Question 1

In retail businesses,inventory is reported as a current asset.

Accepted Answer

A) True 
 B)False

Question 2

Generally,the revenue account for a merchandising business is entitled

Accepted Answer

A)  Sales 
B)  Fees Earned 
C)  Gross Sales 
D)  Gross Profit 
A)  Sales 
B)  Fees Earned 
C)  Gross Sales 
D)  Gross Profit

Question 3

When a buyer returns merchandise purchased for cash,the buyer will record the transaction as a

Accepted Answer

A)  debit to Inventory; a credit to Cash 
B)  debit to Cash; a credit to Inventory 
C)  debit to Cash; a credit to Sales 
D)  debit to Sales; a credit to Accounts Payable 
A)  debit to Inventory; a credit to Cash 
B)  debit to Cash; a credit to Inventory 
C)  debit to Cash; a credit to Sales 
D)  debit to Sales; a credit to Accounts Payable

Question 4

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

Accepted Answer

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

Question 5

Under the periodic inventory system,the cost of goods sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 6

Journalize the following transactions for both Abbott Co.(seller)and Dalton Co.(buyer).Assume both of the companies use the perpetual inventory system.
​

Accepted Answer

The answer of Journalize the following transactions for both Abbott...

Question 7

Taking advantage of a 2 / 10,n / 30 purchases discount is equal to a yearly savings rate of approximately

Accepted Answer

A)  2% 
B)  24% 
C)  20% 
D)  36% 
A)  2% 
B)  24% 
C)  20% 
D)  36%

Question 8

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Accepted Answer

A) True 
 B)False

Question 9

Customer Refunds Payable is an account used to record merchandise returns from customers.

Accepted Answer

A) True 
 B)False

Question 10

During the current year,merchandise is sold for $117,500 cash and $241,750 on account.The cost of the goods sold is $157,400.What is the amount of the gross profit?

Accepted Answer

$117,500 +

Question 11

A buyer who acquires merchandise under credit terms of 1 / 10,n / 30 has 30 days after the invoice date to take advantage of the sales discount.

Accepted Answer

A) True 
 B)False

Question 12

Using the following information,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 13

On March 29,customers who owe $10,500 on account to Sonic Sales Company submit payments of $4,250.Journalize this event for Sonic Sales Company.

Accepted Answer

The answer of On March 29,customers who owe $10,500 on...

Question 14

Freight-in is considered a cost of purchasing inventory.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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.

Accepted Answer

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

Question 17

When comparing a retail business to a service business,the financial statement that changes the most 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 18

The chart of accounts for a merchandising business would include an account called Delivery Expense.

Accepted Answer

A) True 
 B)False

Question 19

When a merchandising business is compared to a service business,the financial statement that is not affected by that change is the retained earnings statement.

Accepted Answer

A) True 
 B)False

Question 20

On March 25,Osgood Company sold merchandise on account,$10,000,terms n / 30.The applicable sales tax percentage is 7.5%.Record the transaction.
​

Accepted Answer

The answer of On March 25,Osgood Company sold merchandise on...

Exam 5: Accounting for Merchandising Businesses

In retail businesses,inventory is reported as a current asset.

Generally,the revenue account for a merchandising business is entitled

When a buyer returns merchandise purchased for cash,the buyer will record the transaction as a

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

Under the periodic inventory system,the cost of goods sold is recorded when sales are made.

Journalize the following transactions for both Abbott Co.(seller)and Dalton Co.(buyer).Assume both of the companies use the perpetual inventory system. ​

Taking advantage of a 2 / 10,n / 30 purchases discount is equal to a yearly savings rate of approximately

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Customer Refunds Payable is an account used to record merchandise returns from customers.

During the current year,merchandise is sold for $117,500 cash and $241,750 on account.The cost of the goods sold is $157,400.What is the amount of the gross profit?

A buyer who acquires merchandise under credit terms of 1 / 10,n / 30 has 30 days after the invoice date to take advantage of the sales discount.

Using the following information,what is the amount of income from operations? ​ ​

On March 29,customers who owe $10,500 on account to Sonic Sales Company submit payments of $4,250.Journalize this event for Sonic Sales Company.

Freight-in is considered a cost of purchasing inventory.

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

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

The chart of accounts for a merchandising business would include an account called Delivery Expense.

When a merchandising business is compared to a service business,the financial statement that is not affected by that change is the retained earnings statement.

On March 25,Osgood Company sold merchandise on account,$10,000,terms n / 30.The applicable sales tax percentage is 7.5%.Record the transaction. ​

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing 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

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Filters

Journalize the following transactions for both Abbott Co.(seller)and Dalton Co.(buyer).Assume both of the companies use the perpetual inventory system.

Using the following information,what is the amount of income from operations?

On March 25,Osgood Company sold merchandise on account,$10,000,terms n / 30.The applicable sales tax percentage is 7.5%.Record the transaction.