Question 1

Which of the following is the result of cost of goods sold divided by average inventory?

Accepted Answer

A)  Current ratio 
B)  Gross profit percentage 
C)  Debt ratio 
D)  Rate of inventory turnover 
A)  Current ratio 
B)  Gross profit percentage 
C)  Debt ratio 
D)  Rate of inventory turnover

Question 2

When a company uses the perpetual inventory method,the inventory account should stay current at all times.

Accepted Answer

A) True 
 B)False

Question 3

Please refer to the following trial balance.
 $$\begin{array} { | l | r | r | } 
\hline &{ \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 5,000 & \
\hline \text { Accounts receivable } & 14,000 & \
\hline \text { Inventory } & 20,000 & \
\hline \text { Supplies } & 5,000 & \
\hline \text { Land } & 100,000 & \
\hline \text { Accounts payable } & & \$ 3,000 \
\hline \text { Notes payable } & & 25,000 \
\hline \text { Capital } & &90,000 \
\hline \text { Drawing } & 1,000 & \
\hline \text { Sales revenues } &  & 160,000 \
\hline \text { Sales returns and allowances } &2,000 & \
\hline \text { Sales discounts } &  3,000 & \
\hline \text { Cost of goods sold } &80,000  & \
\hline \text { Salary expense } &5,000  & \
\hline \text { Utility expense } &23,000 & \
\hline \text { Rent expense } &   18,000& \
\hline \text { Interest expense } &2,000  \
\hline \text { Totals } &\$ 278,000 & \$ 278,000 \
\hline
\end{array}$$
 Please prepare a multi-step income statement:

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 4

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

Accepted Answer

A)  Cost of goods available for sale 
B)  Cost of goods sold 
C)  Sales discounts and Sales returns and allowances 
D)  Operating expenses 
A)  Cost of goods available for sale 
B)  Cost of goods sold 
C)  Sales discounts and Sales returns and allowances 
D)  Operating expenses

Question 5

Michelin Jewelers completed the following transactions.Michelin Jewelers uses the perpetual inventory system.On April 2,Michelin sold $9,000 of merchandise to a customer on account with terms of 3/15,n/30.Michelin's cost of the merchandise sold was $5,500.
-Which of the following journal entries correctly records the Cost of goods sold?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of goods sold } & 5,500 & \
\hline \text { Accounts receivable } & & 5,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales revenue } & 5,500 & \
\hline \text { Cost of goods sold } & & 5,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of goods sold } & 5,500 & \
\hline \text { Inventory } & & 5,500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Inventory } & 5,500 & \
\hline \text { Cost of goods sold } & & 5,500 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of goods sold } & 5,500 & \
\hline \text { Accounts receivable } & & 5,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Sales revenue } & 5,500 & \
\hline \text { Cost of goods sold } & & 5,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cost of goods sold } & 5,500 & \
\hline \text { Inventory } & & 5,500 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Inventory } & 5,500 & \
\hline \text { Cost of goods sold } & & 5,500 \
\hline
\end{array}$$

Question 6

An adjusted trial balance is shown below.
 $$\begin{array} { | l | r | r | } 
\hline &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 12,600 & \
\hline \text { Accounts receivable } & 2,400 & \
\hline \text { Prepaid rent } & 800 & \
\hline \text { Inventory } & 28,000 & \
\hline \text { Accounts payable } & & \$ 4,200 \
\hline \text { Salary payable } & & 1,000 \
\hline \text { Notes payable } & & 800 \
\hline \text { Capital } & & 13,800 \
\hline \text { Drawing } & 1,000 &  \
\hline \text { Sales revenue } & &96,000 \
\hline\text { Sales returns and allowances }&1,600\ 
\hline \text { Sales discounts } & 400 & \
\hline \text { Cost of goods sold } & 25,000 & \
\hline \text { Salary expense } & 21,000 & \
\hline \text { Rent expens } & 14,000 & \
\hline \text { Depreciation expense } & 8,500 & \
\hline \text { Supplies expense } & 500 & \
\hline \text { Total } & \$ 115,800 & \$ 115,800 \
\hline
\end{array}$$

- Please prepare the first closing entry.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \\hline \\hline \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 7

When a company uses the perpetual inventory method,it should NOT be necessary to conduct a physical count of inventory.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is TRUE about freight in?

Accepted Answer

A)  Freight in is added to the cost of merchandise inventory. 
B)  Freight in is a selling expense. 
C)  Freight in is an operating expense. 
D)  Freight in is deducted from Accounts payable. 
A)  Freight in is added to the cost of merchandise inventory. 
B)  Freight in is a selling expense. 
C)  Freight in is an operating expense. 
D)  Freight in is deducted from Accounts payable.

Question 9

On November 1,2012,Everett Janitorial Supply sold merchandise for $5,000,FOB destination,2/10,n/30.The merchandise cost $3,200.
-Everett paid transportation costs of $100.On November 6,2012,merchandise of $1,000 from the November 1 sale was returned.The returned merchandise had cost $600.Please provide the two journal entries to record the return.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$ $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

This question is no

Question 10

Michelin Jewelers completed the following transactions.Michelin Jewelers uses the perpetual inventory system.On April 2,Michelin sold $9,000 of merchandise to a customer on account with terms of 3/15,n/30.Michelin's cost of the merchandise sold was $5,500.On April 4,the customer reported damaged goods and Michelin granted a $1,000 sales allowance.
-On April 10,Michelin received payment from the customer.How much cash was received from the customer?

Accepted Answer

A)  $8,000 
B)  $8,730 
C)  $7,760 
D)  $2,260 
A)  $8,000 
B)  $8,730 
C)  $7,760 
D)  $2,260

Question 11

The general ledger shows a balance of $23,678 in the Inventory account at the end of the period.A physical inventory shows a count of $22,078.The adjusting entry would be a:

Accepted Answer

A)  debit to Cost of goods sold and a credit to Cash. 
B)  debit to Inventory and a credit to Cash. 
C)  debit to Cost of goods sold and a credit to Inventory. 
D)  debit to Inventory and a credit to Cost of goods sold. 
A)  debit to Cost of goods sold and a credit to Cash. 
B)  debit to Inventory and a credit to Cash. 
C)  debit to Cost of goods sold and a credit to Inventory. 
D)  debit to Inventory and a credit to Cost of goods sold.

Question 12

A company that uses the perpetual inventory method purchases inventory for $2,000 from a vendor on account,FOB shipping point,with terms of 2/10,n/30.The company paid the shipper $100 cash for freight in.
-Which of the following entries would be made to record payment to the vendor if the payment is made within 10 days?

Accepted Answer

A)  $1,960 debit to Accounts payable and a $1,960 credit to Cash 
B)  $2,000 debit to Accounts payable, a $100 debit to Inventory and a $1,960 credit to Cash 
C)  $2,000 debit to Accounts payable, a $40 credit to Inventory and a $1,960 credit to Cash 
D)  $1,960 debit to Accounts payable, a $40 debit to Inventory and a $2,000 credit to Cash 
A)  $1,960 debit to Accounts payable and a $1,960 credit to Cash 
B)  $2,000 debit to Accounts payable, a $100 debit to Inventory and a $1,960 credit to Cash 
C)  $2,000 debit to Accounts payable, a $40 credit to Inventory and a $1,960 credit to Cash 
D)  $1,960 debit to Accounts payable, a $40 debit to Inventory and a $2,000 credit to Cash

Question 13

Alpha Company had $45,000 in beginning inventory and $80,000 in ending inventory.Cost of goods sold for the period was $25,000.The inventory turnover is:

Accepted Answer

A)  0.56. 
B)  0.3125. 
C)  0.4. 
D)  4.0. 
A)  0.56. 
B)  0.3125. 
C)  0.4. 
D)  4.0.

Question 14

Which of the following assets MUST a merchandising company have for daily operations?

Accepted Answer

A)  Accounts receivable 
B)  Prepaid insurance 
C)  Merchandise inventory 
D)  Equipment 
A)  Accounts receivable 
B)  Prepaid insurance 
C)  Merchandise inventory 
D)  Equipment

Question 15

The following pertains to periodic inventory: Compute the Net purchases. $\begin{array}{|l|r|}
\hline\text { Net sales } & \$ 198,000 \
\hline\text { Purchases } & 92,000 \
\hline \text { Purchases returns and allowances } & 1,800 \
\hline \text { Purchases discounts } & 1,250 \
\hline \text { Preight in } & 1,590 \
\hline \text { Beginning merchandise inventory } & 63,000 \
\hline \text { Ending merchandise inventory } & 37,000\\hline
\end{array}$

Accepted Answer

A)  $25,950 
B)  $87,360 
C)  $88,950 
D)  $106,000 
A)  $25,950 
B)  $87,360 
C)  $88,950 
D)  $106,000

Question 16

The periodic inventory system keeps a running record of inventory and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 17

A business has Beginning capital of $100,000.During the year,sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.$1,000 of withdrawals were taken.The ending balance in Capital,after closing entries,would be:

Accepted Answer

A)  $119,000. 
B)  $98,500. 
C)  $101,500. 
D)  $1,500. 
A)  $119,000. 
B)  $98,500. 
C)  $101,500. 
D)  $1,500.

Question 18

Compute the amount of payment for an invoice of $5,600,4/10,n/30 paid on the 7th day.

Accepted Answer

A)  $5,600 
B)  $5,040 
C)  $5,376 
D)  $5,570 
A)  $5,600 
B)  $5,040 
C)  $5,376 
D)  $5,570

Question 19

Sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.The first closing entry would include which of the following line items?

Accepted Answer

A)  Credit to Income summary of $19,000 
B)  Credit to Income summary of $20,000 
C)  Debit to Income summary of $2,500 
D)  Debit to Income summary of $16,500 
A)  Credit to Income summary of $19,000 
B)  Credit to Income summary of $20,000 
C)  Debit to Income summary of $2,500 
D)  Debit to Income summary of $16,500

Question 20

A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10,n/30.Defective inventory of $200 is returned 2 days later and the accounts are appropriately adjusted.If the company paid the vendor within 10 days,which of the following entries would be made to record the payment?

Accepted Answer

A)  $800 debit to Accounts payable and an $800 credit to Cash 
B)  $784 debit to Accounts payable, a $16 debit to Inventory and an $800 credit to Cash 
C)  $16 debit to Inventory, an $800 debit to Accounts payable and an $816 credit to Cash 
D)  $800 debit to Accounts payable, a $16 credit to Inventory and a $784 credit to Cash 
A)  $800 debit to Accounts payable and an $800 credit to Cash 
B)  $784 debit to Accounts payable, a $16 debit to Inventory and an $800 credit to Cash 
C)  $16 debit to Inventory, an $800 debit to Accounts payable and an $816 credit to Cash 
D)  $800 debit to Accounts payable, a $16 credit to Inventory and a $784 credit to Cash

Which of the following is the result of cost of goods sold divided by average inventory?

When a company uses the perpetual inventory method,the inventory account should stay current at all times.

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

When a company uses the perpetual inventory method,it should NOT be necessary to conduct a physical count of inventory.

Which of the following is TRUE about freight in?

The general ledger shows a balance of $23,678 in the Inventory account at the end of the period.A physical inventory shows a count of $22,078.The adjusting entry would be a:

Alpha Company had $45,000 in beginning inventory and $80,000 in ending inventory.Cost of goods sold for the period was $25,000.The inventory turnover is:

Which of the following assets MUST a merchandising company have for daily operations?

The following pertains to periodic inventory: Compute the Net purchases. Net sales \ 198,000 Purchases 92,000 Purchases returns and allowances 1,800 Purchases discounts 1,250 Preight in 1,590 Beginning merchandise inventory 63,000 Ending merchandise inventory 37,000

The periodic inventory system keeps a running record of inventory and cost of goods sold.

Compute the amount of payment for an invoice of $5,600,4/10,n/30 paid on the 7th day.

Sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.The first closing entry would include which of the following line items?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 5: Merchandising Operations

Which of the following is the result of cost of goods sold divided by average inventory?

When a company uses the perpetual inventory method,the inventory account should stay current at all times.

Which of the following is subtracted from Sales revenue to arrive at Net sales revenue?

When a company uses the perpetual inventory method,it should NOT be necessary to conduct a physical count of inventory.

Which of the following is TRUE about freight in?

The general ledger shows a balance of $23,678 in the Inventory account at the end of the period.A physical inventory shows a count of $22,078.The adjusting entry would be a:

Alpha Company had $45,000 in beginning inventory and $80,000 in ending inventory.Cost of goods sold for the period was $25,000.The inventory turnover is:

Which of the following assets MUST a merchandising company have for daily operations?

The following pertains to periodic inventory: Compute the Net purchases. Net sales \ 198,000 Purchases 92,000 Purchases returns and allowances 1,800 Purchases discounts 1,250 Preight in 1,590 Beginning merchandise inventory 63,000 Ending merchandise inventory 37,000

The periodic inventory system keeps a running record of inventory and cost of goods sold.

Compute the amount of payment for an invoice of $5,600,4/10,n/30 paid on the 7th day.

Sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.The first closing entry would include which of the following line items?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters