Question 1

When a company uses the perpetual inventory system, there is no need to conduct a physical count of inventory.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the following trial balance.   Prepare a multi-step income statement:

Accepted Answer

The answer of Refer to the following trial balance. ...

Question 3

The term "inventory," for a merchandiser, refers to:

Accepted Answer

A) raw materials that are used for production. 
B) equipment that are used in production process. 
C) the cost of goods sold. 
D) goods held for sale to customers. 
A) raw materials that are used for production. 
B) equipment that are used in production process. 
C) the cost of goods sold. 
D) goods held for sale to customers.

Question 4

A retailer purchases goods from a manufacturer and sells them to customers.

Accepted Answer

A) True 
 B)False

Question 5

A purchase discount is the price offered by the purchaser for delaying the payment to the seller.

Accepted Answer

A) True 
 B)False

Question 6

The main expense of a merchandiser is:

Accepted Answer

A) cost of goods sold. 
B) current assets. 
C) selling and administrative cost. 
D) production overheads. 
A) cost of goods sold. 
B) current assets. 
C) selling and administrative cost. 
D) production overheads.

Question 7

When a customer returns goods to the seller, the seller records it as purchase returns.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the correct journal entry for freight paid on goods purchased by a merchandiser using the periodic inventory system?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser.

Accepted Answer

A) True 
 B)False

Question 10

An adjusted trial balance is given below.   What will be the final balance in the Smith, Capital account after recording the closing entries?

Accepted Answer

A) $37,800 
B) $12,700 
C) $24,000 
D) $36,800 
A) $37,800 
B) $12,700 
C) $24,000 
D) $36,800

Question 11

Avery Supplies uses the periodic inventory system. On February 1, Avery purchased inventory on account for $10,000. The terms of invoice were 3/10, n/30. The amount due was paid on February 9th. Which of the following journal entries correctly records the payment in the books of Avery?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Nurix Inc. sold goods on credit terms n/20 to Jelly Harper Inc. This means no discounts are offered, and the amount of the invoice must be paid within 20 days from the date of invoice.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is shown on a multi-step income statement, but not on a single-step income statement?

Accepted Answer

A) gross profit 
B) net sales revenue 
C) cost of goods sold 
D) net income 
A) gross profit 
B) net sales revenue 
C) cost of goods sold 
D) net income

Question 14

On a multi-step income statement, the operating expenses are subtracted from ________ to arrive at operating income.

Accepted Answer

A) net sales 
B) cost of goods sold 
C) net profit 
D) gross profit 
A) net sales 
B) cost of goods sold 
C) net profit 
D) gross profit

Question 15

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise for $50,000 to a customer on account with terms of 2/15, n/30. The allowance and returns on this sale amounted to $2,000 and $8,000, respectively. The cost of goods sold was $22,000. On April 20, Michelin received payment from the customer. Calculate the amount of gross profit.

Accepted Answer

A) $40,000 
B) $22,000 
C) $18,000 
D) $15,000 
A) $40,000 
B) $22,000 
C) $18,000 
D) $15,000

Question 16

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

The discount is calculated on the amount of the merchandise purchased including transportation costs.

Accepted Answer

A) True 
 B)False

Question 18

Under the perpetual inventory system, two journal entries are used to record the sales of merchandise. One entry records the Sales Revenue and another entry records the Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 19

A merchandiser purchased inventory on account for $10,000. Under the periodic inventory system, the journal entry to record purchases would include:

Accepted Answer

A) a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000. 
B) a debit to Accounts Payable for $10,000 and a credit to Purchases for $10,000. 
C) a debit to Merchandise Inventory for $10,000 and a credit to Accounts Payable for $10,000. 
D) a debit to Accounts Payable for $10,000 and a credit to Merchandise Inventory for $10,000. 
A) a debit to Purchases for $10,000 and a credit to Accounts Payable for $10,000. 
B) a debit to Accounts Payable for $10,000 and a credit to Purchases for $10,000. 
C) a debit to Merchandise Inventory for $10,000 and a credit to Accounts Payable for $10,000. 
D) a debit to Accounts Payable for $10,000 and a credit to Merchandise Inventory for $10,000.

Question 20

An adjusted trial balance of a merchandiser is given below.   Give journal entry to close the expense accounts and contra revenue accounts with a debit balance.

Accepted Answer

The answer of An adjusted trial balance of a merchandiser...

Exam 5: Merchandising Operations

When a company uses the perpetual inventory system, there is no need to conduct a physical count of inventory.

Refer to the following trial balance. Prepare a multi-step income statement:

The term "inventory," for a merchandiser, refers to:

A retailer purchases goods from a manufacturer and sells them to customers.

A purchase discount is the price offered by the purchaser for delaying the payment to the seller.

The main expense of a merchandiser is:

When a customer returns goods to the seller, the seller records it as purchase returns.

Which of the following is the correct journal entry for freight paid on goods purchased by a merchandiser using the periodic inventory system?

Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser.

An adjusted trial balance is given below. What will be the final balance in the Smith, Capital account after recording the closing entries?

Avery Supplies uses the periodic inventory system. On February 1, Avery purchased inventory on account for $10,000. The terms of invoice were 3/10, n/30. The amount due was paid on February 9th. Which of the following journal entries correctly records the payment in the books of Avery?

Nurix Inc. sold goods on credit terms n/20 to Jelly Harper Inc. This means no discounts are offered, and the amount of the invoice must be paid within 20 days from the date of invoice.

Which of the following is shown on a multi-step income statement, but not on a single-step income statement?

On a multi-step income statement, the operating expenses are subtracted from ________ to arrive at operating income.

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold merchandise with a cost of $5,500 for $9,000 to a customer on account with terms of 3/15, n/30. The journal entry to record the cost of goods sold would be:

The discount is calculated on the amount of the merchandise purchased including transportation costs.

Under the perpetual inventory system, two journal entries are used to record the sales of merchandise. One entry records the Sales Revenue and another entry records the Cost of Goods Sold.

A merchandiser purchased inventory on account for $10,000. Under the periodic inventory system, the journal entry to record purchases would include:

An adjusted trial balance of a merchandiser is given below. Give journal entry to close the expense accounts and contra revenue accounts with a debit balance.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Avery Supplies uses the periodic inventory system. On February 1, Avery purchased inventory on account for $10,000. The terms of invoice were 3/10, n/30. The amount due was paid on February 9^th. Which of the following journal entries correctly records the payment in the books of Avery?