Exam 4: Accounting for Merchandising Operations

Credit terms of 2/10,n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date.Otherwise,the full amount is due in 30 days.

(True/False)

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Question 201

Quick assets are defined as:

(Multiple Choice)

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Question 202

How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company?

(Essay)

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Question 203

Inventory Returns Estimated,which reflects an adjustment to inventory for expected future returns,is a liability account reported in the balance sheet,usually under Current Liabilities.

(True/False)

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Question 204

Which of the following is not included on a purchase invoice?

(Multiple Choice)

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Question 205

A ________ inventory system updates the accounting record for inventory only at the end of an accounting period.

(Short Answer)

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Question 206

A merchandising company's operating cycle begins with the purchase of merchandise and ends with the collection of cash from the sale.

(True/False)

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Question 207

Netherland Corporation has the following unadjusted balances: Accounts Receivable,$80,000 (debit),and Allowance for Sales Discounts $300 (credit).Of the receivables,$50,000 of them are within the 2% discount period,and Netherland expects buyers to take $1,000 in future-period discounts ($50,000 × 2%)arising from this period's sales.The adjusting entry or entries to estimate sales discounts is (are):

(Multiple Choice)

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Question 208

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

(Multiple Choice)

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Question 209

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

(True/False)

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Question 210

Describe the recording process (including costs)for the types of transactions involved in purchasing merchandise inventory when a perpetual inventory system is used.

(Essay)

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Question 211

Which of the following statements regarding the operating cycle of a merchandising company is not true?

(Multiple Choice)

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Question 212

A company's current ratio is 1.2 and its quick ratio is 0.25.This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

(True/False)

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Question 213

Purchase returns refer to merchandise a buyer purchases but then returns to the seller.

(True/False)

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Question 214

The gross margin ratio:

(Multiple Choice)

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Question 215

A service company earns net income by buying and selling merchandise.

(True/False)

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Question 216

A single-step income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

(True/False)

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Question 217

What are the steps of the operating cycle for a merchandiser with credit sales?

(Essay)

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Question 218

On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Ryan uses the periodic inventory system and the net method of accounting for sales.On September 14,Johnson returns some of the non-defective merchandise,which is restored to inventory.The selling price of the returned merchandise is $500 and the cost of the merchandise returned is $350.The entry or entries that Ryan must make on September 14 is (are):

(Multiple Choice)

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Question 219

Match the following definitions with terms.

The point of ownership transfer from seller to buyer that takes place when the goods depart the seller's place of business.

Acid-test ratio

A given percent deducted from a list price often granted to customers purchasing large quantities of merchandise.

FOB shipping point

Products a company owns and intends to sell.

Selling expenses

Correct Answer:

Verified

The point of ownership transfer from seller to buyer that takes place when the goods depart the seller's place of business.

A given percent deducted from a list price often granted to customers purchasing large quantities of merchandise.

Products a company owns and intends to sell.

A measure of a company's ability to pay its current liabilities that excludes less liquid current assets such as inventory and prepaid expenses.

Inventory losses that require an adjusting entry to account for losses from theft or deterioration.

An income statement format that lists cost of goods sold as another expense and shows only one subtotal for total expenses.

The point of ownership transfer from seller to buyer that takes place when the goods arrive at the buyer's place of business.

The expenses of advertising merchandise, making sales, and delivering goods to customers.

An income statement format that shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

The expenses that support a company's overall operations and include costs related to accounting, human resources and finance.

(Matching)

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Question 220

Showing 201 - 220 of 252

Exam 4: Accounting for Merchandising Operations

Credit terms of 2/10,n/30 imply that the seller offers the purchaser a 2% cash discount if the amount is paid within 10 days of the invoice date.Otherwise,the full amount is due in 30 days.

Quick assets are defined as:

How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company?

Inventory Returns Estimated,which reflects an adjustment to inventory for expected future returns,is a liability account reported in the balance sheet,usually under Current Liabilities.

Which of the following is not included on a purchase invoice?

A ________ inventory system updates the accounting record for inventory only at the end of an accounting period.

A merchandising company's operating cycle begins with the purchase of merchandise and ends with the collection of cash from the sale.

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Describe the recording process (including costs)for the types of transactions involved in purchasing merchandise inventory when a perpetual inventory system is used.

Which of the following statements regarding the operating cycle of a merchandising company is not true?

A company's current ratio is 1.2 and its quick ratio is 0.25.This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Purchase returns refer to merchandise a buyer purchases but then returns to the seller.

The gross margin ratio:

A service company earns net income by buying and selling merchandise.

A single-step income statement includes cost of goods sold as another expense and shows only one subtotal for total expenses.

What are the steps of the operating cycle for a merchandiser with credit sales?

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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