Question 1

A quantity discount is the same as a purchase discount.

Accepted Answer

A) True 
 B)False

Question 2

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

Accepted Answer

A) True 
 B)False

Question 3

There are additional steps required in the accounting cycle for a merchandising company than for a service company.

Accepted Answer

A) True 
 B)False

Question 4

The Purchase Discounts account is classified as

Accepted Answer

A)  an asset account. 
B)  a contra asset account. 
C)  an expense account. 
D)  a contra expense account. 
A)  an asset account. 
B)  a contra asset account. 
C)  an expense account. 
D)  a contra expense account.

Question 5

In a perpetual system, there are 2 journal entries when making a sale of goods.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a true statement about inventory systems?

Accepted Answer

A)  Periodic inventory systems require more detailed inventory records. 
B)  Perpetual inventory systems require more detailed inventory records. 
C)  A periodic system requires cost of goods sold be determined after each sale. 
D)  A perpetual system is specifically designed for companies that sell low unit-value items. 
A)  Periodic inventory systems require more detailed inventory records. 
B)  Perpetual inventory systems require more detailed inventory records. 
C)  A periodic system requires cost of goods sold be determined after each sale. 
D)  A perpetual system is specifically designed for companies that sell low unit-value items.

Question 7

A sales return in a perpetual inventory system requires a

Accepted Answer

A)  debit to Merchandise Inventory and a credit to Accounts Payable. 
B)  debit to Cost of Goods Sold and a credit to Merchandise Inventory. 
C)  debit to Sales Revenue and a credit to Merchandise Inventory. 
D)  debit to Sales Returns and Allowances and a credit to Accounts Receivable. 
A)  debit to Merchandise Inventory and a credit to Accounts Payable. 
B)  debit to Cost of Goods Sold and a credit to Merchandise Inventory. 
C)  debit to Sales Revenue and a credit to Merchandise Inventory. 
D)  debit to Sales Returns and Allowances and a credit to Accounts Receivable.

Question 8

Match between columns
                        Premises: Freight terms which required the buyer to pay the freight cost
Freight terms which require the seller to pay the freight cost
Freight cost to deliver goods to customers reported as an operating expense
Deducted from net sales to calculate gross profit
A calculation of gross profit divided by net sales
Debits to Merchandise Inventory
A discount provided to encourage early payment
Separate account maintained for each different product
Requires a physical count of goods on hand to calculate cost of goods sold
The merchandise inventory account balance should equal ending inventory, at all times
Sales less sales returns and allowances and sales discounts

Accepted Answer

The Answer of Freight out and Cost of goods purchased is...

Question 9

Klondike Music sells musical instruments. The following data relates to Klondike's inventory of guitars. On January 1, 2014, Klondike had 12 guitars in inventory at a cost of $250 each. During January, the following transactions occurred:
Jan. 1 Purchased 15 guitars at $250 each from International Music Centre (IMC) on account, terms n/30
4 Sold 2 guitars for cash at $370 each.
6 One of the two guitars sold on Jan 4 was returned because it was defective. A full refund was paid. The guitar will be returned to IMC on January 7.
7 The defective guitar was returned to IMC for a credit on account.
16 Sold 21 guitars at $300 on account, terms 2/10, n/30.
18 Purchased 10 guitars from IMC for $250 each on account, terms n/30.
25 Paid the full amount owing to IMC.
26 Collected the balance owing from the Jan 16 sale.
Instructions
Using the perpetual inventory system, prepare the journal entries to record Klondike Music's transactions.

Accepted Answer

The answer of Klondike Music sells musical instruments. The following...

Question 10

Which of the following statements is correct?

Accepted Answer

A)  Under a periodic system, the inventory account is only updated once per period. 
B)  Under a perpetual system, the inventory account is only updated once per period. 
C)  Cost of goods sold computed under a periodic system would be higher than under a perpetual system. 
D)  The value of inventory computed under a periodic system would be lower than under a perpetual system. 
A)  Under a periodic system, the inventory account is only updated once per period. 
B)  Under a perpetual system, the inventory account is only updated once per period. 
C)  Cost of goods sold computed under a periodic system would be higher than under a perpetual system. 
D)  The value of inventory computed under a periodic system would be lower than under a perpetual system.

Question 11

Mark Company gathered the following condensed data for the year ended December 31, 2014:   The company uses a perpetual inventory system.
Instructions
Prepare a single-step income statement in good form.

Accepted Answer

The answer of Mark Company gathered the following condensed data...

Question 12

Kingbridge Range Company has sales in 2014 of $2,650,000. During the year, the company had $50,000 in sales returns and $30,000 in sales discounts. The cost of these sales was $1,800,000. Operating expenses excluding salaries and wages were $150,000 and salaries and wages incurred during the year were $300,000. Kingbridge uses a perpetual inventory system.
Instructions
Prepare a multiple-step income statement for Kingbridge Range Company for the year ended December 31, 2014.

Accepted Answer

The answer of Kingbridge Range Company has sales in 2014...

Question 13

Which of the following statements is correct?

Accepted Answer

A)  A service company does not have Cost of Goods Sold account because it does not sell goods. 
B)  A service company does have a Cost of Goods Sold account because it sells a service. 
C)  A merchandising company does not have a Cost of Goods Sold account because it does not sell goods. 
D)  A merchandising company does not have a Cost of Goods Sold account because it only sells a service. 
A)  A service company does not have Cost of Goods Sold account because it does not sell goods. 
B)  A service company does have a Cost of Goods Sold account because it sells a service. 
C)  A merchandising company does not have a Cost of Goods Sold account because it does not sell goods. 
D)  A merchandising company does not have a Cost of Goods Sold account because it only sells a service.

Question 14

A company makes a purchase for $250 on December 1, terms 2/10 n/30. How much will the discount be if the amount is paid on December 16?

Accepted Answer

A)  $5 
B)  $0 
C)  $10 
D)  $25 
A)  $5 
B)  $0 
C)  $10 
D)  $25

Question 15

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 sold is

Accepted Answer

A)  $129,860. 
B)  $134,360. 
C)  $116,310. 
D)  $110,810. 
A)  $129,860. 
B)  $134,360. 
C)  $116,310. 
D)  $110,810.

Question 16

If a customer agrees to keep merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

Accepted Answer

A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance. 
A)  discount. 
B)  return. 
C)  contra asset. 
D)  allowance.

Question 17

A periodic system of inventory will give the company much more control over their inventory.

Accepted Answer

A) True 
 B)False

Question 18

The Sales Discounts account is classified as

Accepted Answer

A)  an asset account. 
B)  a contra asset account. 
C)  an expense account. 
D)  a contra revenue account. 
A)  an asset account. 
B)  a contra asset account. 
C)  an expense account. 
D)  a contra revenue account.

Question 19

Which of the following expressions is INCORRECT?

Accepted Answer

A)  Gross profit - operating expenses = profit. 
B)  Sales - cost of goods sold - operating expenses = profit. 
C)  Profit + operating expenses = gross profit. 
D)  Operating expenses - cost of goods sold = gross profit. 
A)  Gross profit - operating expenses = profit. 
B)  Sales - cost of goods sold - operating expenses = profit. 
C)  Profit + operating expenses = gross profit. 
D)  Operating expenses - cost of goods sold = gross profit.

Question 20

Sales revenues are usually considered earned when

Accepted Answer

A)  cash is received from credit sales. 
B)  an order is received. 
C)  goods have been transferred from the seller to the buyer. 
D)  adjusting entries are made. 
A)  cash is received from credit sales. 
B)  an order is received. 
C)  goods have been transferred from the seller to the buyer. 
D)  adjusting entries are made.

A quantity discount is the same as a purchase discount.

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

There are additional steps required in the accounting cycle for a merchandising company than for a service company.

The Purchase Discounts account is classified as

In a perpetual system, there are 2 journal entries when making a sale of goods.

Which of the following is a true statement about inventory systems?

A sales return in a perpetual inventory system requires a

Which of the following statements is correct?

Mark Company gathered the following condensed data for the year ended December 31, 2014: The company uses a perpetual inventory system. Instructions Prepare a single-step income statement in good form.

Which of the following statements is correct?

A company makes a purchase for $250 on December 1, terms 2/10 n/30. How much will the discount be if the amount is paid on December 16?

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 sold is

If a customer agrees to keep merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

A periodic system of inventory will give the company much more control over their inventory.

The Sales Discounts account is classified as

Which of the following expressions is INCORRECT?

Sales revenues are usually considered earned when

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 quantity discount is the same as a purchase discount.

The gross profit section for a merchandising company appears on both the multiple-step and single-step forms of an income statement.

There are additional steps required in the accounting cycle for a merchandising company than for a service company.

The Purchase Discounts account is classified as

In a perpetual system, there are 2 journal entries when making a sale of goods.

Which of the following is a true statement about inventory systems?

A sales return in a perpetual inventory system requires a

Which of the following statements is correct?

Mark Company gathered the following condensed data for the year ended December 31, 2014: The company uses a perpetual inventory system. Instructions Prepare a single-step income statement in good form.

Which of the following statements is correct?

A company makes a purchase for $250 on December 1, terms 2/10 n/30. How much will the discount be if the amount is paid on December 16?

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 sold is

If a customer agrees to keep merchandise that is defective because the seller is willing to reduce the selling price, this transaction is known as a sales

A periodic system of inventory will give the company much more control over their inventory.

The Sales Discounts account is classified as

Which of the following expressions is INCORRECT?

Sales revenues are usually considered earned when

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