Question 1

Gross profit is calculated as:

Accepted Answer

A) sales revenue less sales discounts and allowances. 
B) sales revenue less operating expenses. 
C) net sales revenue less sales discounts. 
D) net sales revenue less cost of goods sold. 
A) sales revenue less sales discounts and allowances. 
B) sales revenue less operating expenses. 
C) net sales revenue less sales discounts. 
D) net sales revenue less cost of goods sold.

Question 2

A company that uses the perpetual inventory system purchased inventory for $1,000,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 15 days after the date of invoice?

Accepted Answer

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

Question 3

Net sales revenue is equal to sales revenue less cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 4

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. Which of the following journal entries correctly records the sales revenue?

Accepted Answer

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

Question 5

The discount amount is calculated on the amount of the invoice minus the returns and allowances.

Accepted Answer

A) True 
 B)False

Question 6

In a multi-step income statement, interest revenue and interest expense are included in operating income.

Accepted Answer

A) True 
 B)False

Question 7

Portian Merchandisers has purchased merchandise on account and paid $450 for freight in. Give journal entry for freight paid. (Assume a perpetual inventory system)

Accepted Answer

The answer of Portian Merchandisers has purchased merchandise on account...

Question 8

If goods are sold on terms FOB shipping point the:

Accepted Answer

A) seller normally pays the transportation costs. 
B) buyer normally pays the transportation costs. 
C) buyer and the seller split the shipping costs. 
D) shipping company bears the transportation cost. 
A) seller normally pays the transportation costs. 
B) buyer normally pays the transportation costs. 
C) buyer and the seller split the shipping costs. 
D) shipping company bears the transportation cost.

Question 9

A merchandiser returned inventory worth $2,000 that was purchased on account. Under the periodic inventory system, the journal entry to record such returns would include:

Accepted Answer

A) a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts Payable for $2,000. 
B) a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and Allowances. 
C) a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000. 
D) a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000. 
A) a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts Payable for $2,000. 
B) a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and Allowances. 
C) a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000. 
D) a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000.

Question 10

Freight in is to be recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following line items would appear on the income statement of a company that uses the periodic inventory system, but not on that of a company that uses the perpetual inventory system?

Accepted Answer

A) Net Sales Revenue 
B) Cost of Goods Sold 
C) Cost of Goods Available for Sale 
D) Operating expenses 
A) Net Sales Revenue 
B) Cost of Goods Sold 
C) Cost of Goods Available for Sale 
D) Operating expenses

Question 12

A company made net sales revenue of $540,000 and cost of goods sold totaled $324,000. Calculate its gross profit percentage.

Accepted Answer

A) 40.00%. 
B) 66.67%. 
C) 100.00%. 
D) 300.00%. 
A) 40.00%. 
B) 66.67%. 
C) 100.00%. 
D) 300.00%.

Question 13

WAXS-D, merchandisers of musical instruments, has provided the following details:   Credit terms are: 3/20, n/45, FOB shipping. Calculate the net cost of inventory purchased assuming that there are no other inventory related transactions during the month.

Accepted Answer

A) $785,000 
B) $740,000 
C) $725,000 
D) $743,250 
A) $785,000 
B) $740,000 
C) $725,000 
D) $743,250

Question 14

Refer to the following trial balance.   How much is the gross profit?

Accepted Answer

A) $155,000 
B) $80,000 
C) $230,000 
D) $75,000 
A) $155,000 
B) $80,000 
C) $230,000 
D) $75,000

Question 15

The term "Freight out" refers to:

Accepted Answer

A) transportation costs on purchases. 
B) cost of inventory purchased. 
C) costs that are not actually paid in cash. 
D) transportation costs on sales. 
A) transportation costs on purchases. 
B) cost of inventory purchased. 
C) costs that are not actually paid in cash. 
D) transportation costs on sales.

Question 16

Which of the following is added to operating income to arrive at net income?

Accepted Answer

A) sales revenue 
B) cost of goods sold 
C) interest revenue 
D) operating expenses 
A) sales revenue 
B) cost of goods sold 
C) interest revenue 
D) operating expenses

Question 17

An invoice is also known as a bill.

Accepted Answer

A) True 
 B)False

Question 18

A company purchased inventory for $100,000 on account, and recorded it as follows:   The vendor's invoice showed terms of 3/10, net 30. Give the journal entry for the payment of the invoice seven days after the invoice date, assuming that the vendor uses the perpetual inventory system.

Accepted Answer

The answer of A company purchased inventory for $100,000 on...

Question 19

Which of the following entries would be made to record the purchase of inventory on account if a company uses the perpetual inventory system?

Accepted Answer

A) a debit to Purchases and a credit to Accounts Payable 
B) a debit to Accounts Payable and a credit to Purchases 
C) a debit to Merchandise Inventory and a credit to Accounts Payable 
D) a debit to Accounts Payable and a credit to Merchandise Inventory 
A) a debit to Purchases and a credit to Accounts Payable 
B) a debit to Accounts Payable and a credit to Purchases 
C) a debit to Merchandise Inventory and a credit to Accounts Payable 
D) a debit to Accounts Payable and a credit to Merchandise Inventory

Question 20

A company purchased inventory for $75,000 from a vendor on account, FOB shipping point, with terms of 3/10, n/30. The company paid the shipper $1,500 cash for freight in. The company paid the vendor 9 days after the sale. If there was no beginning inventory, the cost of inventory would be: (Assume a perpetual inventory system)

Accepted Answer

A) $74,250. 
B) $76,500. 
C) $71,295. 
D) $73,500. 
A) $74,250. 
B) $76,500. 
C) $71,295. 
D) $73,500.

Exam 5: Merchandising Operations

Gross profit is calculated as:

A company that uses the perpetual inventory system purchased inventory for $1,000,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 15 days after the date of invoice?

Net sales revenue is equal to sales revenue less cost of goods sold.

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. Which of the following journal entries correctly records the sales revenue?

The discount amount is calculated on the amount of the invoice minus the returns and allowances.

In a multi-step income statement, interest revenue and interest expense are included in operating income.

Portian Merchandisers has purchased merchandise on account and paid $450 for freight in. Give journal entry for freight paid. (Assume a perpetual inventory system)

If goods are sold on terms FOB shipping point the:

A merchandiser returned inventory worth $2,000 that was purchased on account. Under the periodic inventory system, the journal entry to record such returns would include:

Freight in is to be recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Which of the following line items would appear on the income statement of a company that uses the periodic inventory system, but not on that of a company that uses the perpetual inventory system?

A company made net sales revenue of $540,000 and cost of goods sold totaled $324,000. Calculate its gross profit percentage.

WAXS-D, merchandisers of musical instruments, has provided the following details: Credit terms are: 3/20, n/45, FOB shipping. Calculate the net cost of inventory purchased assuming that there are no other inventory related transactions during the month.

Refer to the following trial balance. How much is the gross profit?

The term "Freight out" refers to:

Which of the following is added to operating income to arrive at net income?

An invoice is also known as a bill.

A company purchased inventory for $100,000 on account, and recorded it as follows: The vendor's invoice showed terms of 3/10, net 30. Give the journal entry for the payment of the invoice seven days after the invoice date, assuming that the vendor uses the perpetual inventory system.

Which of the following entries would be made to record the purchase of inventory on account if a company uses the perpetual inventory system?

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

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