Question 1

When recording a return of a credit sale in a perpetual inventory system, all of the following accounts are affected EXCEPT

Accepted Answer

A)  Sales Returns and Allowances. 
B)  Accounts Receivable. 
C)  Merchandise Inventory. 
D)  Cash. 
A)  Sales Returns and Allowances. 
B)  Accounts Receivable. 
C)  Merchandise Inventory. 
D)  Cash.

Question 2

Listed below are various accounts:
1. Merchandise Inventory
2. Salaries expense
3. Cost of goods sold
4. Depreciation
5. Supplies
6. Advertising expense
7. Sales revenue
8. Insurance expense
9. Gross profit
10. Rent expense
Instructions
State which accounts would be classified as operating expenses.

Accepted Answer

2. Salaries expense

Question 3

Operating expenses are

Accepted Answer

A)  expenses incurred to pay employees. 
B)  expenses avoided to make a sale. 
C)  expenses incurred in the process of earning revenue. 
D)  expenses incurred to calculate gross profit. 
A)  expenses incurred to pay employees. 
B)  expenses avoided to make a sale. 
C)  expenses incurred in the process of earning revenue. 
D)  expenses incurred to calculate gross profit.

Question 4

On the income statement, a merchandiser would normally give a single sales figure (the sum of all its individual sales account) because

Accepted Answer

A)  companies do not want competitors to know the details of operating results. 
B)  merchandisers only have one product available for sale. 
C)  perpetual inventory systems cannot separate various sales items. 
D)  it is too time consuming to separate all individual sales terms. 
A)  companies do not want competitors to know the details of operating results. 
B)  merchandisers only have one product available for sale. 
C)  perpetual inventory systems cannot separate various sales items. 
D)  it is too time consuming to separate all individual sales terms.

Question 5

Cost of goods sold, in a periodic inventory system, is determined by adding the cost of goods purchased to the ending inventory.

Accepted Answer

A) True 
 B)False

Question 6

On October 1, Ki's Bicycle Store had an inventory of 10 mountain bicycles at a cost of $150 each. During the month of October, the following transactions occurred:
Oct. 3 Purchased 20 bicycles at a cost of $150 each from the Lyons Bicycle Company, terms n/30.
6 Sold 20 bicycles to Team Canada for $250 each, terms n/30.
7 Received credit from the Lyons Bicycle Company for the return of 2 defective bicycles.
13 Issued a credit to Team Canada for the return of a defective bicycle.
19 Purchased 10 BMX bicycles from Huffy Bicycle Company at a cost of $125 each, terms n/30.
20 Paid freight of $80 on the October 19 purchase.
Instructions
Prepare the journal entries to record the transactions assuming the company uses a periodic inventory system.

Accepted Answer

The answer of On October 1, Ki's Bicycle Store had...

Question 7

In a perpetual inventory system, a separate account is maintained for each separate inventory item. These separate accounts are referred to as

Accepted Answer

A)  contra accounts. 
B)  subsidiary accounts. 
C)  control accounts. 
D)  purchase accounts. 
A)  contra accounts. 
B)  subsidiary accounts. 
C)  control accounts. 
D)  purchase accounts.

Question 8

In a periodic inventory system, the cost of goods sold is calculated as

Accepted Answer

A)  beginning inventory plus the cost of goods purchased less ending inventory. 
B)  ending inventory less cost of goods purchased. 
C)  beginning inventory less cost of goods purchased. 
D)  cost of goods purchased plus ending inventory less beginning inventory. 
A)  beginning inventory plus the cost of goods purchased less ending inventory. 
B)  ending inventory less cost of goods purchased. 
C)  beginning inventory less cost of goods purchased. 
D)  cost of goods purchased plus ending inventory less beginning inventory.

Question 9

As an incentive for customers to pay their accounts promptly, a business, in certain industries, may offer its customers

Accepted Answer

A)  a sales discount. 
B)  free delivery. 
C)  a sales allowance. 
D)  a quantity discount. 
A)  a sales discount. 
B)  free delivery. 
C)  a sales allowance. 
D)  a quantity discount.

Question 10

A multiple-step Income Statement is consistent with International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 11

Freight costs incurred by the seller on outgoing merchandise are recorded as

Accepted Answer

A)  freight out. 
B)  merchandise inventory. 
C)  freight-in. 
D)  cost of goods sold. 
A)  freight out. 
B)  merchandise inventory. 
C)  freight-in. 
D)  cost of goods sold.

Question 12

The sales revenue section of an income statement for a retailer would NOT include

Accepted Answer

A)  Sales returns and allowances. 
B)  Sales. 
C)  Net sales. 
D)  Cost of goods sold. 
A)  Sales returns and allowances. 
B)  Sales. 
C)  Net sales. 
D)  Cost of goods sold.

Question 13

Presented below is the adjusted trial balance of Katie's Pet Supplies as at its fiscal year end, June 30, 2014. All accounts are their normal balance (debit or credit). Katie's uses the perpetual inventory system.   Instructions 
a. Prepare a single-step income statement.
b. Prepare a multiple-step income statement.
c. Calculate Katie's gross profit margin. Katie's gross profit margin for 2013 was 45%. Comment on the change in gross profit margin from the prior year.

Accepted Answer

The answer of Presented below is the adjusted trial balance...

Question 14

A merchandiser differs from a service type business in that it

Accepted Answer

A)  sells goods to customers. 
B)  has more employees. 
C)  only operates in one country. 
D)  requires more government regulation. 
A)  sells goods to customers. 
B)  has more employees. 
C)  only operates in one country. 
D)  requires more government regulation.

Question 15

Operating expenses will only occur in a merchandising company.

Accepted Answer

A) True 
 B)False

Question 16

A company uses the Sales Returns and Allowances account to record

Accepted Answer

A)  a discount offered for a large quantity purchase. 
B)  a discount received from a supplier to encourage prompt payment. 
C)  returns of inventory to suppliers. 
D)  customer returns of prior sales. 
A)  a discount offered for a large quantity purchase. 
B)  a discount received from a supplier to encourage prompt payment. 
C)  returns of inventory to suppliers. 
D)  customer returns of prior sales.

Question 17

Taking a physical inventory count involves all of the following EXCEPT

Accepted Answer

A)  counting the units on hand. 
B)  applying unit costs to the total inventory on hand for each item of inventory. 
C)  evaluating whether inventory needs to be written off as obsolete. 
D)  totalling the cost of each item of inventory to determine the total cost of goods on hand. 
A)  counting the units on hand. 
B)  applying unit costs to the total inventory on hand for each item of inventory. 
C)  evaluating whether inventory needs to be written off as obsolete. 
D)  totalling the cost of each item of inventory to determine the total cost of goods on hand.

Question 18

Wright Company recently made a $10,000 purchase from a major supplier. Shipping costs were $200, terms FOB shipping point. To record this purchase, Wright Company will need to debit the

Accepted Answer

A)  Merchandise Inventory account for $10,000. 
B)  Cost of Goods Sold account for $200. 
C)  Merchandise Inventory account for $10,200. 
D)  Cost of Goods Sold account for $10,200. 
A)  Merchandise Inventory account for $10,000. 
B)  Cost of Goods Sold account for $200. 
C)  Merchandise Inventory account for $10,200. 
D)  Cost of Goods Sold account for $10,200.

Question 19

On September 1, Stanton Supply had an inventory of 20 back packs at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions and events occurred:
Sept. 3 Purchased 40 back packs at $20 each from Janzen terms n/30. Received a 10% quantity discount.
6 Received credit of $72 for the return of 4 back packs purchased on Sept. 3 that were defective.
7 Paid for the September 3 purchase.
9 Sold 20 back packs for $30 each to McGill Books terms n/30.
13 Cash sales 15 back packs for $30 each to Calvin Office Supply.
21 Purchased 25 back packs at $18 each from Coleman Company terms 2/10, n/30.
30 A physical inventory count indicated an ending inventory balance of $774.
Instructions
Journalize the September transactions for Stanton Supply, using a perpetual inventory system.

Accepted Answer

The answer of On September 1, Stanton Supply had an...

Question 20

Omari Company purchases various types of beach toys for sale to consumers. Listed below are the transactions for the month of June. Omari uses a perpetual inventory system.
June 1 Purchased 18 water tubes for $250 each terms n/30 FOB destination.
8 Returned 2 tubes purchased on June 1 due to defects. Received a full refund for the defective tubes.
10 Freight charges of $85 for the June 1 transaction are paid by the responsible party.
11 Made a complaint about competitive pricing. Received a $200 credit for the water tubes purchased on June 1.
15 Purchased 92 water tubes for $225 each terms 2/10 n/30.
18 Made payment for the amount owing for the June 1 transaction.
20 Made payment for the amount owing for June 15 transaction.
Instructions
a. Journalize transactions using the perpetual inventory system.
b. Determine the balance of the Inventory account for June.

Accepted Answer

The answer of Omari Company purchases various types of beach...

When recording a return of a credit sale in a perpetual inventory system, all of the following accounts are affected EXCEPT

Listed below are various accounts: 1. Merchandise Inventory 2. Salaries expense 3. Cost of goods sold 4. Depreciation 5. Supplies 6. Advertising expense 7. Sales revenue 8. Insurance expense 9. Gross profit 10. Rent expense Instructions State which accounts would be classified as operating expenses.

Operating expenses are

On the income statement, a merchandiser would normally give a single sales figure (the sum of all its individual sales account) because

Cost of goods sold, in a periodic inventory system, is determined by adding the cost of goods purchased to the ending inventory.

In a perpetual inventory system, a separate account is maintained for each separate inventory item. These separate accounts are referred to as

In a periodic inventory system, the cost of goods sold is calculated as

As an incentive for customers to pay their accounts promptly, a business, in certain industries, may offer its customers

A multiple-step Income Statement is consistent with International Financial Reporting Standards.

Freight costs incurred by the seller on outgoing merchandise are recorded as

The sales revenue section of an income statement for a retailer would NOT include

A merchandiser differs from a service type business in that it

Operating expenses will only occur in a merchandising company.

A company uses the Sales Returns and Allowances account to record

Taking a physical inventory count involves all of the following EXCEPT

Wright Company recently made a $10,000 purchase from a major supplier. Shipping costs were $200, terms FOB shipping point. To record this purchase, Wright Company will need to debit the

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

When recording a return of a credit sale in a perpetual inventory system, all of the following accounts are affected EXCEPT

Operating expenses are

On the income statement, a merchandiser would normally give a single sales figure (the sum of all its individual sales account) because

Cost of goods sold, in a periodic inventory system, is determined by adding the cost of goods purchased to the ending inventory.

In a perpetual inventory system, a separate account is maintained for each separate inventory item. These separate accounts are referred to as

In a periodic inventory system, the cost of goods sold is calculated as

As an incentive for customers to pay their accounts promptly, a business, in certain industries, may offer its customers

A multiple-step Income Statement is consistent with International Financial Reporting Standards.

Freight costs incurred by the seller on outgoing merchandise are recorded as

The sales revenue section of an income statement for a retailer would NOT include

A merchandiser differs from a service type business in that it

Operating expenses will only occur in a merchandising company.

A company uses the Sales Returns and Allowances account to record

Taking a physical inventory count involves all of the following EXCEPT

Wright Company recently made a $10,000 purchase from a major supplier. Shipping costs were $200, terms FOB shipping point. To record this purchase, Wright Company will need to debit the

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