Question 1

A purchase return or allowance under a perpetual inventory system is credited to:

Accepted Answer

A) Accounts Payable. 
B) Purchase Returns and Allowances. 
C) Inventory. 
D) Purchases. 
A) Accounts Payable. 
B) Purchase Returns and Allowances. 
C) Inventory. 
D) Purchases.

Question 2

Mars Company purchased $2,500 of merchandise on account, terms 3/10 n/60. If payment was made within the discount period, the entry to record the payment under a periodic inventory system would include a credit to:

Accepted Answer

A) Cash of $2,425. 
B) Inventory of $2,352. 
C) Accounts Payable of $2,400. 
D) Cash for $2,400. 
A) Cash of $2,425. 
B) Inventory of $2,352. 
C) Accounts Payable of $2,400. 
D) Cash for $2,400.

Question 3

Under a periodic inventory system, the entry to record the return of inventory sold on account for $360 with a cost of $210 would be recorded by the seller as a:

Accepted Answer

A) credit to Accounts Receivable for $210. 
B) debit to Sales Returns and Allowances for $360. 
C) debit to Sales Revenue for $360. 
D) debit to Inventory for $210. 
A) credit to Accounts Receivable for $210. 
B) debit to Sales Returns and Allowances for $360. 
C) debit to Sales Revenue for $360. 
D) debit to Inventory for $210.

Question 4

Under a perpetual inventory system, the entries to record a $2,600 sales return of undamaged goods for a sale originally made on account, when the merchandise had a cost of $1,200, include a:

Accepted Answer

A) debit to Inventory of $1,200. 
B) debit to Sales Returns and Allowances of $1,200. 
C) credit to Cost of Goods Sold of $2,600. 
D) credit to Sales Returns and Allowances of $1,200. 
A) debit to Inventory of $1,200. 
B) debit to Sales Returns and Allowances of $1,200. 
C) credit to Cost of Goods Sold of $2,600. 
D) credit to Sales Returns and Allowances of $1,200.

Question 5

To update the inventory records for the sale of merchandise under a perpetual inventory system, the entry would include a:

Accepted Answer

A) debit to Inventory. 
B) credit to Accounts Payable. 
C) debit to Sales Revenue. 
D) debit to Cost of Goods Sold. 
A) debit to Inventory. 
B) credit to Accounts Payable. 
C) debit to Sales Revenue. 
D) debit to Cost of Goods Sold.

Question 6

In a periodic inventory system, the closing process includes crediting the following accounts to bring their balances to zero:

Accepted Answer

A) Cost of Goods Sold and Freight In. 
B) Purchases and Freight In. 
C) Purchase Discounts and Sales Discounts. 
D) Purchase Returns and Allowances and Purchase Discounts. 
A) Cost of Goods Sold and Freight In. 
B) Purchases and Freight In. 
C) Purchase Discounts and Sales Discounts. 
D) Purchase Returns and Allowances and Purchase Discounts.

Question 7

Net purchases caption on the multi-step income statement is calculated by subtracting purchase discounts and purchase returns and allowances from purchases.

Accepted Answer

A) True 
 B)False

Question 8

Using a perpetual inventory system, the entry to record the purchase of merchandise on account involves a:

Accepted Answer

A) debit to Inventory. 
B) debit to Accounts Payable. 
C) credit to Inventory. 
D) credit to Cash. 
A) debit to Inventory. 
B) debit to Accounts Payable. 
C) credit to Inventory. 
D) credit to Cash.

Question 9

Which of the following credit terms allows for a cash discount?

Accepted Answer

A) n/30 
B) n/eom 
C) n/60 
D) 1/10 n/30 
A) n/30 
B) n/eom 
C) n/60 
D) 1/10 n/30

Question 10

The following items were taken from the records of Slow Boat Company, which uses a periodic inventory system: $$\begin{array} { l r } 
\text { Salary payable } & \$ 1,100 \
\text { Sales revenue } & 480,000 \
\text { Freight in } & 20,000 \
\text { Beginning inventory } & 35,000 \
\text { Purchases of inventory } & 240,000 \
\text { Purchase returns and allowances } & 35,000 \
\text { Purchase discounts } & 10,000 \
\text { Sales returns and allowances } & 35,000 \
\text { Ending inventory } & 80,000 \
\text { Operating expenses } & 85,000
\end{array}$$ Prepare the cost of goods sold section for the Slow Boat Company's income statement.

Accepted Answer

The answer of The following items were taken from the...

Question 11

A company's ledger shows an Inventory balance of $20,000 and a physical count of the inventory shows $19,000. Which of the following entries is needed to record the shrinkage?

Accepted Answer

A)  $\begin{array} { | r | r | r | } 
\hline \text { Cost of goods sold } & 1,000 & \
\hline \text { Shrinkage expense } & & 1,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | r | r | r | } 
\hline \text { Inventory } & 1,000 & \
\hline \text { Cost of goods sold } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Cost of goods sold } & 1,000 & \
\hline \text { Inventory } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Inventory } & & 1,000 \
\hline
\end{array}$ 
A)  $\begin{array} { | r | r | r | } 
\hline \text { Cost of goods sold } & 1,000 & \
\hline \text { Shrinkage expense } & & 1,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | r | r | r | } 
\hline \text { Inventory } & 1,000 & \
\hline \text { Cost of goods sold } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Cost of goods sold } & 1,000 & \
\hline \text { Inventory } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Inventory } & & 1,000 \
\hline
\end{array}$

Question 12

In a periodic inventory system, the entry to record the taking of a cash discount for the purchase of merchandise would include a:

Accepted Answer

A) credit to Purchase Discounts 
B) credit to Inventory 
C) debit to Purchase Discounts 
D) credit to Purchase Returns and Allowances. 
A) credit to Purchase Discounts 
B) credit to Inventory 
C) debit to Purchase Discounts 
D) credit to Purchase Returns and Allowances.

Question 13

Table 5-2 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 382,000 \
\hline \text { Net sales revenue } & \$ 360,000 \
\hline \text { Gross margin } & 255,000 \
\hline \text { Operating expenses } & 132,000 \
\hline \text { Interest expense } & 30,000 \
\hline \text { Interest revenue } & 60,000 \
\hline
\end{array}$$
-Referring to Table 5-2, what is the operating income or operating loss?

Accepted Answer

A) operating income of $123,000 
B) operating loss of $177,000 
C) operating loss of $27,000 
D) operating income of $27,000 
A) operating income of $123,000 
B) operating loss of $177,000 
C) operating loss of $27,000 
D) operating income of $27,000

Question 14

The faster the sale of inventory and the collection of cash, the higher the profits will be for a business.

Accepted Answer

A) True 
 B)False

Question 15

Tobermory Merchandising had the following transactions during May:
May 5 Purchased $2,700 of merchandise on account, terms 3/15 n/60, FOB shipping point.
9 Paid transportation cost on the May 5 purchase, $250.
10 Returned $400 of defective merchandise purchased on May 5.
15 Paid for the May 5 purchase, less the return and the discount.
Required:
Assuming the perpetual inventory system is used, prepare the journal entries to record the above transactions.

Accepted Answer

The answer of Tobermory Merchandising had the following transactions during...

Question 16

Table 5-3 $$\begin{array} { | l | r | } 
\hline \text { Sales revenue } & \$ 750,000 \
\hline \text { Interest revenue } & 18,000 \
\hline \text { Freight in } & 44,000 \
\hline \text { Beginning inventory } & 75,000 \
\hline \text { Purchases discounts } & 20,000 \
\hline \text { Sales reburns and allowances } & 44,000 \
\hline \text { Operating expenses } & 99,000 \
\hline \text { Interest expense } & 15,000 \
\hline \text { Ending inventory } & 72,000 \
\hline \text { Purchases } & 415,000 \
\hline \text { Sales discounts } & 25,000 \
\hline \text { William Browning, Withdrawals } & 61,000 \
\hline \text { Purchase returns and allowances } & 36,000 \
\hline
\end{array}$$
-Refer to Table 5-3. Net income is:

Accepted Answer

A) $161,000. 
B) $214,000. 
C) $179,000. 
D) $176,000. 
A) $161,000. 
B) $214,000. 
C) $179,000. 
D) $176,000.

Question 17

In a periodic system, inventory balances and the cost of goods sold for the current period are determined:

Accepted Answer

A) at the time of sale. 
B) on a frequent basis. 
C) on the first day of each year. 
D) when a physical inventory count is taken. 
A) at the time of sale. 
B) on a frequent basis. 
C) on the first day of each year. 
D) when a physical inventory count is taken.

Question 18

The multi-step income statement format shows subtotals to highlight significant relationships.

Accepted Answer

A) True 
 B)False

Question 19

In the closing entry process, the sales returns and allowances account is debited.

Accepted Answer

A) True 
 B)False

Question 20

Sales revenue and Net sales are synonymous terms.

Accepted Answer

A) True 
 B)False

A purchase return or allowance under a perpetual inventory system is credited to:

Mars Company purchased $2,500 of merchandise on account, terms 3/10 n/60. If payment was made within the discount period, the entry to record the payment under a periodic inventory system would include a credit to:

Under a periodic inventory system, the entry to record the return of inventory sold on account for $360 with a cost of $210 would be recorded by the seller as a:

Under a perpetual inventory system, the entries to record a $2,600 sales return of undamaged goods for a sale originally made on account, when the merchandise had a cost of $1,200, include a:

To update the inventory records for the sale of merchandise under a perpetual inventory system, the entry would include a:

In a periodic inventory system, the closing process includes crediting the following accounts to bring their balances to zero:

Net purchases caption on the multi-step income statement is calculated by subtracting purchase discounts and purchase returns and allowances from purchases.

Using a perpetual inventory system, the entry to record the purchase of merchandise on account involves a:

Which of the following credit terms allows for a cash discount?

A company's ledger shows an Inventory balance of $20,000 and a physical count of the inventory shows $19,000. Which of the following entries is needed to record the shrinkage?

In a periodic inventory system, the entry to record the taking of a cash discount for the purchase of merchandise would include a:

Table 5-2 Sales revenue \ 382,000 Net sales revenue \ 360,000 Gross margin 255,000 Operating expenses 132,000 Interest expense 30,000 Interest revenue 60,000 -Referring to Table 5-2, what is the operating income or operating loss?

The faster the sale of inventory and the collection of cash, the higher the profits will be for a business.

In a periodic system, inventory balances and the cost of goods sold for the current period are determined:

The multi-step income statement format shows subtotals to highlight significant relationships.

In the closing entry process, the sales returns and allowances account is debited.

Sales revenue and Net sales are synonymous terms.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters

Exam 5: Merchandising Operations and the Accounting Cycle

A purchase return or allowance under a perpetual inventory system is credited to:

Mars Company purchased $2,500 of merchandise on account, terms 3/10 n/60. If payment was made within the discount period, the entry to record the payment under a periodic inventory system would include a credit to:

Under a periodic inventory system, the entry to record the return of inventory sold on account for $360 with a cost of $210 would be recorded by the seller as a:

Under a perpetual inventory system, the entries to record a $2,600 sales return of undamaged goods for a sale originally made on account, when the merchandise had a cost of $1,200, include a:

To update the inventory records for the sale of merchandise under a perpetual inventory system, the entry would include a:

In a periodic inventory system, the closing process includes crediting the following accounts to bring their balances to zero:

Net purchases caption on the multi-step income statement is calculated by subtracting purchase discounts and purchase returns and allowances from purchases.

Using a perpetual inventory system, the entry to record the purchase of merchandise on account involves a:

Which of the following credit terms allows for a cash discount?

A company's ledger shows an Inventory balance of $20,000 and a physical count of the inventory shows $19,000. Which of the following entries is needed to record the shrinkage?

In a periodic inventory system, the entry to record the taking of a cash discount for the purchase of merchandise would include a:

Table 5-2 Sales revenue \ 382,000 Net sales revenue \ 360,000 Gross margin 255,000 Operating expenses 132,000 Interest expense 30,000 Interest revenue 60,000 -Referring to Table 5-2, what is the operating income or operating loss?

The faster the sale of inventory and the collection of cash, the higher the profits will be for a business.

In a periodic system, inventory balances and the cost of goods sold for the current period are determined:

The multi-step income statement format shows subtotals to highlight significant relationships.

In the closing entry process, the sales returns and allowances account is debited.

Sales revenue and Net sales are synonymous terms.

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters