Question 1

Profit is the final outcome of a company's operating and non operating activities.

Accepted Answer

A) True 
 B)False

Question 2

The operating expenses of a merchandising company will be different than the operating expenses of a service company.

Accepted Answer

A) True 
 B)False

Question 3

Purchase discounts are offered to customers for the early payment of the balance due.

Accepted Answer

A) True 
 B)False

Question 4

Harvest Company has an offer to purchase 100 seeds for $100, 200 seeds for $150 or 300 seeds for $175. This offer is called a(n)

Accepted Answer

A)  purchase discount. 
B)  quantity discount. 
C)  purchase return. 
D)  special merchandise terms. 
A)  purchase discount. 
B)  quantity discount. 
C)  purchase return. 
D)  special merchandise terms.

Question 5

Service revenue minus operating expenses equals gross profit.

Accepted Answer

A) True 
 B)False

Question 6

Non operating expenses are any expenses which are NOT related to the company's main operations.

Accepted Answer

A) True 
 B)False

Question 7

The adjusted trial balance of Cochrane Company includes the following accounts:   The company uses a perpetual inventory system.
Instructions
Prepare a multiple-step income statement for the year ended December 31, 2014.

Accepted Answer

The answer of The adjusted trial balance of Cochrane Company...

Question 8

On October 1, Keiler Motorcycle Shop had an inventory of 20 dirt bikes at a cost of $1,150 each. During the month of October, the following transactions occurred:
Oct. 3 Purchased 10 bikes at a cost of $1,150 each from the Lyons Bike Company, terms n/30.
6 Sold 10 bikes for $1,500 each, terms n/30.
6 Freight of $250 on the October 6 sale was FOB shipping point.
7 Received credit from the Lyons Bike Company for the return of 2 defective bikes.
13 Issued a credit to a customer for the return of a bike. The bike was returned to inventory.
19 Purchased 8 bikes from Huffy Cycle Company at a cost of $1,125 each, terms 2/10, n/30.
20 Freight of $220 on the October 19 purchase was FOB shipping point.
29 Paid for the October 19 purchase.
Instructions
Using a perpetual inventory system, prepare the journal entries to record the transactions.

Accepted Answer

The answer of On October 1, Keiler Motorcycle Shop had...

Question 9

Under a perpetual inventory system, any freight which is incurred when purchasing the inventory is debited to the inventory account.

Accepted Answer

A) True 
 B)False

Question 10

The following information is taken from the financial statements of Down Home Deli for the last three years. The owner, John Walton is quite pleased to see that his sales are growing steadily.   Instructions 
a. Calculate gross profit margin, profit margin, and profit margin using profit from operations.
b. Comment on whether the Deli is, in fact, doing better over the three years as John believes.

Accepted Answer

The answer of The following information is taken from the...

Question 11

Sales discounts are only used in a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 12

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

Accepted Answer

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

Question 13

Under a periodic inventory system, the sale of merchandise 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 14

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

Accepted Answer

A)  Merchandise Inventory account. 
B)  Cost of Goods Sold account. 
C)  Purchase Returns and Allowances account. 
D)  Purchases account. 
A)  Merchandise Inventory account. 
B)  Cost of Goods Sold account. 
C)  Purchase Returns and Allowances account. 
D)  Purchases account.

Question 15

Loa's Hardware's trial balance for the year ended December 31, 2014 is provided below. Loa's uses the perpetual inventory system. A count of the inventory on hand shows the actual amount on hand is $26,500. All other year-end adjusting entries have been made.   Instructions 
a. Prepare the adjusting entry to record the correct inventory account.
b. Prepare the closing entries.
c. Prepare a multiple-step income statement for Low's Hardware.

Accepted Answer

The answer of Loa's Hardware's trial balance for the year...

Question 16

The adjusted trial balance of Small Book Company appears below. The company uses a perpetual inventory system.   Instructions
Prepare the end of the year closing journal entries.

Accepted Answer

The answer of The adjusted trial balance of Small Book...

Question 17

A Sales Returns and Allowances account is NOT debited if a customer

Accepted Answer

A)  returns defective merchandise. 
B)  receives a credit for merchandise of inferior quality. 
C)  utilizes a prompt payment incentive. 
D)  returns goods that are not in accordance with specifications. 
A)  returns defective merchandise. 
B)  receives a credit for merchandise of inferior quality. 
C)  utilizes a prompt payment incentive. 
D)  returns goods that are not in accordance with specifications.

Question 18

Yatsu Limited has the following information in its accounting records as at December 31, 2014:   A physical inventory count revealed that there was $68,000 in ending inventory.
-The cost of goods purchased is

Accepted Answer

A)  $129,860. 
B)  $134,360. 
C)  $121,810. 
D)  $117,310. 
A)  $129,860. 
B)  $134,360. 
C)  $121,810. 
D)  $117,310.

Question 19

Gross profit margin is an example of a liquidity ratio.

Accepted Answer

A) True 
 B)False

Question 20

A retail company and a service company have different ways of measuring profit.

Accepted Answer

A) True 
 B)False

Profit is the final outcome of a company's operating and non operating activities.

The operating expenses of a merchandising company will be different than the operating expenses of a service company.

Purchase discounts are offered to customers for the early payment of the balance due.

Harvest Company has an offer to purchase 100 seeds for $100, 200 seeds for $150 or 300 seeds for $175. This offer is called a(n)

Service revenue minus operating expenses equals gross profit.

Non operating expenses are any expenses which are NOT related to the company's main operations.

The adjusted trial balance of Cochrane Company includes the following accounts: The company uses a perpetual inventory system. Instructions Prepare a multiple-step income statement for the year ended December 31, 2014.

Under a perpetual inventory system, any freight which is incurred when purchasing the inventory is debited to the inventory account.

Sales discounts are only used in a perpetual inventory system.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

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

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

The adjusted trial balance of Small Book Company appears below. The company uses a perpetual inventory system. Instructions Prepare the end of the year closing journal entries.

A Sales Returns and Allowances account is NOT debited if a customer

Yatsu Limited has the following information in its accounting records as at December 31, 2014: A physical inventory count revealed that there was $68,000 in ending inventory. -The cost of goods purchased is

Gross profit margin is an example of a liquidity ratio.

A retail company and a service company have different ways of measuring profit.

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

Profit is the final outcome of a company's operating and non operating activities.

The operating expenses of a merchandising company will be different than the operating expenses of a service company.

Purchase discounts are offered to customers for the early payment of the balance due.

Harvest Company has an offer to purchase 100 seeds for $100, 200 seeds for $150 or 300 seeds for $175. This offer is called a(n)

Service revenue minus operating expenses equals gross profit.

Non operating expenses are any expenses which are NOT related to the company's main operations.

The adjusted trial balance of Cochrane Company includes the following accounts: The company uses a perpetual inventory system. Instructions Prepare a multiple-step income statement for the year ended December 31, 2014.

Under a perpetual inventory system, any freight which is incurred when purchasing the inventory is debited to the inventory account.

Sales discounts are only used in a perpetual inventory system.

The journal entry to record a return of merchandise purchased on account under a perpetual inventory system would credit

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

Under a perpetual inventory system, acquisition of merchandise for resale is debited to the

The adjusted trial balance of Small Book Company appears below. The company uses a perpetual inventory system. Instructions Prepare the end of the year closing journal entries.

A Sales Returns and Allowances account is NOT debited if a customer

Yatsu Limited has the following information in its accounting records as at December 31, 2014: A physical inventory count revealed that there was $68,000 in ending inventory. -The cost of goods purchased is

Gross profit margin is an example of a liquidity ratio.

A retail company and a service company have different ways of measuring profit.

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