Question 1

Which of the following accounts should be closed to Retained Earnings at the end of the fiscal year?

Accepted Answer

A) Inventory 
B) Accumulated Depreciation 
C) Customer Refunds Payable 
D) Cost of Goods Sold 
A) Inventory 
B) Accumulated Depreciation 
C) Customer Refunds Payable 
D) Cost of Goods Sold D

Question 2

When a large quantity of merchandise is purchased, a reduction allowed on the sale price is called a trade discount.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following accounts carry a normal credit balance?

Accepted Answer

A) Sales Tax Payable, Cost of Goods Sold, and Sales 
B) Inventory, Delivery Expense, and Sales 
C) Customer Refunds Payable, Estimated Returns Inventory, and Sales 
D) Sales Tax Payable, Customer Refunds Payable, and Sale 
A) Sales Tax Payable, Cost of Goods Sold, and Sales 
B) Inventory, Delivery Expense, and Sales 
C) Customer Refunds Payable, Estimated Returns Inventory, and Sales 
D) Sales Tax Payable, Customer Refunds Payable, and Sale D

Question 4

The fees associated with credit card sales are periodically recorded as expenses.

Accepted Answer

A) True 
 B)False

Question 5

Cost of goods sold is often the largest expense on a merchandising company income statement.

Accepted Answer

A) True 
 B)False

Question 6

Using the following information for a periodic inventory system, what is the amount of net income?

Accepted Answer

A) $29,510 
B) $29,960 
C) $28,310 
D) $29,350 
A) $29,510 
B) $29,960 
C) $28,310 
D) $29,350

Question 7

Gross profit is equal to

Accepted Answer

A) sales plus cost of goods sold 
B) sales plus selling expenses 
C) sales less selling expenses 
D) sales less cost of goods sold 
A) sales plus cost of goods sold 
B) sales plus selling expenses 
C) sales less selling expenses 
D) sales less cost of goods sold

Question 8

If merchandise sold on account is returned to the seller, the seller acknowledges the return by issuing a

Accepted Answer

A) sales invoice 
B) purchase invoice 
C) credit memo 
D) debit memo 
A) sales invoice 
B) purchase invoice 
C) credit memo 
D) debit memo

Question 9

The abbreviation FOB stands for "free on board."

Accepted Answer

A) True 
 B)False

Question 10

The seller may prepay the freight costs even though the terms are FOB shipping point.

Accepted Answer

A) True 
 B)False

Question 11

Record the following transactions related to purchases for Horston's Art Supplies using the general journal form provided below. Assume Horston's uses a periodic inventory system. Omit transaction descriptions from entries.​

Accepted Answer

The answer of Record the following transactions related to purchases...

Question 12

Inventory is classified on the balance sheet as a

Accepted Answer

A) current liability 
B) current asset 
C) long-term asset 
D) long-term liability 
A) current liability 
B) current asset 
C) long-term asset 
D) long-term liability

Question 13

Details of invoices for purchases of merchandise are as follows:   What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.​

Accepted Answer

A) $10,653 
B) $10,753 
C) $10,803 
D) $$10,863 
A) $10,653 
B) $10,753 
C) $10,803 
D) $$10,863

Question 14

Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the asset turnover ratio.

Accepted Answer

A) 3.00 
B) 3.80 
C) 0.29 
D) 0.26 
A) 3.00 
B) 3.80 
C) 0.29 
D) 0.26

Question 15

Cost of goods sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Accepted Answer

A) True 
 B)False

Question 16

Based on the information below, journalize the entries for the seller and the buyer. Both use a perpetual inventory system.(a)Seller sold merchandise on account to the buyer, $4,750, terms 2/10, net 30, FOB shipping point. The cost of the merchandise is $2,850. The seller prepays the freight of $75.(b)Buyer returns $700 of merchandise as defective. The cost of the merchandise is $420.(c)Buyer pays within the discount period.

Accepted Answer

The answer of Based on the information below, journalize the...

Question 17

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

Accepted Answer

A) credit terms 
B) net cash 
C) cash on demand 
D) gross cash 
A) credit terms 
B) net cash 
C) cash on demand 
D) gross cash

Question 18

What is the major difference between a periodic and perpetual inventory system?

Accepted Answer

A) Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account. 
B) Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C) Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. 
D) All of the answers are correct. 
A) Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account. 
B) Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C) Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. 
D) All of the answers are correct.

Question 19

Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to

Accepted Answer

A) Cash for $6,000 
B) Sales for $6,420 
C) Sales Tax Payable for $420 
D) Sales for $5,580 
A) Cash for $6,000 
B) Sales for $6,420 
C) Sales Tax Payable for $420 
D) Sales for $5,580

Question 20

In a merchandising business, sales minus operating expenses equals net income.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Retail Businesses

Which of the following accounts should be closed to Retained Earnings at the end of the fiscal year?

When a large quantity of merchandise is purchased, a reduction allowed on the sale price is called a trade discount.

Which of the following accounts carry a normal credit balance?

The fees associated with credit card sales are periodically recorded as expenses.

Cost of goods sold is often the largest expense on a merchandising company income statement.

Using the following information for a periodic inventory system, what is the amount of net income?

Gross profit is equal to

If merchandise sold on account is returned to the seller, the seller acknowledges the return by issuing a

The abbreviation FOB stands for "free on board."

The seller may prepay the freight costs even though the terms are FOB shipping point.

Record the following transactions related to purchases for Horston's Art Supplies using the general journal form provided below. Assume Horston's uses a periodic inventory system. Omit transaction descriptions from entries.​

Inventory is classified on the balance sheet as a

Details of invoices for purchases of merchandise are as follows: What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.​

Bountiful Company had sales of $650,000 and cost of goods sold of $200,000 during a year. The total assets balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the asset turnover ratio.

Cost of goods sold is the amount that the merchandising company pays for the merchandise it intends to sell.

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

What is the major difference between a periodic and perpetual inventory system?

Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to

In a merchandising business, sales minus operating expenses equals net income.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

Record the following transactions related to purchases for Horston's Art Supplies using the general journal form provided below. Assume Horston's uses a periodic inventory system. Omit transaction descriptions from entries.

Details of invoices for purchases of merchandise are as follows: What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.