The operating expenses section of a multiple-step statement of income for a merchandising company would not include

Beginning inventory plus purchases equals

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Profit margin is calculated by dividing net income by

A quantity discount is recorded separately, the same way as a purchase discount.

After gross profit is calculated, operating expenses are deducted to determine

The largest current asset for a merchandiser is usually

Which of the following accounts has a normal credit balance?

Mindful Corporation sells merchandise on account for $5,000 to Absent Corporation with credit terms of 2/10, n/30.Absent returns $750 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

A merchandiser will have income from operations of exactly $0 when

Use the following information to answer questions -What was the cost of goods available for sale?

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 5: Merchandising Operations

Under ASPE, when returned merchandise is defective, the seller's sales account is debited.

Cost of goods available for sale is considered an operating expense for a merchandising company.

The gross profit amount is generally considered to be more informative than the gross profit margin.

The primary source of revenue for a wholesaler is generated by

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

Discounts taken for early payment of an invoice are called sales discounts by the buyer.

When the terms of sale include a sales discount, it usually is advisable for the buyer to pay within the discount period.

Under a perpetual inventory system, the following is determined each time a sale occurs:

The physical inventory count is used to determine

The operating expenses section of a multiple-step statement of income for a merchandising company would not include

Beginning inventory plus purchases equals

The collection of a $1,000 account paid within the 2 percent discount period will result in a

Profit margin is calculated by dividing net income by

A quantity discount is recorded separately, the same way as a purchase discount.

After gross profit is calculated, operating expenses are deducted to determine

The largest current asset for a merchandiser is usually

Which of the following accounts has a normal credit balance?

Mindful Corporation sells merchandise on account for $5,000 to Absent Corporation with credit terms of 2/10, n/30.Absent returns $750 of merchandise that was damaged, along with a cheque to settle the account within the discount period.What is the amount of the cheque?

A merchandiser will have income from operations of exactly $0 when

Use the following information to answer questions -What was the cost of goods available for sale?

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters