Exam 4: Accounting for Merchandising Businesses

Orange Co.sells merchandise on credit to Zea Co.in the amount of $9,000.The invoice is dated on September 15 with terms of 1/15,net 45.What is the amount of the discount,and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

When merchandise that was sold on account is returned,which accounts are affected?

On the income statement,sales returns and allowances and sales discounts are added to gross sales to yield net sales.

Generally,the revenue account for a merchandising business is entitled:

By dividing gross profit by cost of merchandise sold we arrive at:

A buyer who acquires merchandise under credit terms of 1/10,n/30 has 10 days after the invoice date to take advantage of the cash discount.

A buyer who acquires merchandise under credit terms of 1/10,n/30 has 30 days after the invoice date to take advantage of the cash discount.

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

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

If merchandise costing $2,500,terms FOB destination,2/10,n/30,with prepaid transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $48.

A sale of $600 on account subject to a sales tax of 5% would increase account receivable by $570.

The amount of the total cash paid to the seller for merchandise purchased would normally include:

West,Inc.had beginning inventory of $30,000,purchases of $65,000,and ending inventory of $10,000.What is West's cost of merchandise sold?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a:

Which of the following is not a subsection in a multiple-step income statement?

In credit terms of 1/10,n/30,the "10" represents the:

A sales invoice included the following information: merchandise price,$8,000; terms 2/10,n/eom.Assuming that a credit for merchandise returned of $1,000 is granted prior to payment,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?

ONI,Inc.purchased $60,000 of equipment for cash.How does this transaction impact the statement of cash flows?

A sales invoice included the following information: merchandise price,$4,500; transportation,$300; terms 1/10,n/eom,FOB shipping point.Assuming that a credit for merchandise returned of $600 is granted prior to payment,that the transportation is prepaid by the seller,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?