Question 1

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

Accepted Answer

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

Question 2

A seller may grant a buyer a reduction in selling price and this is called a customer discount.

Accepted Answer

A) True 
 B)False

Question 3

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

Accepted Answer

A)  debit to Sales 
B)  debit to Inventory 
C)  credit to Inventory 
D)  credit to Accounts Receivable 
A)  debit to Sales 
B)  debit to Inventory 
C)  credit to Inventory 
D)  credit to Accounts Receivable

Question 4

Income that cannot be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Revenue on the multiple-step income statement.

Accepted Answer

A) True 
 B)False

Question 5

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

Accepted Answer

A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB buyer 
A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB buyer

Question 6

The abbreviation FOB stands for "free on board."

Accepted Answer

A) True 
 B)False

Question 7

Match each of the following terms (a-h) with the correct definition below.
-Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

Accepted Answer

A) Credit terms 
B) FOB destination 
C) FOB shipping point 
D) Periodic inventory system 
E) Perpetual inventory system
F)Inventory shrinkage
G)Single-step income statement
H)Multiple-step income statement 
A) Credit terms 
B) FOB destination 
C) FOB shipping point 
D) Periodic inventory system 
E) Perpetual inventory system
F)Inventory shrinkage
G)Single-step income statement
H)Multiple-step income statement

Question 8

Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30. The seller prepaid freight costs of $100. Prior to payment, $1,600 of the merchandise is returned. The invoice is paid within the discount period.
Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used. (a) Purchased the merchandise.
(b) Recorded receipt of the credit memo for merchandise returned.
(c) Paid the amount owed.

Accepted Answer

The answer of Merchandise with a list price of $4,700...

Question 9

What is the normal balance of the following accounts?
a. Sales Tax Payable
b. Inventory
c. Delivery Expense
d. Cost of Goods Sold
e. Customer Refunds Payable
f. Estimated Returns Inventory
g. Sales

Accepted Answer

a. credit
b. debit
c

Question 10

In a perpetual inventory system, the Inventory account is only used to reflect the beginning inventory.

Accepted Answer

A) True 
 B)False

Question 11

During the current year, merchandise is sold for $147,500 cash and $381,750 on account. The cost of the goods sold is $242,000. What is the amount of the gross profit?

Accepted Answer

A)  $771,250 
B)  $476,250 
C)  $287,250 
D)  $7,750 
A)  $771,250 
B)  $476,250 
C)  $287,250 
D)  $7,750

Question 12

What is the major difference between a periodic and perpetual inventory system?

Accepted Answer

A)  Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account. 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. 
D)  All of the answers are correct. 
A)  Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account. 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the accounting period. 
D)  All of the answers are correct.

Question 13

Freight-in is considered a cost of purchasing inventory.

Accepted Answer

A) True 
 B)False

Question 14

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Accepted Answer

A) True 
 B)False

Question 15

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Accepted Answer

A)  $21,000 
B)  $20,580 
C)  $30,000 
D)  $29,400 
A)  $21,000 
B)  $20,580 
C)  $30,000 
D)  $29,400

Question 16

Under the periodic inventory system, the cost of goods sold is equal to the beginning inventory plus the cost of merchandise purchased plus the ending inventory.

Accepted Answer

A) True 
 B)False

Question 17

A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Accepted Answer

A)  $12,670 
B)  $9,070 
C)  $8,420 
D)  $17,230 
A)  $12,670 
B)  $9,070 
C)  $8,420 
D)  $17,230

Question 18

Details of invoices for purchases of merchandise are as follows:   ​
Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Accepted Answer

The answer of Details of invoices for purchases of merchandise...

Question 19

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following items would not affect the cost of inventory purchased during the period?

Accepted Answer

A)  quantity discounts 
B)  sales discounts 
C)  freight in 
D)  sales commissions 
A)  quantity discounts 
B)  sales discounts 
C)  freight in 
D)  sales commissions

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

A seller may grant a buyer a reduction in selling price and this is called a customer discount.

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

Income that cannot be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Revenue on the multiple-step income statement.

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

The abbreviation FOB stands for "free on board."

Match each of the following terms (a-h) with the correct definition below. -Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

What is the normal balance of the following accounts? a. Sales Tax Payable b. Inventory c. Delivery Expense d. Cost of Goods Sold e. Customer Refunds Payable f. Estimated Returns Inventory g. Sales

In a perpetual inventory system, the Inventory account is only used to reflect the beginning inventory.

During the current year, merchandise is sold for $147,500 cash and $381,750 on account. The cost of the goods sold is $242,000. What is the amount of the gross profit?

What is the major difference between a periodic and perpetual inventory system?

Freight-in is considered a cost of purchasing inventory.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Under the periodic inventory system, the cost of goods sold is equal to the beginning inventory plus the cost of merchandise purchased plus the ending inventory.

A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Details of invoices for purchases of merchandise are as follows: Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

Which of the following items would not affect the cost of inventory purchased during the period?

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 5: Accounting for Retail Businesses

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

A seller may grant a buyer a reduction in selling price and this is called a customer discount.

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

Income that cannot be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Revenue on the multiple-step income statement.

If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

The abbreviation FOB stands for "free on board."

Match each of the following terms (a-h) with the correct definition below. -Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

What is the normal balance of the following accounts? a. Sales Tax Payable b. Inventory c. Delivery Expense d. Cost of Goods Sold e. Customer Refunds Payable f. Estimated Returns Inventory g. Sales

In a perpetual inventory system, the Inventory account is only used to reflect the beginning inventory.

During the current year, merchandise is sold for $147,500 cash and $381,750 on account. The cost of the goods sold is $242,000. What is the amount of the gross profit?

What is the major difference between a periodic and perpetual inventory system?

Freight-in is considered a cost of purchasing inventory.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Under the periodic inventory system, the cost of goods sold is equal to the beginning inventory plus the cost of merchandise purchased plus the ending inventory.

A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Details of invoices for purchases of merchandise are as follows: ​ Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period.

Which of the following items would not affect the cost of inventory purchased during the period?

Accounting and Business

Double-Entry Accounting

Adjustments: Accruals and Deferrals

The Accounting Cycle

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Details of invoices for purchases of merchandise are as follows: Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.