Question 1

The periodic inventory system requires updating the inventory account only at the end of the period.

Accepted Answer

A) True 
 B)False  True

Question 2

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.

Accepted Answer

A) True 
 B)False  True

Question 3

A period's beginning inventory is equal to the prior period's ________.

Accepted Answer

ending inventory

Question 4

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of

Question 5

Which of the following accounts would be closed at the end of the accounting period with a debit?

Accepted Answer

A) Sales Discounts. 
B) Sales Returns and Allowances. 
C) Cost of Goods Sold. 
D) Operating Expenses. 
E) Sales. 
A) Sales Discounts. 
B) Sales Returns and Allowances. 
C) Cost of Goods Sold. 
D) Operating Expenses. 
E) Sales.

Question 6

Offering sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements regarding inventory shrinkage is not true?

Accepted Answer

A) Inventory shrinkage refers to the loss of inventory. 
B) Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts. 
C) Inventory shrinkage is recognized by debiting an operating expense. 
D) Inventory shrinkage is recognized by debiting Cost of Goods Sold. 
E) Inventory shrinkage can be caused by theft or deterioration. 
A) Inventory shrinkage refers to the loss of inventory. 
B) Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts. 
C) Inventory shrinkage is recognized by debiting an operating expense. 
D) Inventory shrinkage is recognized by debiting Cost of Goods Sold. 
E) Inventory shrinkage can be caused by theft or deterioration.

Question 8

Jasper Company is a wholesaler that buys merchandise in large quantities.Its supplier's catalog indicates a list price of $500 per unit on merchandise Jasper intends to purchase,and offers a 30% trade discount for large quantity purchases.The cost of shipping for the merchandise is $7 per unit.Jasper's total purchase price per unit will be:

Accepted Answer

A) $507. 
B) $350. 
C) $357. 
D) $343. 
E) $493. 
A) $507. 
B) $350. 
C) $357. 
D) $343. 
E) $493.

Question 9

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system and the gross method of recording invoices.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 10

KLM Corporation's quick assets are $5,888,000,its current assets are $11,700,000 and its current liabilities are $8,000,000.Its acid-test ratio equals:

Accepted Answer

A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20. 
A) 0.50. 
B) 0.68. 
C) 0.74. 
D) 1.50. 
E) 2.20.

Question 11

Cushman Company had $800,000 in sales,sales discounts of $12,000,sales returns and allowances of $18,000,cost of goods sold of $380,000,and $275,000 in operating expenses.
-Net income equals:

Accepted Answer

A) $770,000. 
B) $402,000. 
C) $390,000. 
D) $115,000. 
E) $408,000. 
A) $770,000. 
B) $402,000. 
C) $390,000. 
D) $115,000. 
E) $408,000.

Question 12

FOB ________ means the buyer accepts ownership when the goods depart the seller's place of business.The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Accepted Answer

The answer of FOB ________ means the buyer accepts ownership...

Question 13

The following information refers to Percy's Records and its competitors in the music store business.
   Required:
Comment on the relative liquidity positions of these companies.

Accepted Answer

Both Jewel CDs and Rudy's Raps have acce

Question 14

On May 1,Anders Company purchased merchandise in the amount of $5,800 from Shilling,with credit terms of 2/10,n/30.Anders uses the perpetual inventory system and the gross method.The journal entry that Anders will make on May 1 is:

Accepted Answer

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

Question 15

When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an expense.

Accepted Answer

A) True 
 B)False

Question 16

Sales discounts has a normal debit balance because it decreases Sales,which has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 17

From the adjusted trial balance given below for the Grayson Company,prepare a multiple-step income statement in good form.Salaries expense and building depreciation expense should be equally divided between selling activities and the general and administrative activities.

Accepted Answer

The answer of From the adjusted trial balance given below...

Question 18

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

Accepted Answer

A) Balanced income statement. 
B) Single-step income statement. 
C) Multiple-step income statement. 
D) Combined income statement. 
E) Simplified income statement. 
A) Balanced income statement. 
B) Single-step income statement. 
C) Multiple-step income statement. 
D) Combined income statement. 
E) Simplified income statement.

Question 19

Using the following year-end information for Calvin's Clothing,calculate the current ratio and acid-test ratio for the business:

Accepted Answer

A) 1.80 and 1.00 
B) 1.97 and 1.52 
C) 2.73 and 1.52 
D) 3.50 and 0.90 
E) 1.80 and 0.90 
A) 1.80 and 1.00 
B) 1.97 and 1.52 
C) 2.73 and 1.52 
D) 3.50 and 0.90 
E) 1.80 and 0.90

Question 20

On September 12,Vander Company sold merchandise in the amount of $5,800 to Jepson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.
-Jepson uses the periodic inventory system and the gross method of accounting for purchases.Jepson pays the invoice on September 18,and takes the appropriate discount.The journal entry that Jepson makes on September 18 is:

Accepted Answer

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

Exam 4: Accounting for Merchandising Operations

The periodic inventory system requires updating the inventory account only at the end of the period.

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.

A period's beginning inventory is equal to the prior period's ________.

Distinguish between selling expenses and general and administrative expenses.

Which of the following accounts would be closed at the end of the accounting period with a debit?

Offering sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Which of the following statements regarding inventory shrinkage is not true?

Prepare journal entries to record the following merchandising transactions of Margin Company,which applies the perpetual inventory system and the gross method of recording invoices.Margin Company offers all of its credit customers credit terms of 2/10,n/30.

KLM Corporation's quick assets are $5,888,000,its current assets are $11,700,000 and its current liabilities are $8,000,000.Its acid-test ratio equals:

Cushman Company had $800,000 in sales,sales discounts of $12,000,sales returns and allowances of $18,000,cost of goods sold of $380,000,and $275,000 in operating expenses. -Net income equals:

FOB ________ means the buyer accepts ownership when the goods depart the seller's place of business.The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

The following information refers to Percy's Records and its competitors in the music store business. Required: Comment on the relative liquidity positions of these companies.

On May 1,Anders Company purchased merchandise in the amount of $5,800 from Shilling,with credit terms of 2/10,n/30.Anders uses the perpetual inventory system and the gross method.The journal entry that Anders will make on May 1 is:

When purchases are recorded at net amounts,any discounts lost as a result of late payments are reported as an expense.

Sales discounts has a normal debit balance because it decreases Sales,which has a normal credit balance.

From the adjusted trial balance given below for the Grayson Company,prepare a multiple-step income statement in good form.Salaries expense and building depreciation expense should be equally divided between selling activities and the general and administrative activities.

An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:

Using the following year-end information for Calvin's Clothing,calculate the current ratio and acid-test ratio for the business:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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