Question 1

Giving a customer a sales allowance

Accepted Answer

A) increases the amount of Refund Liability. 
B) reduces the amount of cost of goods sold. 
C) increases the amount of cost of goods sold. 
D) reduces the amount of Refund Liability. 
A) increases the amount of Refund Liability. 
B) reduces the amount of cost of goods sold. 
C) increases the amount of cost of goods sold. 
D) reduces the amount of Refund Liability.

Question 2

Which of the following accounts has a normal credit balance?

Accepted Answer

A) Sales Returns 
B) Sales Discounts 
C) Sales 
D) Cost of Goods Sold 
A) Sales Returns 
B) Sales Discounts 
C) Sales 
D) Cost of Goods Sold

Question 3

Expenses on a statement of income are listed

Accepted Answer

A) in no particular order under ASPE. 
B) from smallest to largest under IFRS. 
C) by their nature or function under ASPE. 
D) in alphabetical order under IFRS. 
A) in no particular order under ASPE. 
B) from smallest to largest under IFRS. 
C) by their nature or function under ASPE. 
D) in alphabetical order under IFRS.

Question 4

When sales are made with a right of return, the sales revenue is recorded net of the expected amount of returns and a Refund Liability is also debited.

Accepted Answer

A) True 
 B)False

Question 5

When management estimates a rate for return, at the time of sale this requires

Accepted Answer

A) a debit to Sales revenue for the estimated returns. 
B) a credit to Refund Liability for the estimated returns. 
C) no entry for the estimated returns. 
D) a debit to Refund Liability for the estimated returns. 
A) a debit to Sales revenue for the estimated returns. 
B) a credit to Refund Liability for the estimated returns. 
C) no entry for the estimated returns. 
D) a debit to Refund Liability for the estimated returns.

Question 6

Freight terms will specify the point at which ownership of the goods is transferred from the seller to the buyer.

Accepted Answer

A) True 
 B)False

Question 7

Use the following information to answer questions 
  
-What was the cost of goods sold?

Accepted Answer

A) $234,600 
B) $231,600 
C) $237,600 
D) $213,400 
A) $234,600 
B) $231,600 
C) $237,600 
D) $213,400

Question 8

Which of the following would not be classified as a contra account?

Accepted Answer

A) Sales 
B) Sales Returns 
C) Accumulated Depreciation 
D) Sales Discounts 
A) Sales 
B) Sales Returns 
C) Accumulated Depreciation 
D) Sales Discounts

Question 9

Operating expenses are similar in merchandising and service companies.

Accepted Answer

A) True 
 B)False

Question 10

Gross profit is

Accepted Answer

A) a measure of the overall net income of a company. 
B) is expressed as a percentage of gross sales. 
C) also called gross margin. 
D) the same as gross profit margin. 
A) a measure of the overall net income of a company. 
B) is expressed as a percentage of gross sales. 
C) also called gross margin. 
D) the same as gross profit margin.

Question 11

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

Accepted Answer

A) True 
 B)False

Question 12

The entry to record a sale of $525 with an estimated return rate of 4% will include a

Accepted Answer

A) debit to Refund Liability for $21. 
B) debit to Sales for $21. 
C) credit to Accounts Receivable for $504. 
D) credit to Sales for $504. 
A) debit to Refund Liability for $21. 
B) debit to Sales for $21. 
C) credit to Accounts Receivable for $504. 
D) credit to Sales for $504.

Question 13

Beginning inventory plus the cost of goods purchased equals

Accepted Answer

A) cost of goods sold. 
B) cost of goods available for sale. 
C) net purchases. 
D) total goods purchased. 
A) cost of goods sold. 
B) cost of goods available for sale. 
C) net purchases. 
D) total goods purchased.

Question 14

Companies following ASPE may classify their expenses by nature, but not by function.

Accepted Answer

A) True 
 B)False

Question 15

A decline in a company's gross profit could be caused by all of the following except

Accepted Answer

A) selling products with a lower markup. 
B) clearance of discontinued inventory. 
C) paying lower prices to its suppliers. 
D) increased competition resulting in lower selling prices. 
A) selling products with a lower markup. 
B) clearance of discontinued inventory. 
C) paying lower prices to its suppliers. 
D) increased competition resulting in lower selling prices.

Question 16

A Refund Liability (deferred revenue) account is used to track expected sales returns and allowances.

Accepted Answer

A) True 
 B)False

Question 17

Corporations following IFRS must classify their expenses either by nature or by function.

Accepted Answer

A) True 
 B)False

Question 18

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not one of the steps in the five-step model when goods are being sold?

Accepted Answer

A) identify the contract 
B) identify the performance obligation(s) 
C) recognize revenue when it has been earned 
D) determine the transaction price. 
A) identify the contract 
B) identify the performance obligation(s) 
C) recognize revenue when it has been earned 
D) determine the transaction price.

Question 20

On the statement of income for a company using the periodic inventory system, the inventory at the beginning of the period is added to the cost of merchandise purchased for the period to calculate the cost of goods available for sale during the period.

Accepted Answer

A) True 
 B)False

Giving a customer a sales allowance

Which of the following accounts has a normal credit balance?

Expenses on a statement of income are listed

When sales are made with a right of return, the sales revenue is recorded net of the expected amount of returns and a Refund Liability is also debited.

When management estimates a rate for return, at the time of sale this requires

Freight terms will specify the point at which ownership of the goods is transferred from the seller to the buyer.

Use the following information to answer questions -What was the cost of goods sold?

Which of the following would not be classified as a contra account?

Operating expenses are similar in merchandising and service companies.

Gross profit is

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

The entry to record a sale of $525 with an estimated return rate of 4% will include a

Beginning inventory plus the cost of goods purchased equals

Companies following ASPE may classify their expenses by nature, but not by function.

A decline in a company's gross profit could be caused by all of the following except

A Refund Liability (deferred revenue) account is used to track expected sales returns and allowances.

Corporations following IFRS must classify their expenses either by nature or by function.

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Which of the following is not one of the steps in the five-step model when goods are being sold?

On the statement of income for a company using the periodic inventory system, the inventory at the beginning of the period is added to the cost of merchandise purchased for the period to calculate the cost of goods available for sale during the period.

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

Exam 5: Merchandising Operations

Giving a customer a sales allowance

Which of the following accounts has a normal credit balance?

Expenses on a statement of income are listed

When sales are made with a right of return, the sales revenue is recorded net of the expected amount of returns and a Refund Liability is also debited.

When management estimates a rate for return, at the time of sale this requires

Freight terms will specify the point at which ownership of the goods is transferred from the seller to the buyer.

Use the following information to answer questions -What was the cost of goods sold?

Which of the following would not be classified as a contra account?

Operating expenses are similar in merchandising and service companies.

Gross profit is

When the terms of sale are FOB shipping point, the seller is responsible for any damages to the goods during shipping.

The entry to record a sale of $525 with an estimated return rate of 4% will include a

Beginning inventory plus the cost of goods purchased equals

Companies following ASPE may classify their expenses by nature, but not by function.

A decline in a company's gross profit could be caused by all of the following except

A Refund Liability (deferred revenue) account is used to track expected sales returns and allowances.

Corporations following IFRS must classify their expenses either by nature or by function.

Merchandise is sold for $2,500 with terms 1/10, n/30.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $20.

Which of the following is not one of the steps in the five-step model when goods are being sold?

On the statement of income for a company using the periodic inventory system, the inventory at the beginning of the period is added to the cost of merchandise purchased for the period to calculate the cost of goods available for sale during the period.

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