Question 1

Profit margin is calculated by dividing

Accepted Answer

A) net income by gross profit. 
B) net income by sales. 
C) operating income by sales. 
D) sales by net income. 
A) net income by gross profit. 
B) net income by sales. 
C) operating income by sales. 
D) sales by net income.

Question 2

Use the following information to answer questions 
  
-The gross profit margin would be

Accepted Answer

A) 60.5%. 
B) 23.2%. 
C) 29.3%. 
D) 39.5%. 
A) 60.5%. 
B) 23.2%. 
C) 29.3%. 
D) 39.5%.

Question 3

Each of the following companies is a merchandising company except a

Accepted Answer

A) wholesale parts company. 
B) candy store. 
C) moving company. 
D) furniture store. 
A) wholesale parts company. 
B) candy store. 
C) moving company. 
D) furniture store.

Question 4

Gross profit margin is calculated by dividing cost of goods sold by sales.

Accepted Answer

A) True 
 B)False

Question 5

The primary difference between a periodic and a perpetual inventory system is that a periodic system

Accepted Answer

A) keeps a detailed record showing the inventory on hand at all times. 
B) provides better control over inventories. 
C) records the cost of goods sold on the date the sale is made. 
D) determines the cost of goods sold at the end of the accounting period. 
A) keeps a detailed record showing the inventory on hand at all times. 
B) provides better control over inventories. 
C) records the cost of goods sold on the date the sale is made. 
D) determines the cost of goods sold at the end of the accounting period.

Question 6

Purchases less purchase returns and allowances less purchase discounts is called

Accepted Answer

A) cost of goods purchased. 
B) net purchases. 
C) cost of goods sold. 
D) net inventory. 
A) cost of goods purchased. 
B) net purchases. 
C) cost of goods sold. 
D) net inventory.

Question 7

Gross profit equals the difference between sales and

Accepted Answer

A) net income. 
B) cost of goods sold. 
C) operating expenses. 
D) cost of goods sold plus operating expenses. 
A) net income. 
B) cost of goods sold. 
C) operating expenses. 
D) cost of goods sold plus operating expenses.

Question 8

When a customer returns merchandise, the entry includes

Accepted Answer

A) a credit to Refund Liability. 
B) a credit to Estimated Inventory Returns. 
C) a credit to Inventory. 
D) a debit to Sales. 
A) a credit to Refund Liability. 
B) a credit to Estimated Inventory Returns. 
C) a credit to Inventory. 
D) a debit to Sales.

Question 9

ClearEyes Inc.reported beginning inventory of $20,000.During the period, purchases were $140,000; purchase returns, $4,000; and freight in $10,000.A physical count of inventory at the end of the period revealed that $30,000 was still on hand.The cost of goods available for sale was

Accepted Answer

A) $156,000. 
B) $164,000. 
C) $166,000. 
D) $184,000. 
A) $156,000. 
B) $164,000. 
C) $166,000. 
D) $184,000.

Question 10

Income from operations appears on

Accepted Answer

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

Question 11

Profit margin is calculated by dividing net income by sales.

Accepted Answer

A) True 
 B)False

Question 12

A physical inventory count should be done at least once a year regardless of whether a perpetual or periodic inventory system is being used.

Accepted Answer

A) True 
 B)False

Question 13

When a sale occurs under a perpetual inventory system,

Accepted Answer

A) a decrease in cost of goods sold is recorded. 
B) a increase in inventory is recorded. 
C) a decrease in accounts receivable is recorded. 
D) a decrease in quantity is recorded. 
A) a decrease in cost of goods sold is recorded. 
B) a increase in inventory is recorded. 
C) a decrease in accounts receivable is recorded. 
D) a decrease in quantity is recorded.

Question 14

Gross profit margin is the same as the gross profit amount.

Accepted Answer

A) True 
 B)False

Question 15

If a company determines cost of goods sold each time a sale occurs, it

Accepted Answer

A) must have a computerized accounting system. 
B) uses a combination of the perpetual and periodic inventory systems. 
C) uses a periodic inventory system. 
D) uses a perpetual inventory system. 
A) must have a computerized accounting system. 
B) uses a combination of the perpetual and periodic inventory systems. 
C) uses a periodic inventory system. 
D) uses a perpetual inventory system.

Question 16

Sales less cost of goods sold is called

Accepted Answer

A) gross profit. 
B) cost of goods sold. 
C) net income. 
D) income before income taxes. 
A) gross profit. 
B) cost of goods sold. 
C) net income. 
D) income before income taxes.

Question 17

Under a perpetual inventory system, purchase of inventory is recorded as a debit to the

Accepted Answer

A) Supplies account. 
B) Purchases account. 
C) Inventory account. 
D) Cost of Goods Sold account. 
A) Supplies account. 
B) Purchases account. 
C) Inventory account. 
D) Cost of Goods Sold account.

Question 18

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

Accepted Answer

A) True 
 B)False

Question 19

The operating cycle of a merchandising company is

Accepted Answer

A) always one year in length. 
B) generally longer than that of a service company. 
C) about the same as that of a service company. 
D) generally shorter than that of a service company. 
A) always one year in length. 
B) generally longer than that of a service company. 
C) about the same as that of a service company. 
D) generally shorter than that of a service company.

Question 20

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A) in the selling expenses of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra revenue account of the seller. 
A) in the selling expenses of the buyer. 
B) in operating expenses for the seller. 
C) to the cost of goods sold of the seller. 
D) to a contra revenue account of the seller.

Profit margin is calculated by dividing

Use the following information to answer questions -The gross profit margin would be

Each of the following companies is a merchandising company except a

Gross profit margin is calculated by dividing cost of goods sold by sales.

The primary difference between a periodic and a perpetual inventory system is that a periodic system

Purchases less purchase returns and allowances less purchase discounts is called

Gross profit equals the difference between sales and

When a customer returns merchandise, the entry includes

ClearEyes Inc.reported beginning inventory of $20,000.During the period, purchases were $140,000; purchase returns, $4,000; and freight in $10,000.A physical count of inventory at the end of the period revealed that $30,000 was still on hand.The cost of goods available for sale was

Income from operations appears on

Profit margin is calculated by dividing net income by sales.

A physical inventory count should be done at least once a year regardless of whether a perpetual or periodic inventory system is being used.

When a sale occurs under a perpetual inventory system,

Gross profit margin is the same as the gross profit amount.

If a company determines cost of goods sold each time a sale occurs, it

Sales less cost of goods sold is called

Under a perpetual inventory system, purchase of inventory is recorded as a debit to the

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

The operating cycle of a merchandising company is

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

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

Profit margin is calculated by dividing

Use the following information to answer questions -The gross profit margin would be

Each of the following companies is a merchandising company except a

Gross profit margin is calculated by dividing cost of goods sold by sales.

The primary difference between a periodic and a perpetual inventory system is that a periodic system

Purchases less purchase returns and allowances less purchase discounts is called

Gross profit equals the difference between sales and

When a customer returns merchandise, the entry includes

ClearEyes Inc.reported beginning inventory of $20,000.During the period, purchases were $140,000; purchase returns, $4,000; and freight in $10,000.A physical count of inventory at the end of the period revealed that $30,000 was still on hand.The cost of goods available for sale was

Income from operations appears on

Profit margin is calculated by dividing net income by sales.

A physical inventory count should be done at least once a year regardless of whether a perpetual or periodic inventory system is being used.

When a sale occurs under a perpetual inventory system,

Gross profit margin is the same as the gross profit amount.

If a company determines cost of goods sold each time a sale occurs, it

Sales less cost of goods sold is called

Under a perpetual inventory system, purchase of inventory is recorded as a debit to the

If a quantity discount of 10% is received on a purchase of $10,000, inventory would be recorded at $9,000.

The operating cycle of a merchandising company is

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

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