Question 1

Which of the following accounts usually has a debit balance?

Accepted Answer

A) Accounts Payable 
B) Sales Tax Payable 
C) Sales 
D) Inventory 
A) Accounts Payable 
B) Sales Tax Payable 
C) Sales 
D) Inventory

Question 2

Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?

Accepted Answer

A) Purchases 
B) Freight In 
C) Selling Expense 
D) Inventory 
A) Purchases 
B) Freight In 
C) Selling Expense 
D) Inventory

Question 3

Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a

Accepted Answer

A) debit to Cash for $5,000 
B) debit to Customer Refunds Payable for $100 
C) credit to Sales for $4,900 
D) debit to Accounts Receivable for $4,880 
A) debit to Cash for $5,000 
B) debit to Customer Refunds Payable for $100 
C) credit to Sales for $4,900 
D) debit to Accounts Receivable for $4,880

Question 4

President's salaries, depreciation of office furniture, and office supplies are

Accepted Answer

A) selling expenses 
B) miscellaneous expenses 
C) administrative expenses 
D) inventory expenses 
A) selling expenses 
B) miscellaneous expenses 
C) administrative expenses 
D) inventory expenses

Question 5

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Accepted Answer

A) $21,000 
B) $20,580 
C) $30,000 
D) $29,400 
A) $21,000 
B) $20,580 
C) $30,000 
D) $29,400

Question 6

The following expenses were incurred by a retail business during the year. Classify whether they should be reported on the income statement as a (1) selling expense, (2) administrative expense, or (3) other.​
(a) Advertising expense
(b) Depreciation expense on office equipment
(c) Rent expense on office building
(d) Salary expense of sales manager
(e) Commissions expense paid to sales staff
(f) Interest expense on notes payable
(g) Salary expense of office staff
(h) Office supplies expense

Accepted Answer

(a) 1
(b)

Question 7

A chart of accounts for a merchandising business

Accepted Answer

A) usually is the same as the chart of accounts for a service business 
B) usually requires more accounts than does the chart of accounts for a service business 
C) usually is standardized by the FASB for all merchandising businesses 
D) always uses a three-digit numbering system 
A) usually is the same as the chart of accounts for a service business 
B) usually requires more accounts than does the chart of accounts for a service business 
C) usually is standardized by the FASB for all merchandising businesses 
D) always uses a three-digit numbering system

Question 8

The following entry was recorded in the books of Brighty Company.Oct. 31 Accounts Receivable-Digitec
12,000
Sales
12,000
Invoice No. 7112.​
What is the impact of this entry on the accounting equation?

Accepted Answer

A) an increase in Assets and an increase in Equity 
B) an increase in Assets and an increase in Liabilities 
C) a decrease in Assets and a decrease in Liabilities 
D) a decrease in Assets and a decrease in Equity 
A) an increase in Assets and an increase in Equity 
B) an increase in Assets and an increase in Liabilities 
C) a decrease in Assets and a decrease in Liabilities 
D) a decrease in Assets and a decrease in Equity

Question 9

Using the following information for a periodic inventory system, what is the amount of gross profit?

Accepted Answer

A) $25,300 
B) $31,670 
C) $30,600 
D) $62,840 
A) $25,300 
B) $31,670 
C) $30,600 
D) $62,840

Question 10

Generally, the revenue account for a merchandising business is entitled

Accepted Answer

A) Sales 
B) Fees Earned 
C) Gross Sales 
D) Gross Profit 
A) Sales 
B) Fees Earned 
C) Gross Sales 
D) Gross Profit

Question 11

Colma Company purchased merchandise on account from Bellville Company, $2,400, terms FOB destination. Analyze the transaction and determine its effect on the accounting equation.May 18
Inventory
2,400
Accounts Payable-Bellville Co.2,400

Accepted Answer

The entry increases

Question 12

In a multiple-step income statement, the dollar amount for income from operations is always the same as net income.

Accepted Answer

A) True 
 B)False

Question 13

Argyle Corp. uses the gross method or recording sales discounts. Assume that Fitzgerald, Inc. made a $12,000 purchase with terms of 2/10, n/30. When it pays in the discount period, what is the correct journal entry?

Accepted Answer

The answer of Argyle Corp. uses the gross method or...

Question 14

Freight-in is the amount paid by the company to deliver merchandise sold to a customer.

Accepted Answer

A) True 
 B)False

Question 15

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows:   Assume that Austin Maxwell pays his $400 receivable on January 3, taking the 2 percent discount to which he is entitled. Journalize the entry to record the transaction.

Accepted Answer

The answer of Surplus Galore uses the gross method of...

Question 16

In credit terms of 3/15, n/45, the "3" represents the

Accepted Answer

A) number of days in the discount period 
B) full amount of the invoice 
C) number of days when the entire amount is due 
D) percent of the cash discount 
A) number of days in the discount period 
B) full amount of the invoice 
C) number of days when the entire amount is due 
D) percent of the cash discount

Question 17

Details of a purchase invoice and related credit memo are summarized as follows:
Invoice:
Cost of merchandise listed on purchase invoice
$6,500
Prepaid freight charge added to invoice
150
Terms, FOB shipping point, 1/10, n/eom
Credit memo: Cost of merchandise returned
$1,500
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:
(a)Amount of the cash discount allowed.(b)Amount to be paid by the purchaser if the discount is taken.(c)Cost of the merchandise to the purchaser if the discount is not taken.

Accepted Answer

(a)$50
(b)

Question 18

The following entry was recorded in the books of Brighty Company.Apr. 8 Accounts Payable-Marigold, Inc.3,000
Inventory
3,000
Debit Memo No. 25.What is the impact of this entry on the accounting equation?

Accepted Answer

A) an increase in Assets and an increase in Equity 
B) an increase in Assets and an increase in Liabilities 
C) a decrease in Assets and a decrease in Liabilities. 
D) a decrease in Assets and a decrease in Liabilities 
A) an increase in Assets and an increase in Equity 
B) an increase in Assets and an increase in Liabilities 
C) a decrease in Assets and a decrease in Liabilities. 
D) a decrease in Assets and a decrease in Liabilities

Question 19

Net income plus operating expenses is equal to

Accepted Answer

A) cost of goods sold 
B) cost of merchandise 
C) sales 
D) gross profit 
A) cost of goods sold 
B) cost of merchandise 
C) sales 
D) gross profit

Question 20

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Retail Businesses

Which of the following accounts usually has a debit balance?

Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?

Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a

President's salaries, depreciation of office furniture, and office supplies are

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

A chart of accounts for a merchandising business

The following entry was recorded in the books of Brighty Company.Oct. 31 Accounts Receivable-Digitec 12,000 Sales 12,000 Invoice No. 7112.​ What is the impact of this entry on the accounting equation?

Using the following information for a periodic inventory system, what is the amount of gross profit?

Generally, the revenue account for a merchandising business is entitled

Colma Company purchased merchandise on account from Bellville Company, $2,400, terms FOB destination. Analyze the transaction and determine its effect on the accounting equation.May 18 Inventory 2,400 Accounts Payable-Bellville Co.2,400

In a multiple-step income statement, the dollar amount for income from operations is always the same as net income.

Argyle Corp. uses the gross method or recording sales discounts. Assume that Fitzgerald, Inc. made a $12,000 purchase with terms of 2/10, n/30. When it pays in the discount period, what is the correct journal entry?

Freight-in is the amount paid by the company to deliver merchandise sold to a customer.

In credit terms of 3/15, n/45, the "3" represents the

The following entry was recorded in the books of Brighty Company.Apr. 8 Accounts Payable-Marigold, Inc.3,000 Inventory 3,000 Debit Memo No. 25.What is the impact of this entry on the accounting equation?

Net income plus operating expenses is equal to

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

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

The following entry was recorded in the books of Brighty Company.Oct. 31 Accounts Receivable-Digitec 12,000 Sales 12,000 Invoice No. 7112. What is the impact of this entry on the accounting equation?