Exam 5: Accounting for Merchandising Operations

A company uses the perpetual inventory system and recorded the following entry: Accounts Payable………………………… 2,500 Merchandise Inventory……………. 50 Cash………………………………... 2,450 This entry reflects a:

(Multiple Choice)

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Question 61

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

(True/False)

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Question 62

A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory.

(True/False)

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Question 63

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

(True/False)

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Question 64

Each sales transaction for a seller that uses a perpetual inventory system involves recognizing both revenue and cost of merchandise sold.

(True/False)

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Question 65

_______________ refer to merchandise that customers return to the seller after a sale.

(Short Answer)

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Question 66

Match the following terms with the appropriate definition.

An accounting method that continually updates accounting records for merchandise transactions.

Debit memorandum

A cash discount granted to customers for paying within the discount period.

Perpetual inventory system

The amount of time allowed before full payment is due.

Gross profit

Correct Answer:

Verified

An accounting method that continually updates accounting records for merchandise transactions.

A cash discount granted to customers for paying within the discount period.

The amount of time allowed before full payment is due.

An accounting method that updates the accounting records for merchandise transactions only at the end of a period.

The description of the amounts and timing of payments from a buyer to a seller.

The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.

The time period in which a cash discount is available and a reduced payment can be made by the buyer.

A notification that the sender has credited the recipient's account kept by the sender.

Net sales less cost of goods sold.

A notification that the sender has debited the recipient's account kept by the sender.

(Matching)

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Question 67

How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company?

(Essay)

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Question 68

The acid-test ratio reflects the ___________ of a company.

(Short Answer)

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Question 69

A ___________ is an intermediary that buys products from manufacturers and sells to retailers.

(Short Answer)

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Question 70

On October 1,Courtland Company sold merchandise in the amount of $5,800 to Carter Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Courtland uses the periodic inventory system.The journal entry or entries that Courtland will make on October 1 is:

(Multiple Choice)

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Question 71

Using the following year-end information for Brim,LLC,calculate the current ratio and acid-test ratio:

(Multiple Choice)

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Question 72

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

(True/False)

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Question 73

A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.

(True/False)

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Question 74

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

(True/False)

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Question 75

_____________ are non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals.

(Short Answer)

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Question 76

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

(Essay)

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Question 77

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

(True/False)

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Question 78

A company's current assets are $23,420,its quick assets were $13,890 and its current liabilities were $12,220.Its acid-test ratio equals:

(Multiple Choice)

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Question 79

From the adjusted trial balance for Worker Products Company given below,prepare a multiple-step income statement in good form.

(Essay)

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Question 80

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Exam 5: Accounting for Merchandising Operations

A company uses the perpetual inventory system and recorded the following entry: Accounts Payable………………………… 2,500 Merchandise Inventory……………. 50 Cash………………………………... 2,450 This entry reflects a:

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Each sales transaction for a seller that uses a perpetual inventory system involves recognizing both revenue and cost of merchandise sold.

_______________ refer to merchandise that customers return to the seller after a sale.

How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company?

The acid-test ratio reflects the ___________ of a company.

A ___________ is an intermediary that buys products from manufacturers and sells to retailers.

On October 1,Courtland Company sold merchandise in the amount of $5,800 to Carter Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Courtland uses the periodic inventory system.The journal entry or entries that Courtland will make on October 1 is:

Using the following year-end information for Brim,LLC,calculate the current ratio and acid-test ratio:

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

_____________ are non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals.

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

A company's current assets are $23,420,its quick assets were $13,890 and its current liabilities were $12,220.Its acid-test ratio equals:

From the adjusted trial balance for Worker Products Company given below,prepare a multiple-step income statement in good form.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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