Question 1

Sales Returns and Allowances:

Accepted Answer

A)  is a contra revenue account. 
B)  has a normal debit balance. 
C)  appears on the income statement. 
D)  All of the above. 
A)  is a contra revenue account. 
B)  has a normal debit balance. 
C)  appears on the income statement. 
D)  All of the above. D

Question 2

In a perpetual inventory system, the Merchandise Inventory account acts as a control account for the individual inventory accounts in the subsidiary ledger.

Accepted Answer

A) True 
 B)False  True

Question 3

Freight costs for items shipped FOB destination are paid by the buyer.

Accepted Answer

A) True 
 B)False  False

Question 4

Detailed inventory records of every purchase and sale of inventory are maintained when using a ________________ inventory system.

Accepted Answer

Detailed inventory records of

Question 5

Cost of goods sold is a contra revenue account

Accepted Answer

A) True 
 B)False

Question 6

Freight on goods shipped FOB shipping point is the responsibility of the ____________.

Accepted Answer

Freight on goods shi

Question 7

Which of the following statements is false?

Accepted Answer

A)  Freight costs paid by the seller are debited to Delivery Expense. 
B)  Freight charges for goods shipped FOB destination are paid by the seller. 
C)  Freight charges for goods shipped FOB shipping point are paid by the purchaser. 
D)  Freight costs paid by the purchaser are debited to Delivery Expense. 
A)  Freight costs paid by the seller are debited to Delivery Expense. 
B)  Freight charges for goods shipped FOB destination are paid by the seller. 
C)  Freight charges for goods shipped FOB shipping point are paid by the purchaser. 
D)  Freight costs paid by the purchaser are debited to Delivery Expense.

Question 8

For merchandising companies, operating expenses are expenses that are incurred in the process of earning sales revenue.

Accepted Answer

A) True 
 B)False

Question 9

In a single-step income statement, gross profit and are shown on the income statement.

Accepted Answer

A) True 
 B)False

Question 10

An adjusting entry prepared to account for the difference between actual inventory on hand and inventory according to the accounting records includes an adjustment of cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 11

What is the formula to calculate Gross Profit Margin?

Accepted Answer

Gross Prof

Question 12

Using the account balances listed in the following table, calculate the following:
a. Net Sales _________________
b. Gross Profit _________________
c. Profit from Operations _________________
d. Profit _________________

Accepted Answer

The answer of Using the account balances listed in the...

Question 13

A quantity discount is offered to customers who pay their invoices promptly

Accepted Answer

A) True 
 B)False

Question 14

Under IFRS, companies must classify operating and other expenses based on either the nature of the expenses or their function within the company.

Accepted Answer

A) True 
 B)False

Question 15

Companies that use the ___________________inventory system must take a physical count of inventory at the end of the period to determine the quantity on hand and to determine the cost of goods sold and cost of ending inventory

Accepted Answer

Companies that use the periodic

Question 16

When a company uses the perpetual inventory system, the:

Accepted Answer

A)  Merchandise Inventory account balance does not change until the end of the year. 
B)  Merchandise Inventory account is debited when inventory is purchased. 
C)  sale of inventory requires a credit to Cost of Goods Sold. 
D)  acquisition of merchandise requires a debit to Purchases 
A)  Merchandise Inventory account balance does not change until the end of the year. 
B)  Merchandise Inventory account is debited when inventory is purchased. 
C)  sale of inventory requires a credit to Cost of Goods Sold. 
D)  acquisition of merchandise requires a debit to Purchases

Question 17

Cost of goods sold is subtracted from gross profit to determine operating income.

Accepted Answer

A) True 
 B)False

Question 18

Recording a sale requires a:

Accepted Answer

A)  credit to a revenue account and a debit to an asset account. 
B)  debit to Cash and a credit to Owner's Capital. 
C)  debit to a revenue account and credit to an asset account. 
D)  credit to Sales and a debit to Sales Returns and Allowances 
A)  credit to a revenue account and a debit to an asset account. 
B)  debit to Cash and a credit to Owner's Capital. 
C)  debit to a revenue account and credit to an asset account. 
D)  credit to Sales and a debit to Sales Returns and Allowances

Question 19

Baker Department Store uses a perpetual inventory system. Prepare journal entries to record the following transactions for Baker.
a. Baker bought ten stoves from a manufacturer on account, at a cost of $300 each. 
b. Baker returned two of the stoves to the manufacturer because they were defective.
c. Baker sold a stove to a customer for $650 cash.
d. Baker paid the manufacturer for the stoves.

Accepted Answer

The answer of Baker Department Store uses a perpetual inventory...

Question 20

Which of the following is a non-operating expense?

Accepted Answer

A)  Interest expense 
B)  Rent expense 
C)  Delivery expense 
D)  Office expense 
A)  Interest expense 
B)  Rent expense 
C)  Delivery expense 
D)  Office expense

Sales Returns and Allowances:

In a perpetual inventory system, the Merchandise Inventory account acts as a control account for the individual inventory accounts in the subsidiary ledger.

Freight costs for items shipped FOB destination are paid by the buyer.

Detailed inventory records of every purchase and sale of inventory are maintained when using a ________________ inventory system.

Cost of goods sold is a contra revenue account

Freight on goods shipped FOB shipping point is the responsibility of the ____________.

Which of the following statements is false?

For merchandising companies, operating expenses are expenses that are incurred in the process of earning sales revenue.

In a single-step income statement, gross profit and are shown on the income statement.

An adjusting entry prepared to account for the difference between actual inventory on hand and inventory according to the accounting records includes an adjustment of cost of goods sold.

What is the formula to calculate Gross Profit Margin?

Using the account balances listed in the following table, calculate the following: a. Net Sales _________ b. Gross Profit _ c. Profit from Operations _ d. Profit _________

A quantity discount is offered to customers who pay their invoices promptly

Under IFRS, companies must classify operating and other expenses based on either the nature of the expenses or their function within the company.

Companies that use the ___________________inventory system must take a physical count of inventory at the end of the period to determine the quantity on hand and to determine the cost of goods sold and cost of ending inventory

When a company uses the perpetual inventory system, the:

Cost of goods sold is subtracted from gross profit to determine operating income.

Recording a sale requires a:

Which of the following is a non-operating expense?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Filters

Exam 5: Accounting for Merchandising Operations

Sales Returns and Allowances:

In a perpetual inventory system, the Merchandise Inventory account acts as a control account for the individual inventory accounts in the subsidiary ledger.

Freight costs for items shipped FOB destination are paid by the buyer.

Detailed inventory records of every purchase and sale of inventory are maintained when using a ________________ inventory system.

Cost of goods sold is a contra revenue account

Freight on goods shipped FOB shipping point is the responsibility of the ____________.

Which of the following statements is false?

For merchandising companies, operating expenses are expenses that are incurred in the process of earning sales revenue.

In a single-step income statement, gross profit and are shown on the income statement.

An adjusting entry prepared to account for the difference between actual inventory on hand and inventory according to the accounting records includes an adjustment of cost of goods sold.

What is the formula to calculate Gross Profit Margin?

Using the account balances listed in the following table, calculate the following: a. Net Sales _________________ b. Gross Profit _________________ c. Profit from Operations _________________ d. Profit _________________

A quantity discount is offered to customers who pay their invoices promptly

Under IFRS, companies must classify operating and other expenses based on either the nature of the expenses or their function within the company.

Companies that use the ___________________inventory system must take a physical count of inventory at the end of the period to determine the quantity on hand and to determine the cost of goods sold and cost of ending inventory

When a company uses the perpetual inventory system, the:

Cost of goods sold is subtracted from gross profit to determine operating income.

Recording a sale requires a:

Which of the following is a non-operating expense?

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities

Financial Reporting Concepts

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and IFRS

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Filters

Using the account balances listed in the following table, calculate the following: a. Net Sales _________ b. Gross Profit _ c. Profit from Operations _ d. Profit _________