Question 1

If an invoice shows a total of $4,000 with terms 2/10, n/30, the customer may pay $3,920 within 10 days to satisfy the bill.

Accepted Answer

A) True 
 B)False  True

Question 2

If an invoice shows a total of $3,000 with terms 5/15, n/60, which of the following is NOT a true statement?

Accepted Answer

A) The customer must pay $3,000 within 60 days after the date of the invoice. 
B) The customer may pay $2,850 within 15 days to satisfy the bill. 
C) The customer will receive a 10% discount if they pay within 60 days. 
D) The customer has a discount period of 15 days. 
A) The customer must pay $3,000 within 60 days after the date of the invoice. 
B) The customer may pay $2,850 within 15 days to satisfy the bill. 
C) The customer will receive a 10% discount if they pay within 60 days. 
D) The customer has a discount period of 15 days. C

Question 3

TNT Corporation pays an invoice for $4,500 in time to take a 5% discount. The journal entry to record the payment of this invoice is:

Accepted Answer

A) debit Accounts Payable $4,500; credit Cash $4,500. 
B) debit Accounts Payable $4,275; credit Cash $4,275. 
C) debit Accounts Payable $4,275, debit Inventory $225; credit Cash for $4,500. 
D) debit Accounts Payable $4,500; credit Inventory $225, credit Cash for $4,275. 
A) debit Accounts Payable $4,500; credit Cash $4,500. 
B) debit Accounts Payable $4,275; credit Cash $4,275. 
C) debit Accounts Payable $4,275, debit Inventory $225; credit Cash for $4,500. 
D) debit Accounts Payable $4,500; credit Inventory $225, credit Cash for $4,275. D

Question 4

When a company repays the seller for shipping costs on an FOB shipping point transaction, which of the following is TRUE?

Accepted Answer

A) A purchase discount can still be taken net of the prepaid shipping charges. 
B) A purchase discount can still be taken on the gross amount of the invoice. 
C) A purchase discount cannot be taken when shipping charges are prepaid. 
D) The shipping costs do not affect the invoice value. 
A) A purchase discount can still be taken net of the prepaid shipping charges. 
B) A purchase discount can still be taken on the gross amount of the invoice. 
C) A purchase discount cannot be taken when shipping charges are prepaid. 
D) The shipping costs do not affect the invoice value.

Question 5

The Botanical Boutique uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $24,000 in the Inventory account. Actual inventory on hand per a physical count was $19,000. What action does the company now need to take?

Accepted Answer

A) No action is required because the amount is not material. 
B) Debit Cost of Goods Sold and credit Inventory, $5,000. 
C) Debit Purchases and credit Cost of Goods Sold, $5,000. 
D) Debit Inventory and credit Cost of Goods Sold, $5,000. 
A) No action is required because the amount is not material. 
B) Debit Cost of Goods Sold and credit Inventory, $5,000. 
C) Debit Purchases and credit Cost of Goods Sold, $5,000. 
D) Debit Inventory and credit Cost of Goods Sold, $5,000.

Question 6

If damaged goods are received by the merchandiser and are kept with a reduction in price, the account to be credited by the merchandiser for the reduction in price under a perpetual inventory system is:

Accepted Answer

A) Inventory. 
B) Accounts Payable. 
C) Returns. 
D) Cash. 
A) Inventory. 
B) Accounts Payable. 
C) Returns. 
D) Cash.

Question 7

A company has net sales of $137,000, cost of goods sold of $82,000, operating expenses of $39,000, and other expenses of $3,000. The company's net income is:

Accepted Answer

A) $13,000. 
B) $55,000. 
C) $52,000. 
D) $16,000. 
A) $13,000. 
B) $55,000. 
C) $52,000. 
D) $16,000.

Question 8

Net Sales minus Cost of Goods Sold equals Gross Profit.

Accepted Answer

A) True 
 B)False

Question 9

Equipment is an example of a:

Accepted Answer

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

Question 10

Gross profit percentage is computed by dividing net sales by cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 11

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales Revenue account.

Accepted Answer

A) True 
 B)False

Question 12

A company has net sales of $124,000, cost of goods sold of $76,000, operating expenses of $38,000, and other expenses of $5,000. The company's gross profit percentage is approximately:

Accepted Answer

A) 8.1%. 
B) 4%. 
C) 26.6%. 
D) 38.7%. 
A) 8.1%. 
B) 4%. 
C) 26.6%. 
D) 38.7%.

Question 13

If there is a difference between the physical count and the perpetual record, the account in which the difference is recorded is:

Accepted Answer

A) Sales. 
B) Cost of Goods Sold. 
C) Inventory Expense. 
D) Revenue. 
A) Sales. 
B) Cost of Goods Sold. 
C) Inventory Expense. 
D) Revenue.

Question 14

Debit card and credit card sales are counted as cash transactions.

Accepted Answer

A) True 
 B)False

Question 15

A company has net sales of $132,000, cost of goods sold of $77,000, operating expenses of $32,000, and other expenses of $1,000. The company's gross profit is:

Accepted Answer

A) $22,000. 
B) $55,000. 
C) $54,000. 
D) $23,000. 
A) $22,000. 
B) $55,000. 
C) $54,000. 
D) $23,000.

Question 16

If a company has $115,000 net sales, $65,000 in gross profit, and $12,000 in net income, the net income percentage would be approximately 57%.

Accepted Answer

A) True 
 B)False

Question 17

The Inventory account appears on the:

Accepted Answer

A) Balance Sheet. 
B) Statement of Retained Earnings. 
C) Income Statement. 
D) list of liabilities. 
A) Balance Sheet. 
B) Statement of Retained Earnings. 
C) Income Statement. 
D) list of liabilities.

Question 18

Which of the following accounts is NOT used to account for merchandise sales transactions?

Accepted Answer

A) Accounts Payable 
B) Accounts Receivable 
C) Sales Discounts 
D) Sales Returns and Allowances 
A) Accounts Payable 
B) Accounts Receivable 
C) Sales Discounts 
D) Sales Returns and Allowances

Question 19

A company's gross profit percentage decreases from 58% to 51%. What does this mean?

Accepted Answer

A) This means that net income will be higher. 
B) This means that net income will be lower. 
C) This means that there will be a net loss. 
D) We cannot determine anything definite from the information given. 
A) This means that net income will be higher. 
B) This means that net income will be lower. 
C) This means that there will be a net loss. 
D) We cannot determine anything definite from the information given.

Question 20

TLR Productions has received an invoice for $6,500 with terms of 3/15, n/50. If TLR pays the invoice on the seventeenth day, the Cash account will be:

Accepted Answer

A) credited for $6,500. 
B) credited for $6,305. 
C) debited for $6,305. 
D) credited for $195. 
A) credited for $6,500. 
B) credited for $6,305. 
C) debited for $6,305. 
D) credited for $195.

If an invoice shows a total of $4,000 with terms 2/10, n/30, the customer may pay $3,920 within 10 days to satisfy the bill.

If an invoice shows a total of $3,000 with terms 5/15, n/60, which of the following is NOT a true statement?

TNT Corporation pays an invoice for $4,500 in time to take a 5% discount. The journal entry to record the payment of this invoice is:

When a company repays the seller for shipping costs on an FOB shipping point transaction, which of the following is TRUE?

The Botanical Boutique uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $24,000 in the Inventory account. Actual inventory on hand per a physical count was $19,000. What action does the company now need to take?

If damaged goods are received by the merchandiser and are kept with a reduction in price, the account to be credited by the merchandiser for the reduction in price under a perpetual inventory system is:

A company has net sales of $137,000, cost of goods sold of $82,000, operating expenses of $39,000, and other expenses of $3,000. The company's net income is:

Net Sales minus Cost of Goods Sold equals Gross Profit.

Equipment is an example of a:

Gross profit percentage is computed by dividing net sales by cost of goods sold.

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales Revenue account.

A company has net sales of $124,000, cost of goods sold of $76,000, operating expenses of $38,000, and other expenses of $5,000. The company's gross profit percentage is approximately:

If there is a difference between the physical count and the perpetual record, the account in which the difference is recorded is:

Debit card and credit card sales are counted as cash transactions.

A company has net sales of $132,000, cost of goods sold of $77,000, operating expenses of $32,000, and other expenses of $1,000. The company's gross profit is:

If a company has $115,000 net sales, $65,000 in gross profit, and $12,000 in net income, the net income percentage would be approximately 57%.

The Inventory account appears on the:

Which of the following accounts is NOT used to account for merchandise sales transactions?

A company's gross profit percentage decreases from 58% to 51%. What does this mean?

TLR Productions has received an invoice for $6,500 with terms of 3/15, n/50. If TLR pays the invoice on the seventeenth day, the Cash account will be:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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Exam 4: Accounting for a Merchandising Business

If an invoice shows a total of $4,000 with terms 2/10, n/30, the customer may pay $3,920 within 10 days to satisfy the bill.

If an invoice shows a total of $3,000 with terms 5/15, n/60, which of the following is NOT a true statement?

TNT Corporation pays an invoice for $4,500 in time to take a 5% discount. The journal entry to record the payment of this invoice is:

When a company repays the seller for shipping costs on an FOB shipping point transaction, which of the following is TRUE?

The Botanical Boutique uses the perpetual inventory system. At year end the general ledger indicated that the company had a balance of $24,000 in the Inventory account. Actual inventory on hand per a physical count was $19,000. What action does the company now need to take?

If damaged goods are received by the merchandiser and are kept with a reduction in price, the account to be credited by the merchandiser for the reduction in price under a perpetual inventory system is:

A company has net sales of $137,000, cost of goods sold of $82,000, operating expenses of $39,000, and other expenses of $3,000. The company's net income is:

Net Sales minus Cost of Goods Sold equals Gross Profit.

Equipment is an example of a:

Gross profit percentage is computed by dividing net sales by cost of goods sold.

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales Revenue account.

A company has net sales of $124,000, cost of goods sold of $76,000, operating expenses of $38,000, and other expenses of $5,000. The company's gross profit percentage is approximately:

If there is a difference between the physical count and the perpetual record, the account in which the difference is recorded is:

Debit card and credit card sales are counted as cash transactions.

A company has net sales of $132,000, cost of goods sold of $77,000, operating expenses of $32,000, and other expenses of $1,000. The company's gross profit is:

If a company has $115,000 net sales, $65,000 in gross profit, and $12,000 in net income, the net income percentage would be approximately 57%.

The Inventory account appears on the:

Which of the following accounts is NOT used to account for merchandise sales transactions?

A company's gross profit percentage decreases from 58% to 51%. What does this mean?

TLR Productions has received an invoice for $6,500 with terms of 3/15, n/50. If TLR pays the invoice on the seventeenth day, the Cash account will be:

Business, Accounting, and You

Analyzing and Recording Business Transactions

Adjusting and Closing Entries

Inventory

The Challenges of Accounting: Standards, Internal Control, Audits, Fraud, and Ethics

Cash and Receivables

Long-Term and Other Assets

Current Liabilities and Long-Term Debt

Corporations: Paid-In Capital and Retained Earnings

The Statement of Cash Flows

Financial Statement Analysis

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