Question 1

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are:

Accepted Answer

A) n/30. 
B) FOB shipping point. 
C) FOB destination. 
D) consigned. 
A) n/30. 
B) FOB shipping point. 
C) FOB destination. 
D) consigned.

Question 2

Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business.

Accepted Answer

A) True 
 B)False

Question 3

Merchandise with a list price of $7,500 and a cost of $7,000 is sold on account,terms 1/10,n/30.Prior to payment,merchandise with a list price of $1,000 and a cost of $800 is returned.The correct amount is paid within the discount period.
a.
Statement of Cash Flows
Income Statement
Assets =
Liabilities
+ Stockholders' Equity
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Capital Stock
Retained Earnings
b.
Statement of Cash Flows
Income Statement
Assets =
Liabilities
+ Stockholders' Equity
Cash
Accounts Receivable
Merchandise Inventory
Accounts Payable
Capital Stock
Retained Earnings
c.
Statement of Cash Flows
Income Statement

Accepted Answer

Assets = Liabilities + Stockholders' Equ

Question 4

If Johnson,Inc.sold $800,000 worth of merchandise,had $100,000 returned,and then the balance paid during the 1% discount period,how much was Johnson's net sales?

Accepted Answer

A) $700,000 
B) $800,000 
C) $693,000 
D) $692,000 
A) $700,000 
B) $800,000 
C) $693,000 
D) $692,000

Question 5

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is:

Accepted Answer

A) increase Cost of Merchandise Sold; increase Cash. 
B) increase Cost of Merchandise Sold; decrease Merchandise Inventory. 
C) increase Merchandise Inventory; decrease Cost of Merchandise Sold. 
D) increase Accounts Receivable; decrease Merchandise Inventory. 
A) increase Cost of Merchandise Sold; increase Cash. 
B) increase Cost of Merchandise Sold; decrease Merchandise Inventory. 
C) increase Merchandise Inventory; decrease Cost of Merchandise Sold. 
D) increase Accounts Receivable; decrease Merchandise Inventory.

Question 6

Galaxy,Inc.had the following merchandise transactions in October:

Accepted Answer

A) $80,000 
B) $67,800 
C) $83,000 
D) $77,000 
A) $80,000 
B) $67,800 
C) $83,000 
D) $77,000

Question 7

Gross profit is determined by subtracting the cost of merchandise sold from what?

Accepted Answer

A) The cost of merchandise purchased 
B) Fees earned 
C) Accounts receivable 
D) Net sales 
A) The cost of merchandise purchased 
B) Fees earned 
C) Accounts receivable 
D) Net sales

Question 8

It is usual for the credit period to begin with the date the merchandise is received by the buyer.

Accepted Answer

A) True 
 B)False

Question 9

Sales Returns and Allowances is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A) Only cash sales are included in the Sales account. 
B) Sales is the total amount charged customers,including cash sales and sales on account. 
C) Both sales discounts and sales returns and allowances are added to Sales to arrive at Net Sales. 
D) Sales is the revenue account typically used in service businesses. 
A) Only cash sales are included in the Sales account. 
B) Sales is the total amount charged customers,including cash sales and sales on account. 
C) Both sales discounts and sales returns and allowances are added to Sales to arrive at Net Sales. 
D) Sales is the revenue account typically used in service businesses.

Question 11

Sales discounts are granted by the seller to customers for payment at the end of the month.

Accepted Answer

A) True 
 B)False

Question 12

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

Accepted Answer

A) True 
 B)False

Question 13

Multiple-step income statements show:

Accepted Answer

A) gross profit but not income from operations. 
B) neither gross profit nor income from operations. 
C) both gross profit and income from operations. 
D) income from operations but not gross profit. 
A) gross profit but not income from operations. 
B) neither gross profit nor income from operations. 
C) both gross profit and income from operations. 
D) income from operations but not gross profit.

Question 14

The difference between sales and cost of merchandise sold for a merchandising business is:

Accepted Answer

A) sales. 
B) net sales. 
C) gross sales. 
D) gross profit. 
A) sales. 
B) net sales. 
C) gross sales. 
D) gross profit.

Question 15

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a:

Accepted Answer

A) sales invoice. 
B) purchase invoice. 
C) credit memorandum. 
D) debit memorandum. 
A) sales invoice. 
B) purchase invoice. 
C) credit memorandum. 
D) debit memorandum.

Question 16

Net sales is equal to sales plus cost of merchandise sold.

Accepted Answer

A) True 
 B)False

Question 17

Credit memorandum is issued by the seller to customers for return of damaged or defective merchandise.

Accepted Answer

A) True 
 B)False

Question 18

Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the buyer's accounts on November 18.The credit period begins with what date?

Accepted Answer

A) November 12 
B) November 15 
C) November 17 
D) November 18 
A) November 12 
B) November 15 
C) November 17 
D) November 18

Question 19

ABC Company had $100,000 in net sales,$45,000 in cost of merchandise sold,$60,000 in operating expenses,and $10,000 in other income.What is ABC Company's gross profit?

Accepted Answer

A) $55,000 
B) $40,000 
C) $90,000 
D) $145,000 
A) $55,000 
B) $40,000 
C) $90,000 
D) $145,000

Question 20

A criticism of a single-step income statement is that net income is not available for analysis.

Accepted Answer

A) True 
 B)False

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are:

Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business.

If Johnson,Inc.sold $800,000 worth of merchandise,had $100,000 returned,and then the balance paid during the 1% discount period,how much was Johnson's net sales?

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is:

Galaxy,Inc.had the following merchandise transactions in October:

Gross profit is determined by subtracting the cost of merchandise sold from what?

It is usual for the credit period to begin with the date the merchandise is received by the buyer.

Sales Returns and Allowances is a contra-asset account.

Which of the following statements is true?

Sales discounts are granted by the seller to customers for payment at the end of the month.

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

Multiple-step income statements show:

The difference between sales and cost of merchandise sold for a merchandising business is:

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a:

Net sales is equal to sales plus cost of merchandise sold.

Credit memorandum is issued by the seller to customers for return of damaged or defective merchandise.

ABC Company had $100,000 in net sales,$45,000 in cost of merchandise sold,$60,000 in operating expenses,and $10,000 in other income.What is ABC Company's gross profit?

A criticism of a single-step income statement is that net income is not available for analysis.

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

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are:

Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business.

If Johnson,Inc.sold $800,000 worth of merchandise,had $100,000 returned,and then the balance paid during the 1% discount period,how much was Johnson's net sales?

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is:

Galaxy,Inc.had the following merchandise transactions in October:

Gross profit is determined by subtracting the cost of merchandise sold from what?

It is usual for the credit period to begin with the date the merchandise is received by the buyer.

Sales Returns and Allowances is a contra-asset account.

Which of the following statements is true?

Sales discounts are granted by the seller to customers for payment at the end of the month.

A criticism of the single-step income statement is that gross profit and income from operations are not readily available for analysis.

Multiple-step income statements show:

The difference between sales and cost of merchandise sold for a merchandising business is:

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a:

Net sales is equal to sales plus cost of merchandise sold.

Credit memorandum is issued by the seller to customers for return of damaged or defective merchandise.

ABC Company had $100,000 in net sales,$45,000 in cost of merchandise sold,$60,000 in operating expenses,and $10,000 in other income.What is ABC Company's gross profit?

A criticism of a single-step income statement is that net income is not available for analysis.

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