Question 1

A business using the perpetual inventory system, with its detailed subsidiary records, does not need to take a physical inventory.

Accepted Answer

A) True 
 B)False

Question 2

The asset turnover ratio measures how effectively a business is using its assets to generate sales.

Accepted Answer

A) True 
 B)False

Question 3

A chart of accounts for a merchandising business

Accepted Answer

A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system 
A)  usually is the same as the chart of accounts for a service business 
B)  usually requires more accounts than does the chart of accounts for a service business 
C)  usually is standardized by the FASB for all merchandising businesses 
D)  always uses a three-digit numbering system

Question 4

In recording the cost of goods sold for cash, based on data available from perpetual inventory records, the journal entry is

Accepted Answer

A)  debit Cost of Goods Sold; credit Sales 
B)  debit Cost of Goods Sold; credit Inventory 
C)  debit Inventory; credit Cost of Goods Sold 
D)  debit Accounts Receivable; credit Inventory 
A)  debit Cost of Goods Sold; credit Sales 
B)  debit Cost of Goods Sold; credit Inventory 
C)  debit Inventory; credit Cost of Goods Sold 
D)  debit Accounts Receivable; credit Inventory

Question 5

Journalize the following merchandise transactions. The company uses the perpetual inventory system.

Accepted Answer

The answer of Journalize the following merchandise transactions. The company...

Question 6

Match each of the following terms (a-h) with the correct definition below.
-Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

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 7

The following selected accounts and their current balances appear in the ledger of Fernandez Co. at the end of its fiscal year.
  
-What is Fernandez Company's ending retained earnings balance for the year?

Accepted Answer

A)  $4,135,000 
B)  $4,210,000 
C)  $3,510,000 
D)  $4,260,000 
A)  $4,135,000 
B)  $4,210,000 
C)  $3,510,000 
D)  $4,260,000

Question 8

Why does the gross method of recording sales discounts require an adjusting entry at the end of the fiscal period?

Accepted Answer

Under GAAP, sales must be reco

Question 9

Match between columns
                        Premises:  Discount taken by the buyer for early payment of invoice.
 Account used to record inventory on hand under a perpetual inventory system.
 Early payment discount offered to customers by the seller.
 Expense account for recording shipping costs paid by the seller.
 Discount to government agencies or customers who purchase large quantities of merchandise.
 Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system.
 The cost associated with delivery of merchandise to the customer.
 Informs the seller of the reasons for the return of merchandise or the request for a price allowance.

Accepted Answer

The Answer of Freight and Delivery Expense and Inventory and is...

Question 10

Alt Tile Company uses a perpetual inventory system. Journalize the December 31 adjusting entries based on the following information:
a. The inventory account has a balance of $133,150, while the physical inventory indicates that $130,900 of merchandise is on hand. Assume any shrinkage is a normal amount.
b. Sales returns of $11,000 and merchandise returns of $8,000 are estimated for the current year's sales.

Accepted Answer

The answer of Alt Tile Company uses a perpetual inventory...

Question 11

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Accepted Answer

A)  debit Cash, $2,000; credit Inventory, $1,250 
B)  debit Cash, $2,000; credit Sales, $2,000; and debit Cost of Goods Sold, $1,250; credit Inventory, $1,250 
C)  debit Cash, $1,250; credit Sales, $1,250 
D)  debit Accounts Receivable, $2,000; credit Sales, $2,000; and debit Cost of Goods Sold, $1,250; credit Inventory, $1,250 
A)  debit Cash, $2,000; credit Inventory, $1,250 
B)  debit Cash, $2,000; credit Sales, $2,000; and debit Cost of Goods Sold, $1,250; credit Inventory, $1,250 
C)  debit Cash, $1,250; credit Sales, $1,250 
D)  debit Accounts Receivable, $2,000; credit Sales, $2,000; and debit Cost of Goods Sold, $1,250; credit Inventory, $1,250

Question 13

A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom; FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

Accepted Answer

A)  $12,285 
B)  $11,500 
C)  $10,480 
D)  $11,385 
A)  $12,285 
B)  $11,500 
C)  $10,480 
D)  $11,385

Question 14

A physical inventory taken at year end indicated that there was $125,000 on hand. The Estimated Returns Inventory is $8,200. Depreciation for the year is $24,500. On December 31, the close of the fiscal year, the balances of selected accounts appearing in the ledger of Broxton Gallery, an art retailer, are as follows:
​   ​
Prepare the December 31 closing entries for Broxton Gallery.   ​
​

Accepted Answer

The answer of A physical inventory taken at year end...

Question 15

Using the following information for a periodic inventory system, what is the amount of income from operations?

Accepted Answer

A)  $31,670 
B)  $29,960 
C)  $28,760 
D)  $29,800 
A)  $31,670 
B)  $29,960 
C)  $28,760 
D)  $29,800

Question 16

Stergell Company had sales of $1,500,000 and related cost of goods sold of $920,000 for the year. Stergell estimates that customers will request refunds for 1.5% of sales and estimates that merchandise costing $12,000 will be returned. Journalize the adjusting entries on December 31 to record the expected customer returns.
​   ​
​

Accepted Answer

The answer of Stergell Company had sales of $1,500,000 and...

Question 17

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Accepted Answer

A)  multiple-step statement 
B)  revenue statement 
C)  operating-income statement 
D)  single-step statement 
A)  multiple-step statement 
B)  revenue statement 
C)  operating-income statement 
D)  single-step statement

Question 18

Inventory normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 19

Match each of the following items (a-h) with the appropriate definition below.
-Discount to government agencies or customers who purchase large quantities of merchandise.

Accepted Answer

A) Freight 
B) Delivery Expense 
C) Inventory 
D) Sales discount 
E) Purchases Returns and Allowances
F)Debit memo
G)Purchases discount
H)Trade discount 
A) Freight 
B) Delivery Expense 
C) Inventory 
D) Sales discount 
E) Purchases Returns and Allowances
F)Debit memo
G)Purchases discount
H)Trade discount

Question 20

Inventory is classified on the balance sheet as a

Accepted Answer

A)  current liability 
B)  current asset 
C)  long-term asset 
D)  long-term liability 
A)  current liability 
B)  current asset 
C)  long-term asset 
D)  long-term liability

A business using the perpetual inventory system, with its detailed subsidiary records, does not need to take a physical inventory.

The asset turnover ratio measures how effectively a business is using its assets to generate sales.

A chart of accounts for a merchandising business

In recording the cost of goods sold for cash, based on data available from perpetual inventory records, the journal entry is

Journalize the following merchandise transactions. The company uses the perpetual inventory system.

Match each of the following terms (a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

The following selected accounts and their current balances appear in the ledger of Fernandez Co. at the end of its fiscal year. -What is Fernandez Company's ending retained earnings balance for the year?

Why does the gross method of recording sales discounts require an adjusting entry at the end of the fiscal period?

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet.

Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Using the following information for a periodic inventory system, what is the amount of income from operations?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Inventory normally has a debit balance.

Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

Inventory is classified on the balance sheet as a

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

A business using the perpetual inventory system, with its detailed subsidiary records, does not need to take a physical inventory.

The asset turnover ratio measures how effectively a business is using its assets to generate sales.

A chart of accounts for a merchandising business

In recording the cost of goods sold for cash, based on data available from perpetual inventory records, the journal entry is

Journalize the following merchandise transactions. The company uses the perpetual inventory system.

Match each of the following terms (a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

The following selected accounts and their current balances appear in the ledger of Fernandez Co. at the end of its fiscal year. -What is Fernandez Company's ending retained earnings balance for the year?

Why does the gross method of recording sales discounts require an adjusting entry at the end of the fiscal period?

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet.

Cumberland Co. sells $2,000 of inventory to Hancock Co. for cash. Cumberland paid $1,250 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Using the following information for a periodic inventory system, what is the amount of income from operations?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Inventory normally has a debit balance.

Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

Inventory is classified on the balance sheet as a

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