Question 1

Under the perpetual inventory system, the account to which purchased goods are recorded is:

Accepted Answer

A) Purchases as a credit. 
B) Inventory as a debit. 
C) Cost of Goods Sold as a debit. 
D) Purchases as a debit. 
A) Purchases as a credit. 
B) Inventory as a debit. 
C) Cost of Goods Sold as a debit. 
D) Purchases as a debit.

Question 2

Kramer and Associates has the following account balances listed in alphabetical order: Accumulated Depreciation, $24,000; Accounts Payable, $9,500, Accounts Receivable, $11,000; Cash, $4,000; Equipment, $47,000, Land, $23,000, Mortgage Payable, $46,000; Prepaid Insurance, $7,500; Supplies, $1,000; Unearned Revenue, $5,000; Wages payable, $2,000. Kramer and Associates' current liabilities are:

Accepted Answer

A) $16,500. 
B) $57,500. 
C) $11,500. 
D) $62,500. 
A) $16,500. 
B) $57,500. 
C) $11,500. 
D) $62,500.

Question 3

Net income is commonly referred to as the company's "bottom line."

Accepted Answer

A) True 
 B)False

Question 4

Most businesses today use the periodic inventory method.

Accepted Answer

A) True 
 B)False

Question 5

Wholesalers purchase large quantities of product from manufacturers and then sell the product to retailers.

Accepted Answer

A) True 
 B)False

Question 6

In the perpetual inventory system, inventory is constantly updated through the inventory tracking system.

Accepted Answer

A) True 
 B)False

Question 7

Under the periodic inventory system, the amount of inventory is:

Accepted Answer

A) constantly updated. 
B) only known when a physical count is taken. 
C) adjusted after each sale. 
D) adjusted after each purchase. 
A) constantly updated. 
B) only known when a physical count is taken. 
C) adjusted after each sale. 
D) adjusted after each purchase.

Question 8

An invoice of $2,400 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, the amount to be paid is:

Accepted Answer

A) $48. 
B) $240. 
C) $2,352. 
D) $2,400. 
A) $48. 
B) $240. 
C) $2,352. 
D) $2,400.

Question 9

An invoice with the credit terms 3/10, n/30 means that the customer has 3 days to take a 10% discount off of the invoice total.

Accepted Answer

A) True 
 B)False

Question 10

Smith Company had an inventory balance of $13,000 on January 1 and $16,000 on December 31. The cost of goods sold during the period was $60,000. What is the purchase amount?

Accepted Answer

A) $44,000 
B) $31,000 
C) $62,000 
D) $63,000 
A) $44,000 
B) $31,000 
C) $62,000 
D) $63,000

Question 11

When a customer accepts an allowance on unwanted goods, the journal entry for a merchandiser using the perpetual inventory system will include a debit to Sales Returns and Allowances and a debit to Inventory.

Accepted Answer

A) True 
 B)False

Question 12

When a retailer sells merchandise on account, the general entry for the sales price would be:

Accepted Answer

A) debiting Accounts Receivable and crediting Sales Revenue. 
B) debiting Accounts Receivable and crediting Inventory. 
C) debiting Accounts Receivable and crediting Cost of Goods Sold. 
D) debiting Cost of Goods Sold and crediting Sales Revenue. 
A) debiting Accounts Receivable and crediting Sales Revenue. 
B) debiting Accounts Receivable and crediting Inventory. 
C) debiting Accounts Receivable and crediting Cost of Goods Sold. 
D) debiting Cost of Goods Sold and crediting Sales Revenue.

Question 13

An entry that has more than one debit and/or credit is called a:

Accepted Answer

A) double entry. 
B) compound entry. 
C) multiple-step entry. 
D) special entry. 
A) double entry. 
B) compound entry. 
C) multiple-step entry. 
D) special entry.

Question 14

Both purchase returns and allowances decrease the merchandiser's inventory cost.

Accepted Answer

A) True 
 B)False

Question 15

Depreciation on the company warehouse is an example of a(n):

Accepted Answer

A) inventory expense. 
B) asset expense. 
C) selling expense. 
D) delivery expense. 
A) inventory expense. 
B) asset expense. 
C) selling expense. 
D) delivery expense.

Question 16

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Accepted Answer

A) True 
 B)False

Question 17

Sales Returns and Allowances appear on the:

Accepted Answer

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

Question 18

When a customer pays within the discount period, the journal entry for the merchandiser will include a debit to Cash and a credit to Sales Discounts.

Accepted Answer

A) True 
 B)False

Question 19

On April 1, the Caesar Coffee Company sold coffee to Charbucks for $300, with credit terms of 2/15, n/30 Charbucks paid Caesar's on April 10. The journal entry that Caesar would make to record the payment would include a:

Accepted Answer

A) debit to Cash $300; credit to Accounts Receivable - Charbucks $300. 
B) debit to Cash $300; credit to Sales Discounts $6; credit to Accounts Receivable - Charbucks $294. 
C) debit to Cash $294; debit to Sales Discounts $6; credit to Accounts Receivable - Charbucks $300. 
D) debit to Cash $294; credit to Accounts Receivable - Charbucks $294. 
A) debit to Cash $300; credit to Accounts Receivable - Charbucks $300. 
B) debit to Cash $300; credit to Sales Discounts $6; credit to Accounts Receivable - Charbucks $294. 
C) debit to Cash $294; debit to Sales Discounts $6; credit to Accounts Receivable - Charbucks $300. 
D) debit to Cash $294; credit to Accounts Receivable - Charbucks $294.

Question 20

The amount of an invoice is $1,000, with terms 2/10, n/30. The amount to be paid within the discount period is:

Accepted Answer

A) $1,000. 
B) $980. 
C) $900. 
D) $700. 
A) $1,000. 
B) $980. 
C) $900. 
D) $700.

Under the perpetual inventory system, the account to which purchased goods are recorded is:

Net income is commonly referred to as the company's "bottom line."

Most businesses today use the periodic inventory method.

Wholesalers purchase large quantities of product from manufacturers and then sell the product to retailers.

In the perpetual inventory system, inventory is constantly updated through the inventory tracking system.

Under the periodic inventory system, the amount of inventory is:

An invoice of $2,400 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, the amount to be paid is:

An invoice with the credit terms 3/10, n/30 means that the customer has 3 days to take a 10% discount off of the invoice total.

Smith Company had an inventory balance of $13,000 on January 1 and $16,000 on December 31. The cost of goods sold during the period was $60,000. What is the purchase amount?

When a customer accepts an allowance on unwanted goods, the journal entry for a merchandiser using the perpetual inventory system will include a debit to Sales Returns and Allowances and a debit to Inventory.

When a retailer sells merchandise on account, the general entry for the sales price would be:

An entry that has more than one debit and/or credit is called a:

Both purchase returns and allowances decrease the merchandiser's inventory cost.

Depreciation on the company warehouse is an example of a(n):

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Sales Returns and Allowances appear on the:

When a customer pays within the discount period, the journal entry for the merchandiser will include a debit to Cash and a credit to Sales Discounts.

On April 1, the Caesar Coffee Company sold coffee to Charbucks for $300, with credit terms of 2/15, n/30 Charbucks paid Caesar's on April 10. The journal entry that Caesar would make to record the payment would include a:

The amount of an invoice is $1,000, with terms 2/10, n/30. The amount to be paid within the discount period is:

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

Under the perpetual inventory system, the account to which purchased goods are recorded is:

Net income is commonly referred to as the company's "bottom line."

Most businesses today use the periodic inventory method.

Wholesalers purchase large quantities of product from manufacturers and then sell the product to retailers.

In the perpetual inventory system, inventory is constantly updated through the inventory tracking system.

Under the periodic inventory system, the amount of inventory is:

An invoice of $2,400 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, the amount to be paid is:

An invoice with the credit terms 3/10, n/30 means that the customer has 3 days to take a 10% discount off of the invoice total.

Smith Company had an inventory balance of $13,000 on January 1 and $16,000 on December 31. The cost of goods sold during the period was $60,000. What is the purchase amount?

When a customer accepts an allowance on unwanted goods, the journal entry for a merchandiser using the perpetual inventory system will include a debit to Sales Returns and Allowances and a debit to Inventory.

When a retailer sells merchandise on account, the general entry for the sales price would be:

An entry that has more than one debit and/or credit is called a:

Both purchase returns and allowances decrease the merchandiser's inventory cost.

Depreciation on the company warehouse is an example of a(n):

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Sales Returns and Allowances appear on the:

When a customer pays within the discount period, the journal entry for the merchandiser will include a debit to Cash and a credit to Sales Discounts.

On April 1, the Caesar Coffee Company sold coffee to Charbucks for $300, with credit terms of 2/15, n/30 Charbucks paid Caesar's on April 10. The journal entry that Caesar would make to record the payment would include a:

The amount of an invoice is $1,000, with terms 2/10, n/30. The amount to be paid within the discount period is:

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

Filters