Question 1

Revenue from sources other than the primary operating activity of a business is called other income.

Accepted Answer

A) True 
 B)False

Question 2

The sales discount account is a contra account to Sales.

Accepted Answer

A) True 
 B)False

Question 3

The following data for the year ended June 30,2016,were extracted from the accounting records of Roof Co.:

Accepted Answer

Roof Co. Income Statement For

Question 4

Refer to X.Bonds Company.If the income statement were prepared in a multiple-step format,gross profit would be:

Accepted Answer

A) $240,000. 
B) $126,000. 
C) $260,000. 
D) $185,000. 
A) $240,000. 
B) $126,000. 
C) $260,000. 
D) $185,000.

Question 5

Under a perpetual inventory system,

Accepted Answer

A) accounting records continuously disclose the amount of inventory. 
B) increases in inventory resulting from purchases are debited to Purchases. 
C) there is no need for a year-end physical count. 
D) the purchase returns and allowances account is credited when goods are returned to vendors. 
A) accounting records continuously disclose the amount of inventory. 
B) increases in inventory resulting from purchases are debited to Purchases. 
C) there is no need for a year-end physical count. 
D) the purchase returns and allowances account is credited when goods are returned to vendors.

Question 6

Sales discounts is used in accounting for transactions with customers.

Accepted Answer

A) True 
 B)False

Question 7

Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer.

Accepted Answer

A) True 
 B)False

Question 8

The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

Accepted Answer

A) credit terms. 
B) net cash. 
C) cash on demand. 
D) gross cash. 
A) credit terms. 
B) net cash. 
C) cash on demand. 
D) gross cash.

Question 9

Which of the following would not affect the operating activities section of the statement of cash flows,using the indirect method?

Accepted Answer

A) Decrease in merchandise inventory 
B) Payment on a note payable 
C) Decrease in unearned rent 
D) Depreciation expense 
A) Decrease in merchandise inventory 
B) Payment on a note payable 
C) Decrease in unearned rent 
D) Depreciation expense

Question 10

Merchandise subject to terms 2/10,n/30,FOB shipping point,is sold on account to a customer for $35,000.The seller issued a credit memorandum for $8,000 prior to payment.What is the amount of the cash discount allowable?

Accepted Answer

A) $700 
B) $540 
C) $860 
D) $350 
A) $700 
B) $540 
C) $860 
D) $350

Question 11

When purchases of merchandise are made for cash,under the perpetual inventory system,the transaction:

Accepted Answer

A) increases Cash; decreases Merchandise Inventory. 
B) increases Merchandise Inventory; decreases Cash. 
C) increases Merchandise Inventory; decreases Cash Discounts. 
D) increases Merchandise Inventory; decreases Purchases. 
A) increases Cash; decreases Merchandise Inventory. 
B) increases Merchandise Inventory; decreases Cash. 
C) increases Merchandise Inventory; decreases Cash Discounts. 
D) increases Merchandise Inventory; decreases Purchases.

Question 12

Purchases discounts are discounts given to the seller.

Accepted Answer

A) True 
 B)False

Question 13

Under the perpetual inventory system,the cost of merchandise sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 14

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 15

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a(n):

Accepted Answer

A) decrease in Bank Credit Card Sales,increase in Credit Card Expense,and increase in Sales. 
B) increase in Cash,increase in Credit Card Expense,and increase in Sales. 
C) increase in Cash,decrease in Credit Card Expense,and increase in Sales. 
D) decrease in Sales,increase in Credit Card Expense,and decrease in Cash. 
A) decrease in Bank Credit Card Sales,increase in Credit Card Expense,and increase in Sales. 
B) increase in Cash,increase in Credit Card Expense,and increase in Sales. 
C) increase in Cash,decrease in Credit Card Expense,and increase in Sales. 
D) decrease in Sales,increase in Credit Card Expense,and decrease in Cash.

Question 16

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

Accepted Answer

A) True 
 B)False

Question 17

The document issued by the seller that informs the buyer of the details of sales returns is called a debit memorandum.

Accepted Answer

A) True 
 B)False

Question 18

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

Accepted Answer

(a) Investing activities,$145,000 ($75,0

Question 19

In a transaction where purchased merchandise has been returned,the buyer will increase the Sales Returns and Allowances account and the seller will increase the Purchases Returns and Allowances account.

Accepted Answer

A) True 
 B)False

Question 20

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Accepted Answer

A) Gross profit 
B) Income from operations 
C) Net income 
D) Gross sales 
A) Gross profit 
B) Income from operations 
C) Net income 
D) Gross sales

Revenue from sources other than the primary operating activity of a business is called other income.

The sales discount account is a contra account to Sales.

The following data for the year ended June 30,2016,were extracted from the accounting records of Roof Co.:

Refer to X.Bonds Company.If the income statement were prepared in a multiple-step format,gross profit would be:

Under a perpetual inventory system,

Sales discounts is used in accounting for transactions with customers.

Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer.

The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

Which of the following would not affect the operating activities section of the statement of cash flows,using the indirect method?

Merchandise subject to terms 2/10,n/30,FOB shipping point,is sold on account to a customer for $35,000.The seller issued a credit memorandum for $8,000 prior to payment.What is the amount of the cash discount allowable?

When purchases of merchandise are made for cash,under the perpetual inventory system,the transaction:

Purchases discounts are discounts given to the seller.

Under the perpetual inventory system,the cost of merchandise sold is recorded when sales are made.

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a(n):

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

The document issued by the seller that informs the buyer of the details of sales returns is called a debit memorandum.

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

In a transaction where purchased merchandise has been returned,the buyer will increase the Sales Returns and Allowances account and the seller will increase the Purchases Returns and Allowances account.

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 4: Accounting for Merchandising Businesses

Revenue from sources other than the primary operating activity of a business is called other income.

The sales discount account is a contra account to Sales.

The following data for the year ended June 30,2016,were extracted from the accounting records of Roof Co.:

Refer to X.Bonds Company.If the income statement were prepared in a multiple-step format,gross profit would be:

Under a perpetual inventory system,

Sales discounts is used in accounting for transactions with customers.

Discounts taken by the buyer for early payment of an invoice are called purchases discounts by the buyer.

The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

Which of the following would not affect the operating activities section of the statement of cash flows,using the indirect method?

Merchandise subject to terms 2/10,n/30,FOB shipping point,is sold on account to a customer for $35,000.The seller issued a credit memorandum for $8,000 prior to payment.What is the amount of the cash discount allowable?

When purchases of merchandise are made for cash,under the perpetual inventory system,the transaction:

Purchases discounts are discounts given to the seller.

Under the perpetual inventory system,the cost of merchandise sold is recorded when sales are made.

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a(n):

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

The document issued by the seller that informs the buyer of the details of sales returns is called a debit memorandum.

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

In a transaction where purchased merchandise has been returned,the buyer will increase the Sales Returns and Allowances account and the seller will increase the Purchases Returns and Allowances account.

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters