Question 1

Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:

Accepted Answer

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

Question 2

An amount that a merchandiser earns by selling its inventory is known as Sales Revenue or Sales.

Accepted Answer

A) True 
 B)False

Question 3

A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer.

Accepted Answer

A) True 
 B)False

Question 4

When a seller grants a sales allowance, the customer does not return any goods to the seller.

Accepted Answer

A) True 
 B)False

Question 5

Gross profit is calculated as the difference between net sales revenue and:

Accepted Answer

A) purchases. 
B) cost of goods sold. 
C) cost of merchandise inventory. 
D) selling and administrative expenses. 
A) purchases. 
B) cost of goods sold. 
C) cost of merchandise inventory. 
D) selling and administrative expenses.

Question 6

Which of the following is true of net sales revenue?

Accepted Answer

A) It is calculated by subtracting cost of goods sold from sales. 
B) It is calculated by adding sales discounts to sales. 
C) It is calculated by adding sales discounts and sales returns and allowances to sales. 
D) It is calculated by deducting sales discounts and sales returns and allowances from sales. 
A) It is calculated by subtracting cost of goods sold from sales. 
B) It is calculated by adding sales discounts to sales. 
C) It is calculated by adding sales discounts and sales returns and allowances to sales. 
D) It is calculated by deducting sales discounts and sales returns and allowances from sales.

Question 7

If a merchandiser uses the periodic inventory system, it is necessary to conduct physical count of inventory to determine the quantity of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 8

A merchandiser's statement of owner's equity looks exactly like that of a service business.

Accepted Answer

A) True 
 B)False

Question 9

On a multi-step income statement, both merchandisers and service companies report operating expenses in two categories-selling expenses and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 10

Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the following details.

Accepted Answer

A) $500,000 
B) $478,000 
C) $490,000 
D) $625,000 
A) $500,000 
B) $478,000 
C) $490,000 
D) $625,000

Question 11

Oscar Packers received an allowance from the vendor for an amount of $400. Give the journal entry for the same. The company uses a perpetual inventory system.

Accepted Answer

The answer of Oscar Packers received an allowance from the...

Question 12

Under the perpetual inventory system, the journal entry to record cost of goods sold when a product is sold is:

Accepted Answer

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

Question 13

The purpose of reviewing FOB terms on the invoice is to:

Accepted Answer

A) identify the person liable to pay freight. 
B) calculate the amount of freight payable. 
C) to locate the transporter. 
D) to decide and conform the transporter. 
A) identify the person liable to pay freight. 
B) calculate the amount of freight payable. 
C) to locate the transporter. 
D) to decide and conform the transporter.

Question 14

Michelin Jewelers uses the perpetual inventory system. On April 2, Michelin sold goods with a cost of $5,500 for $9,000 with terms of 3/15, n/30. On April 4, the customer reported damaged goods and Michelin granted a $1,000 sales allowance. On April 10, Michelin received the payment for the sale. Give the journal entry that will be recorded on April 10 by Michelin.

Accepted Answer

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

Question 15

The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is the correct journal entry for purchase returns of goods purchased on account under the periodic inventory system?

Accepted Answer

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

Question 17

Hitech Inc., a small, local grocer, without optical scanning cash registers and computer systems, wants to introduce an inventory system to track its inventory. The perpetual inventory system is the most suitable for its operations.

Accepted Answer

A) True 
 B)False

Question 18

What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?

Accepted Answer

A) A discount of 2% will be allowed if invoice is paid within 10 days from the date of the invoice . 
B) An interest of 2% will be charged if invoice is paid after 10 days from the date of invoice. 
C) A discount of 10% will be allowed if invoice is paid within 2 days from the date of invoice. 
D) An interest of 10% will be charged if invoice is paid after 2 days. 
A) A discount of 2% will be allowed if invoice is paid within 10 days from the date of the invoice . 
B) An interest of 2% will be charged if invoice is paid after 10 days from the date of invoice. 
C) A discount of 10% will be allowed if invoice is paid within 2 days from the date of invoice. 
D) An interest of 10% will be charged if invoice is paid after 2 days.

Question 19

Under a perpetual inventory system, merchandise returned by a customer to the seller is recorded as a ________ in the books of the seller.

Accepted Answer

A) sales return 
B) sales allowance 
C) sales discount 
D) purchase return 
A) sales return 
B) sales allowance 
C) sales discount 
D) purchase return

Question 20

________ are the expenses that occur in an entity's major line of business.

Accepted Answer

A) Selling expenses 
B) Administrative expenses 
C) Operating expenses 
D) Overhead expenses 
A) Selling expenses 
B) Administrative expenses 
C) Operating expenses 
D) Overhead expenses

Exam 5: Merchandising Operations

Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:

An amount that a merchandiser earns by selling its inventory is known as Sales Revenue or Sales.

A wholesaler is a merchandiser who buys merchandise from a manufacturer and sells the same to a retailer.

When a seller grants a sales allowance, the customer does not return any goods to the seller.

Gross profit is calculated as the difference between net sales revenue and:

Which of the following is true of net sales revenue?

If a merchandiser uses the periodic inventory system, it is necessary to conduct physical count of inventory to determine the quantity of inventory on hand.

A merchandiser's statement of owner's equity looks exactly like that of a service business.

On a multi-step income statement, both merchandisers and service companies report operating expenses in two categories-selling expenses and administrative expenses.

Calculate the cost of goods sold for a merchandiser using the periodic inventory system from the following details.

Oscar Packers received an allowance from the vendor for an amount of $400. Give the journal entry for the same. The company uses a perpetual inventory system.

Under the perpetual inventory system, the journal entry to record cost of goods sold when a product is sold is:

The purpose of reviewing FOB terms on the invoice is to:

The gross profit percentage measures the profitability of each sales dollar above the cost of goods sold.

Which of the following is the correct journal entry for purchase returns of goods purchased on account under the periodic inventory system?

Hitech Inc., a small, local grocer, without optical scanning cash registers and computer systems, wants to introduce an inventory system to track its inventory. The perpetual inventory system is the most suitable for its operations.

What does "2/10" mean, with respect to "credit terms of 2/10, n/30"?

Under a perpetual inventory system, merchandise returned by a customer to the seller is recorded as a ________ in the books of the seller.

________ are the expenses that occur in an entity's major line of business.

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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