Question 1

When merchandise is purchased to resell to customers,it is recorded in the account entitled:

Accepted Answer

A) Supplies. 
B) Cost of Goods Sold. 
C) Merchandise Inventory. 
D) Sales. 
A) Supplies. 
B) Cost of Goods Sold. 
C) Merchandise Inventory. 
D) Sales.

Question 2

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment,the terms are stated as FOB destination.

Accepted Answer

A) True 
 B)False

Question 3

Where are selling and administrative expenses found on the multi-step income statement?

Accepted Answer

A) Before gross profit 
B) After sales and before gross profit 
C) After net income and before expenses 
D) After gross profit 
A) Before gross profit 
B) After sales and before gross profit 
C) After net income and before expenses 
D) After gross profit

Question 4

A company has a net income of $70,000 and depreciation expenses of $20,000.During the year,its accounts payable balance decreased by $15,000.What is the net cash flow from operating activities using the indirect method for preparing the statement of cash flows?

Accepted Answer

A) $90,000 
B) $105,000 
C) $50,000 
D) $75,000 
A) $90,000 
B) $105,000 
C) $50,000 
D) $75,000

Question 5

Sometimes a(n)is offered to buyers as a means of encouraging them to pay before the end of the credit period.

Accepted Answer

A) accounts receivable 
B) credit card 
C) sales discount 
D) cash sale 
A) accounts receivable 
B) credit card 
C) sales discount 
D) cash sale

Question 6

The following data for the current year ended December 31,2016,were extracted from the accounting records of Gilbert Co.:

Accepted Answer

Gilbert Co. Income Statement F

Question 7

The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Question 8

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Accepted Answer

A) selling expenses. 
B) general expenses. 
C) other expenses. 
D) administrative expenses. 
A) selling expenses. 
B) general expenses. 
C) other expenses. 
D) administrative expenses.

Question 9

Using a perpetual inventory system,the return of merchandise purchased on account includes a(n):

Accepted Answer

A) increase in Sales. 
B) increase in Merchandise Inventory. 
C) decrease in Merchandise Inventory. 
D) decrease in Sales. 
A) increase in Sales. 
B) increase in Merchandise Inventory. 
C) decrease in Merchandise Inventory. 
D) decrease in Sales.

Question 10

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are the net income in the cash flows from operating activities section.

Accepted Answer

A) subtracted from 
B) added to 
C) not used when calculating 
D) equal to 
A) subtracted from 
B) added to 
C) not used when calculating 
D) equal to

Question 11

Which of the following accounts is a contra account to Sales?

Accepted Answer

A) Accounts Payable 
B) Sales Returns and Allowances 
C) Accounts Receivable 
D) Interest Revenue 
A) Accounts Payable 
B) Sales Returns and Allowances 
C) Accounts Receivable 
D) Interest Revenue

Question 12

Which term indicates that merchandise is free of transportation charges to the buyer?

Accepted Answer

A) FOB destination 
B) Transportation out 
C) FOB shipping point 
D) Transportation in 
A) FOB destination 
B) Transportation out 
C) FOB shipping point 
D) Transportation in

Question 13

Merchandise not sold at the end of the period is reported as:

Accepted Answer

A) cost of goods sold. 
B) old stock. 
C) merchandise inventory. 
D) net purchases. 
A) cost of goods sold. 
B) old stock. 
C) merchandise inventory. 
D) net purchases.

Question 14

Gold Co.sold merchandise to Bronze Co.on account,$23,000,terms 2/15,net 45.The cost of the merchandise sold is $18,500.Gold Co.issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900.Bronze Co.paid the invoice within the discount period.What is the amount of net income earned by Gold Co.on the transactions?

Accepted Answer

$3,490 (Net Sales $2

Question 15

Silver Co.sold merchandise to Copper Co.on account,$75,000,terms 2/10,net 30.The cost of the merchandise sold is $55,000.Silver Co.issued a credit memorandum for $10,000 for merchandise returned that originally cost $9,000.Copper Co.paid the invoice within the discount period.What is amount of net sales from the transactions?

Accepted Answer

A) $65,000 
B) $63,500 
C) $64,680 
D) $63,700 
A) $65,000 
B) $63,500 
C) $64,680 
D) $63,700

Question 16

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Accepted Answer

A) True 
 B)False

Question 17

Merchandise subject to terms 1/10,n/30,FOB shipping point,is sold on account to a customer for $17,500.The seller issued a credit memorandum for $4,000 prior to payment.What is the amount of the cash discount allowable?

Accepted Answer

A) $215 
B) $175 
C) $135 
D) $140 
A) $215 
B) $175 
C) $135 
D) $140

Question 18

Which of the following is not an example of selling expenses?

Accepted Answer

A) Salespersons' salaries 
B) Office staff salaries 
C) Depreciation of store equipment 
D) Advertising 
A) Salespersons' salaries 
B) Office staff salaries 
C) Depreciation of store equipment 
D) Advertising

Question 19

When the seller offers a sales discount,even if borrowing has to be done,it is generally advantageous for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 20

Purchase discounts reduce sales.

Accepted Answer

A) True 
 B)False

When merchandise is purchased to resell to customers,it is recorded in the account entitled:

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment,the terms are stated as FOB destination.

Where are selling and administrative expenses found on the multi-step income statement?

A company has a net income of $70,000 and depreciation expenses of $20,000.During the year,its accounts payable balance decreased by $15,000.What is the net cash flow from operating activities using the indirect method for preparing the statement of cash flows?

Sometimes a(n)is offered to buyers as a means of encouraging them to pay before the end of the credit period.

The following data for the current year ended December 31,2016,were extracted from the accounting records of Gilbert Co.:

The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Using a perpetual inventory system,the return of merchandise purchased on account includes a(n):

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are the net income in the cash flows from operating activities section.

Which of the following accounts is a contra account to Sales?

Which term indicates that merchandise is free of transportation charges to the buyer?

Merchandise not sold at the end of the period is reported as:

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Merchandise subject to terms 1/10,n/30,FOB shipping point,is sold on account to a customer for $17,500.The seller issued a credit memorandum for $4,000 prior to payment.What is the amount of the cash discount allowable?

Which of the following is not an example of selling expenses?

When the seller offers a sales discount,even if borrowing has to be done,it is generally advantageous for the buyer to pay within the discount period.

Purchase discounts reduce sales.

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

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Exam 4: Accounting for Merchandising Businesses

When merchandise is purchased to resell to customers,it is recorded in the account entitled:

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment,the terms are stated as FOB destination.

Where are selling and administrative expenses found on the multi-step income statement?

A company has a net income of $70,000 and depreciation expenses of $20,000.During the year,its accounts payable balance decreased by $15,000.What is the net cash flow from operating activities using the indirect method for preparing the statement of cash flows?

Sometimes a(n)is offered to buyers as a means of encouraging them to pay before the end of the credit period.

The following data for the current year ended December 31,2016,were extracted from the accounting records of Gilbert Co.:

The indirect method of preparing the statement of cash flows reconciles net income with net cash flows from operating activities.

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as:

Using a perpetual inventory system,the return of merchandise purchased on account includes a(n):

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are the net income in the cash flows from operating activities section.

Which of the following accounts is a contra account to Sales?

Which term indicates that merchandise is free of transportation charges to the buyer?

Merchandise not sold at the end of the period is reported as:

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Merchandise subject to terms 1/10,n/30,FOB shipping point,is sold on account to a customer for $17,500.The seller issued a credit memorandum for $4,000 prior to payment.What is the amount of the cash discount allowable?

Which of the following is not an example of selling expenses?

When the seller offers a sales discount,even if borrowing has to be done,it is generally advantageous for the buyer to pay within the discount period.

Purchase discounts reduce sales.

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