Question 1

Aspen,Inc.purchased merchandise from Crimson Corp.for cash.The journal entry for Aspen,Inc.under a perpetual inventory system will be:

Accepted Answer

A) debit Inventory;credit Cash. 
B) debit Cash;credit Inventory. 
C) debit Inventory;credit Accounts Payable-Crimson Corporation. 
D) debit Inventory;credit Accounts Receivable-Crimson Corporation. 
A) debit Inventory;credit Cash. 
B) debit Cash;credit Inventory. 
C) debit Inventory;credit Accounts Payable-Crimson Corporation. 
D) debit Inventory;credit Accounts Receivable-Crimson Corporation.

Question 2

A gross profit percentage of 43% means that for every $1 of gross profit,the company has $0.43 of net income.

Accepted Answer

A) True 
 B)False

Question 3

Discounts allowed for customers who pay their invoices early:

Accepted Answer

A) reduce the cost of the purchased inventory. 
B) increase the cost of the purchased inventory. 
C) are called manufacturers' discounts. 
D) are called allowances. 
A) reduce the cost of the purchased inventory. 
B) increase the cost of the purchased inventory. 
C) are called manufacturers' discounts. 
D) are called allowances.

Question 4

The account Sales Returns and Allowances is debited when items are returned from a customer.

Accepted Answer

A) True 
 B)False

Question 5

In a Balance Sheet prepared in report form,liabilities must be listed after:

Accepted Answer

A) assets in alphabetical order. 
B) assets with long-term liabilities listed first. 
C) assets with current liabilities listed first. 
D) Stockholders' Equity. 
A) assets in alphabetical order. 
B) assets with long-term liabilities listed first. 
C) assets with current liabilities listed first. 
D) Stockholders' Equity.

Question 6

Bach Co.had an inventory balance of $15,250 on January 1,purchased $37,000 during the accounting period,and the cost of goods sold was $25,000.What is the ending balance in the inventory account?

Accepted Answer

A) $27,250 
B) $37,000 
C) $52,250 
D) Not enough information provided 
A) $27,250 
B) $37,000 
C) $52,250 
D) Not enough information provided

Question 7

If a customer pays within the discount period,the discount will be debited to the Inventory account.

Accepted Answer

A) True 
 B)False

Question 8

Advertising and promotion are examples of selling expenses.

Accepted Answer

A) True 
 B)False

Question 9

Greene Company purchases $5,000 inventory with shipping terms,FOB Columbus.Greene is based in Dayton and the supplier is based in Columbus.The shipping costs are $460.What is the cost of Greene's inventory?

Accepted Answer

A) $5,000 
B) $5,460 
C) Either $5,000 or $5,460 is an acceptable amount to assign to inventory cost under GAAP. 
D) There is not enough information to calculate inventory cost. 
A) $5,000 
B) $5,460 
C) Either $5,000 or $5,460 is an acceptable amount to assign to inventory cost under GAAP. 
D) There is not enough information to calculate inventory cost.

Question 10

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

Question 11

Long-term assets on the Balance Sheet represent assets that will last longer than one operating cycle of the business.

Accepted Answer

A) True 
 B)False

Question 12

The journal entry to record the purchase of merchandise on credit,under the perpetual inventory system is:

Accepted Answer

A) Debit Purchases,credit Accounts Payable 
B) Debit Cost of Goods Sold,credit Accounts Payable 
C) Debit Inventory,credit Accounts Payable 
D) Debit Purchases,credit Inventory 
A) Debit Purchases,credit Accounts Payable 
B) Debit Cost of Goods Sold,credit Accounts Payable 
C) Debit Inventory,credit Accounts Payable 
D) Debit Purchases,credit Inventory

Question 13

Net sales is computed by taking:

Accepted Answer

A) Gross Sales - Sales Returns and Allowances + Sales Discounts. 
B) Gross Sales - Sales Returns and Allowances - Sales Discounts. 
C) Gross Sales + Sales Returns and Allowances + Sales Discounts. 
D) Gross Sales - Cash received for sales. 
A) Gross Sales - Sales Returns and Allowances + Sales Discounts. 
B) Gross Sales - Sales Returns and Allowances - Sales Discounts. 
C) Gross Sales + Sales Returns and Allowances + Sales Discounts. 
D) Gross Sales - Cash received for sales.

Question 14

If net sales decreases and cost of goods sold increases,the gross profit percentage:

Accepted Answer

A) remains the same. 
B) decreases. 
C) increases. 
D) will change based upon the change in total assets. 
A) remains the same. 
B) decreases. 
C) increases. 
D) will change based upon the change in total assets.

Question 15

When a company sells goods to customers FOB destination,the company's delivery expense account is credited for the cost of shipment.

Accepted Answer

A) True 
 B)False

Question 16

The major difference in the Statement of Retained Earnings between a service business and a merchandising business is:

Accepted Answer

A) that the Retained Earnings statement of a service business includes Dividends. 
B) that the Retained Earnings statement of a merchandising business includes Dividends. 
C) that the Retained Earnings statement of a merchandising business shows the Cost of Goods Sold. 
D) nothing.There are no differences between the two. 
A) that the Retained Earnings statement of a service business includes Dividends. 
B) that the Retained Earnings statement of a merchandising business includes Dividends. 
C) that the Retained Earnings statement of a merchandising business shows the Cost of Goods Sold. 
D) nothing.There are no differences between the two.

Question 17

Hawk Company purchases goods for resale from Spirits,Inc.The amount of the purchase is $12,500 with terms of 3/10,n/30.Hawk later returns $500 of the goods.Under the perpetual inventory system,the journal entry to record the return is:

Accepted Answer

A) debit Accounts Payable;credit Purchase Returns and Allowances. 
B) debit Purchase Returns and Allowances;credit Accounts Payable. 
C) debit Accounts Payable;credit Inventory. 
D) debit Accounts Payable;credit Purchase Discounts. 
A) debit Accounts Payable;credit Purchase Returns and Allowances. 
B) debit Purchase Returns and Allowances;credit Accounts Payable. 
C) debit Accounts Payable;credit Inventory. 
D) debit Accounts Payable;credit Purchase Discounts.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

If net sales increases and cost of goods sold decreases,the gross profit ratio:

Accepted Answer

A) remains the same. 
B) decreases. 
C) increases. 
D) cannot be determined from the information given. 
A) remains the same. 
B) decreases. 
C) increases. 
D) cannot be determined from the information given.

Question 20

A company has net sales of $126,000,cost of goods sold of $72,000,operating expenses of $38,000,and other expenses of $3,000.The company's gross profit percentage is approximately:

Accepted Answer

A) 0)127. 
B) 0)103. 
C) 0)241. 
D) 0)429. 
A) 0)127. 
B) 0)103. 
C) 0)241. 
D) 0)429.

Aspen,Inc.purchased merchandise from Crimson Corp.for cash.The journal entry for Aspen,Inc.under a perpetual inventory system will be:

A gross profit percentage of 43% means that for every $1 of gross profit,the company has $0.43 of net income.

Discounts allowed for customers who pay their invoices early:

The account Sales Returns and Allowances is debited when items are returned from a customer.

In a Balance Sheet prepared in report form,liabilities must be listed after:

Bach Co.had an inventory balance of $15,250 on January 1,purchased $37,000 during the accounting period,and the cost of goods sold was $25,000.What is the ending balance in the inventory account?

If a customer pays within the discount period,the discount will be debited to the Inventory account.

Advertising and promotion are examples of selling expenses.

Greene Company purchases $5,000 inventory with shipping terms,FOB Columbus.Greene is based in Dayton and the supplier is based in Columbus.The shipping costs are $460.What is the cost of Greene's inventory?

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.

Long-term assets on the Balance Sheet represent assets that will last longer than one operating cycle of the business.

The journal entry to record the purchase of merchandise on credit,under the perpetual inventory system is:

Net sales is computed by taking:

If net sales decreases and cost of goods sold increases,the gross profit percentage:

When a company sells goods to customers FOB destination,the company's delivery expense account is credited for the cost of shipment.

The major difference in the Statement of Retained Earnings between a service business and a merchandising business is:

Hawk Company purchases goods for resale from Spirits,Inc.The amount of the purchase is $12,500 with terms of 3/10,n/30.Hawk later returns $500 of the goods.Under the perpetual inventory system,the journal entry to record the return is:

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

If net sales increases and cost of goods sold decreases,the gross profit ratio:

A company has net sales of $126,000,cost of goods sold of $72,000,operating expenses of $38,000,and other expenses of $3,000.The company's gross profit percentage is approximately:

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

Aspen,Inc.purchased merchandise from Crimson Corp.for cash.The journal entry for Aspen,Inc.under a perpetual inventory system will be:

A gross profit percentage of 43% means that for every $1 of gross profit,the company has $0.43 of net income.

Discounts allowed for customers who pay their invoices early:

The account Sales Returns and Allowances is debited when items are returned from a customer.

In a Balance Sheet prepared in report form,liabilities must be listed after:

Bach Co.had an inventory balance of $15,250 on January 1,purchased $37,000 during the accounting period,and the cost of goods sold was $25,000.What is the ending balance in the inventory account?

If a customer pays within the discount period,the discount will be debited to the Inventory account.

Advertising and promotion are examples of selling expenses.

Greene Company purchases $5,000 inventory with shipping terms,FOB Columbus.Greene is based in Dayton and the supplier is based in Columbus.The shipping costs are $460.What is the cost of Greene's inventory?

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.

Long-term assets on the Balance Sheet represent assets that will last longer than one operating cycle of the business.

The journal entry to record the purchase of merchandise on credit,under the perpetual inventory system is:

Net sales is computed by taking:

If net sales decreases and cost of goods sold increases,the gross profit percentage:

When a company sells goods to customers FOB destination,the company's delivery expense account is credited for the cost of shipment.

The major difference in the Statement of Retained Earnings between a service business and a merchandising business is:

Hawk Company purchases goods for resale from Spirits,Inc.The amount of the purchase is $12,500 with terms of 3/10,n/30.Hawk later returns $500 of the goods.Under the perpetual inventory system,the journal entry to record the return is:

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

If net sales increases and cost of goods sold decreases,the gross profit ratio:

A company has net sales of $126,000,cost of goods sold of $72,000,operating expenses of $38,000,and other expenses of $3,000.The company's gross profit percentage is approximately:

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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