Question 1

The seller may prepay the freight costs even though the terms are FOB shipping point.

Accepted Answer

A) True 
 B)False

Question 2

The seller records the sales tax as part of the sales amount.

Accepted Answer

A) True 
 B)False

Question 3

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Accepted Answer

A) True 
 B)False

Question 4

Emma Co.sold to Isabella Co.merchandise on account FOB shipping point,2/10,net 30,for $15,000.Emma Co.prepaid the $750 shipping charge.Using the perpetual inventory method,which of the following entries will Isabella Co.make to record payment of the merchandise if Isabella Co.pays within the discount period?

Accepted Answer

A) Accounts Payable-Emma Co.,debit $15,000; Cash,credit $15,000 
B) Accounts Payable-Emma Co.,debit $15,450; Cash,credit $15,450 
C) Accounts Payable-Emma Co.,debit $15,000; Freight-In,debit $750; Cash,credit $15,750 
D) Accounts Payable-Emma Co.,debit $15,750; Merchandise Inventory,debit $300; Cash,credit $16,050 
A) Accounts Payable-Emma Co.,debit $15,000; Cash,credit $15,000 
B) Accounts Payable-Emma Co.,debit $15,450; Cash,credit $15,450 
C) Accounts Payable-Emma Co.,debit $15,000; Freight-In,debit $750; Cash,credit $15,750 
D) Accounts Payable-Emma Co.,debit $15,750; Merchandise Inventory,debit $300; Cash,credit $16,050

Question 5

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

Accepted Answer

A) Merchandise Inventory 
B) Accumulated Depreciation 
C) Dividends 
D) Cost of Merchandise Sold 
A) Merchandise Inventory 
B) Accumulated Depreciation 
C) Dividends 
D) Cost of Merchandise Sold

Question 6

Complete the following data taken from the condensed income statements for merchandising Companies X,Y,and Z.
 $\begin{array}{|l|r|r|r|}
\hline & \text { Company } \mathrm{X} & \text { Company } \mathrm{Y} & \text { Company Z } \
\hline \text { Net income or net loss } & \$ 220 & \$ & ? 70 \
\hline \text { Sales } & ? & 1,315 & 890 \
\hline \text { Gross profit } & 435 & ? & 465 \
\hline \text { Operating expenses } & ? & 565 & ? \
\hline \text { Cost of merchandise sold } & 330 & 775 & ? \
\hline
\end{array}$

Accepted Answer

None

Question 7

Merchandise Inventory normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 8

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 9

As we compare a merchandising business to a service business,the financial statement that changes the most is the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

When merchandise purchased on account is returned under the perpetual inventory system,the buyer would debit

Accepted Answer

A) Merchandise Inventory 
B) Purchases Returns and Allowances 
C) Accounts Payable 
D) Accounts Receivable 
A) Merchandise Inventory 
B) Purchases Returns and Allowances 
C) Accounts Payable 
D) Accounts Receivable

Question 11

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?

Accepted Answer

A) none of these 
B) Cost of Merchandise Sold 
C) Inventory 
D) Purchases 
A) none of these 
B) Cost of Merchandise Sold 
C) Inventory 
D) Purchases

Question 12

When a large quantity of merchandise is purchased,a reduction allowed on the sale price is called a trade discount.

Accepted Answer

A) True 
 B)False

Question 13

Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.The entry to record the purchase will include a debit to Cash and a credit to Sales.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

Accepted Answer

A) Sales 
B) Accounts Receivable 
C) Merchandise Inventory 
D) Accounts Payable 
A) Sales 
B) Accounts Receivable 
C) Merchandise Inventory 
D) Accounts Payable

Question 15

Sampson Co.sold merchandise to Batson Co.on account,$46,000,terms 2/15,net 45.The cost of the merchandise sold is $38,500.The Batson Co.paid the invoice within the discount period.Prepare the entries that both Sampson and Batson Companies would record for the above.Assume both Sampson and Batson use a perpetual inventory system.

Accepted Answer

Sampson Co

Question 16

When comparing a retail business to a service business,the financial statement that changes the least is the

Accepted Answer

A) balance sheet 
B) income statement 
C) retained earnings statement 
D) statement of cash flows 
A) balance sheet 
B) income statement 
C) retained earnings statement 
D) statement of cash flows

Question 17

President's salaries,depreciation of office furniture,and office supplies are

Accepted Answer

A) selling expenses 
B) miscellaneous expenses 
C) administrative expenses 
D) inventory expenses 
A) selling expenses 
B) miscellaneous expenses 
C) administrative expenses 
D) inventory expenses

Question 18

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

Accepted Answer

A) selling expenses 
B) general expenses 
C) other expenses 
D) administrative expenses 
A) selling expenses 
B) general expenses 
C) other expenses 
D) administrative expenses

Question 19

Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.

Accepted Answer

A) True 
 B)False

Question 20

If merchandise sold on account is returned to the seller,the seller acknowledges the return by issuing a

Accepted Answer

A) sales invoice 
B) purchase invoice 
C) credit memo 
D) debit memo 
A) sales invoice 
B) purchase invoice 
C) credit memo 
D) debit memo

The seller may prepay the freight costs even though the terms are FOB shipping point.

The seller records the sales tax as part of the sales amount.

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

Complete the following data taken from the condensed income statements for merchandising Companies X,Y,and Z. Company Company Company Z Net income or net loss \ 220 \ ?70 Sales ? 1,315 890 Gross profit 435 ? 465 Operating expenses ? 565 ? Cost of merchandise sold 330 775 ?

Merchandise Inventory normally has a debit balance.

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

As we compare a merchandising business to a service business,the financial statement that changes the most is the balance sheet.

When merchandise purchased on account is returned under the perpetual inventory system,the buyer would debit

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?

When a large quantity of merchandise is purchased,a reduction allowed on the sale price is called a trade discount.

Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.The entry to record the purchase will include a debit to Cash and a credit to Sales.

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

When comparing a retail business to a service business,the financial statement that changes the least is the

President's salaries,depreciation of office furniture,and office supplies are

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.

If merchandise sold on account is returned to the seller,the seller acknowledges the return by issuing a

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 5: Accounting for Merchandising Businesses

The seller may prepay the freight costs even though the terms are FOB shipping point.

The seller records the sales tax as part of the sales amount.

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

Complete the following data taken from the condensed income statements for merchandising Companies X,Y,and Z. Company Company Company Z Net income or net loss \ 220 \ ?70 Sales ? 1,315 890 Gross profit 435 ? 465 Operating expenses ? 565 ? Cost of merchandise sold 330 775 ?

Merchandise Inventory normally has a debit balance.

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

As we compare a merchandising business to a service business,the financial statement that changes the most is the balance sheet.

When merchandise purchased on account is returned under the perpetual inventory system,the buyer would debit

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?

When a large quantity of merchandise is purchased,a reduction allowed on the sale price is called a trade discount.

Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.The entry to record the purchase will include a debit to Cash and a credit to Sales.

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

When comparing a retail business to a service business,the financial statement that changes the least is the

President's salaries,depreciation of office furniture,and office supplies are

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.

If merchandise sold on account is returned to the seller,the seller acknowledges the return by issuing a

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Inventories

Sarbanes-Oxley,internal Control,and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization,stock Transactions,and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters