Question 1

An account used in the periodic inventory system that is not used in the perpetual inventory system is

Accepted Answer

A) Merchandise Inventory 
B) Sales 
C) Sales Returns and Allowances 
D) Accounts Payable 
E) Purchases 
A) Merchandise Inventory 
B) Sales 
C) Sales Returns and Allowances 
D) Accounts Payable 
E) Purchases

Question 2

A service company earns net income by buying and selling merchandise.

Accepted Answer

A) True 
 B)False

Question 3

The acid-test ratio is defined as current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 4

The gross margin ratio:

Accepted Answer

A) Is also called the net profit ratio. 
B) Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
C) Is also called the profit margin. 
D) Is a measure of liquidity. 
E) Should be greater than 1. 
A) Is also called the net profit ratio. 
B) Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
C) Is also called the profit margin. 
D) Is a measure of liquidity. 
E) Should be greater than 1.

Question 5

What is gross margin ratio?
 How is it used as an indicator of profitability?

Accepted Answer

The gross margin ratio is calculated by

Question 6

Cost of goods sold is also called cost of sales.

Accepted Answer

A) True 
 B)False

Question 7

A company reported the following information for the month of November:
Sales…………………………………. $50,475
Sales discounts………………………. 235
Sales returns and allowances………… 2,840
Cost of goods sold…………………… 33,975
Required:
 Calculate this company's gross margin ratio.

Accepted Answer

The answer of A company reported the following information for...

Question 8

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Accepted Answer

A) True 
 B)False

Question 9

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.Carter pays the invoice on October 8,and takes the appropriate discount.The journal entry that Courtland makes on October 8 is:

Accepted Answer

A)   
B)   
C)   
D)   
E)   
A)   
B)   
C)   
D)   
E)

Question 10

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:
   Prepare the closing entries at December 31 for the current year.

Accepted Answer

The answer of Following is the year-end adjusted trial balance...

Question 11

When a company has no reportable nonoperating activities,its income from operations is reported as ___________________ .

Accepted Answer

The answer of When a company has no reportable nonoperating...

Question 12

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken a ___ cash discount for early payment.

Accepted Answer

A) 1% 
B) 2% 
C) 5% 
D) 10% 
E) 15% 
A) 1% 
B) 2% 
C) 5% 
D) 10% 
E) 15%

Question 13

The current period's ending inventory is:

Accepted Answer

A) The next period's beginning inventory. 
B) The current period's cost of goods sold. 
C) The prior period's beginning inventory. 
D) The current period's net purchases. 
E) The current period's beginning inventory. 
A) The next period's beginning inventory. 
B) The current period's cost of goods sold. 
C) The prior period's beginning inventory. 
D) The current period's net purchases. 
E) The current period's beginning inventory.

Question 14

A journal entry with a debit to cash of $980,a debit to Sales Discounts of $20,and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Accepted Answer

A) True 
 B)False

Question 15

All of the following statements related to U.S.GAAP and IFRS are true except:

Accepted Answer

A) Accounting for basic inventory transactions is the same under the two systems. 
B) The closing process for merchandisers is the same under both systems. 
C) U.S.GAAP offers little guidance about the presentation order of expenses. 
D) Neither system requires separate disclosure of items when their size, nature, or frequency are important for proper interpretation. 
E) Neither system defines operating income. 
A) Accounting for basic inventory transactions is the same under the two systems. 
B) The closing process for merchandisers is the same under both systems. 
C) U.S.GAAP offers little guidance about the presentation order of expenses. 
D) Neither system requires separate disclosure of items when their size, nature, or frequency are important for proper interpretation. 
E) Neither system defines operating income.

Question 16

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Accepted Answer

The answer of ___________________ refer to reductions in the selling...

Question 17

When a credit customer returns merchandise to the seller,under a perpetual inventory system,the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 18

Herald Company had sales of $135,000,sales discounts of $2,000,and sales returns of $3,200.Herald Company's net sales equals:

Accepted Answer

A) $5,200. 
B) $129,800. 
C) $133,000. 
D) $135,000. 
E) $140,200. 
A) $5,200. 
B) $129,800. 
C) $133,000. 
D) $135,000. 
E) $140,200.

Question 19

Selling expenses support a company's overall operations and include expenses related to accounting,human resource management,and financial management.

Accepted Answer

A) True 
 B)False

Question 20

All of the following statements regarding sales returns and allowances are true except:

Accepted Answer

A) Sales returns and allowances can include a reduction is the selling price because of damaged merchandise. 
B) Sales returns and allowances do not reflect the possibility of lost future sales. 
C) Sales returns and allowances are recorded in a separate contra-revenue account. 
D) Sales returns and allowances are rarely disclosed in published financial statements. 
E) Sales returns and allowances are closed to the Income Summary account. 
A) Sales returns and allowances can include a reduction is the selling price because of damaged merchandise. 
B) Sales returns and allowances do not reflect the possibility of lost future sales. 
C) Sales returns and allowances are recorded in a separate contra-revenue account. 
D) Sales returns and allowances are rarely disclosed in published financial statements. 
E) Sales returns and allowances are closed to the Income Summary account.

Exam 5: Accounting for Merchandising Operations

An account used in the periodic inventory system that is not used in the perpetual inventory system is

A service company earns net income by buying and selling merchandise.

The acid-test ratio is defined as current assets divided by current liabilities.

The gross margin ratio:

What is gross margin ratio? How is it used as an indicator of profitability?

Cost of goods sold is also called cost of sales.

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year.

When a company has no reportable nonoperating activities,its income from operations is reported as ___________________ .

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken a ___ cash discount for early payment.

The current period's ending inventory is:

A journal entry with a debit to cash of $980,a debit to Sales Discounts of $20,and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

All of the following statements related to U.S.GAAP and IFRS are true except:

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

When a credit customer returns merchandise to the seller,under a perpetual inventory system,the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold.

Herald Company had sales of $135,000,sales discounts of $2,000,and sales returns of $3,200.Herald Company's net sales equals:

Selling expenses support a company's overall operations and include expenses related to accounting,human resource management,and financial management.

All of the following statements regarding sales returns and allowances are true except:

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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