Question 1

A decrease in cost of goods sold will always increase a company's gross profit margin.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be classified as a contra account?

Accepted Answer

A)  Sales 
B)  Sales Returns and Allowances 
C)  Merchandise Inventory 
D)  Unearned Revenue 
A)  Sales 
B)  Sales Returns and Allowances 
C)  Merchandise Inventory 
D)  Unearned Revenue

Question 3

The journal entry to record a shortage of inventory at the end of the accounting period is

Accepted Answer

The answer of The journal entry to record a shortage...

Question 4

Which of the following is NOT a true statement about a multiple-step income statement?

Accepted Answer

A)  Operating expenses may be classified as selling and administrative expenses. 
B)  There may be a section for non-operating activities. 
C)  There may be a section for operating assets. 
D)  There is a section for cost of goods sold. 
A)  Operating expenses may be classified as selling and administrative expenses. 
B)  There may be a section for non-operating activities. 
C)  There may be a section for operating assets. 
D)  There is a section for cost of goods sold.

Question 5

A perpetual inventory system requires the company only determine the cost of goods sold at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 6

Profit margin measures the extent by which selling price covers

Accepted Answer

A)  operating expenses. 
B)  the cost of goods sold. 
C)  all expenses. 
D)  income taxes. 
A)  operating expenses. 
B)  the cost of goods sold. 
C)  all expenses. 
D)  income taxes.

Question 7

Net purchases is determined by adding purchase returns and allowances to total purchases.

Accepted Answer

A) True 
 B)False

Question 8

An increase in a company's gross profit will mean an increase in gross profit margin.

Accepted Answer

A) True 
 B)False

Question 9

If Gross Profit is $80,000 and operating expenses are $55,000, then the Profit from Operations is $25,000.

Accepted Answer

A) True 
 B)False

Question 10

Using a periodic inventory system, the cost of freight in

Accepted Answer

A)  increases the cost of merchandise inventory. 
B)  is debited to the Purchases account 
C)  is reflected in an expense account called Freight In 
D)  reflects the cost of delivering goods to customers. 
A)  increases the cost of merchandise inventory. 
B)  is debited to the Purchases account 
C)  is reflected in an expense account called Freight In 
D)  reflects the cost of delivering goods to customers.

Question 11

Profit margin is calculated as

Accepted Answer

A)  profit ÷ sales revenue. 
B)  profit ÷ net sales. 
C)  gross profit ÷ sales revenue. 
D)  gross profit ÷ cost of goods sold. 
A)  profit ÷ sales revenue. 
B)  profit ÷ net sales. 
C)  gross profit ÷ sales revenue. 
D)  gross profit ÷ cost of goods sold.

Question 12

Tantramar Shipbuilding Company had the following information available at its year end September 30, 2014. Accounts are listed in alphabetical order for the convenience of the bookkeeper.   Instructions 
a. Calculate the gross profit margin for Tantramar.
b. Calculate the profit from operations for Tantramar.
c. Calculate the profit margin for Tantramar.
d. List three actions which Tantramar could take to increase its profit margin.
e. If last year's gross profit margin was 39%, comment on the company's results this year.

Accepted Answer

The answer of Tantramar Shipbuilding Company had the following information...

Question 13

Profit margin is improved when

Accepted Answer

A)  sales revenue increases. 
B)  gross profit decreases. 
C)  operating expenses increase. 
D)  the cost of goods sold increases. 
A)  sales revenue increases. 
B)  gross profit decreases. 
C)  operating expenses increase. 
D)  the cost of goods sold increases.

Question 14

A single-step Income Statement is considered more useful because it provides a detailed breakdown of all the categories of expenses.

Accepted Answer

A) True 
 B)False

Question 15

A sales invoice is a source document that

Accepted Answer

A)  provides support for goods purchased for resale. 
B)  is required before a sale can be recorded. 
C)  provides evidence of a sale. 
D)  serves only as a customer receipt. 
A)  provides support for goods purchased for resale. 
B)  is required before a sale can be recorded. 
C)  provides evidence of a sale. 
D)  serves only as a customer receipt.

Question 16

Under a periodic inventory system, the return of merchandise sold on credit requires a credit to

Accepted Answer

A)  Merchandise Inventory. 
B)  Sales Revenue. 
C)  Accounts Receivable. 
D)  Cash. 
A)  Merchandise Inventory. 
B)  Sales Revenue. 
C)  Accounts Receivable. 
D)  Cash.

Question 17

Selling terms 2/10, net 30 indicates which of the following?

Accepted Answer

A)  The purchaser is required to pay the entire bill within 10 days. 
B)  The purchaser can take a 20% discount if they pay within 30 days. 
C)  The purchaser can take a 2% discount if they pay within 10 days. 
D)  The purchaser can take a 2% discount if they pay within 30 days. 
A)  The purchaser is required to pay the entire bill within 10 days. 
B)  The purchaser can take a 20% discount if they pay within 30 days. 
C)  The purchaser can take a 2% discount if they pay within 10 days. 
D)  The purchaser can take a 2% discount if they pay within 30 days.

Question 18

Bendo Company receives a discount from its largest supplier for each order that exceeds 100 units. This discount is referred to as a

Accepted Answer

A)  sales discount. 
B)  purchase discount. 
C)  quantity discount. 
D)  merchandise discount. 
A)  sales discount. 
B)  purchase discount. 
C)  quantity discount. 
D)  merchandise discount.

Question 19

Under a perpetual inventory system, the following entry would be made to record the return of merchandise purchased on account:

Accepted Answer

The answer of Under a perpetual inventory system, the following...

Question 20

Under a perpetual inventory system, the following entry would be made to record the purchase of inventory on account:

Accepted Answer

The answer of Under a perpetual inventory system, the following...

A decrease in cost of goods sold will always increase a company's gross profit margin.

Which of the following would be classified as a contra account?

The journal entry to record a shortage of inventory at the end of the accounting period is

Which of the following is NOT a true statement about a multiple-step income statement?

A perpetual inventory system requires the company only determine the cost of goods sold at the end of the accounting period.

Profit margin measures the extent by which selling price covers

Net purchases is determined by adding purchase returns and allowances to total purchases.

An increase in a company's gross profit will mean an increase in gross profit margin.

If Gross Profit is $80,000 and operating expenses are $55,000, then the Profit from Operations is $25,000.

Using a periodic inventory system, the cost of freight in

Profit margin is calculated as

Profit margin is improved when

A single-step Income Statement is considered more useful because it provides a detailed breakdown of all the categories of expenses.

A sales invoice is a source document that

Under a periodic inventory system, the return of merchandise sold on credit requires a credit to

Selling terms 2/10, net 30 indicates which of the following?

Bendo Company receives a discount from its largest supplier for each order that exceeds 100 units. This discount is referred to as a

Under a perpetual inventory system, the following entry would be made to record the return of merchandise purchased on account:

Under a perpetual inventory system, the following entry would be made to record the purchase of inventory on account:

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 5: Accounting for Merchandising Operations

A decrease in cost of goods sold will always increase a company's gross profit margin.

Which of the following would be classified as a contra account?

The journal entry to record a shortage of inventory at the end of the accounting period is

Which of the following is NOT a true statement about a multiple-step income statement?

A perpetual inventory system requires the company only determine the cost of goods sold at the end of the accounting period.

Profit margin measures the extent by which selling price covers

Net purchases is determined by adding purchase returns and allowances to total purchases.

An increase in a company's gross profit will mean an increase in gross profit margin.

If Gross Profit is $80,000 and operating expenses are $55,000, then the Profit from Operations is $25,000.

Using a periodic inventory system, the cost of freight in

Profit margin is calculated as

Profit margin is improved when

A single-step Income Statement is considered more useful because it provides a detailed breakdown of all the categories of expenses.

A sales invoice is a source document that

Under a periodic inventory system, the return of merchandise sold on credit requires a credit to

Selling terms 2/10, net 30 indicates which of the following?

Bendo Company receives a discount from its largest supplier for each order that exceeds 100 units. This discount is referred to as a

Under a perpetual inventory system, the following entry would be made to record the return of merchandise purchased on account:

Under a perpetual inventory system, the following entry would be made to record the purchase of inventory on account:

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters