Question 1

Operating income is gross profit minus operating expenses.

Accepted Answer

A) True 
 B)False

Question 2

Purchase discounts are calculated on the amount of the merchandise purchased including freight costs.

Accepted Answer

A) True 
 B)False

Question 3

From the following details,calculate net sales revenue.

Accepted Answer

A) $351,000 
B) $359,000 
C) $372,000 
D) $392,000 
A) $351,000 
B) $359,000 
C) $372,000 
D) $392,000

Question 4

Which of the following is the correct formula for calculating gross profit percentage?

Accepted Answer

A) Net profit / Net sales revenue 
B) Gross profit / Net sales revenue 
C) Net sales revenue / Net profit 
D) Net sales revenue / Gross profit 
A) Net profit / Net sales revenue 
B) Gross profit / Net sales revenue 
C) Net sales revenue / Net profit 
D) Net sales revenue / Gross profit

Question 5

On January 21,2016,Bessant Company received merchandise from Mullies Company.On that date,it found a few of these goods to be damaged.On January 22,it returned the damaged goods to the seller.Such returns will be treated as ________ by Bessant.

Accepted Answer

A) purchase returns 
B) sales returns 
C) purchase allowances 
D) sales allowances 
A) purchase returns 
B) sales returns 
C) purchase allowances 
D) sales allowances

Question 6

The entry to close Cost of Goods Sold includes a debit to Income Summary.

Accepted Answer

A) True 
 B)False

Question 7

A company using the perpetual inventory system purchased inventory worth $21,000 on account with terms of 3/10,n/30.Defective inventory of $1,000 was returned two days later,and the accounts were appropriately adjusted.If the invoice is paid within 10 days,the amount of the purchase discount that would be available to the company is ________.

Accepted Answer

A) $600 
B) $660 
C) $630 
D) $620 
A) $600 
B) $660 
C) $630 
D) $620

Question 8

From the following details of a merchandiser,calculate the Cost of Goods Sold.(Assume the merchandiser uses the periodic inventory system. )

Accepted Answer

A) $115,650 
B) $65,900 
C) $113,900 
D) $54,650 
A) $115,650 
B) $65,900 
C) $113,900 
D) $54,650

Question 9

Under the terms FOB destination,title to the merchandise will pass to the purchaser when the goods are received by the purchaser.

Accepted Answer

A) True 
 B)False

Question 10

A company sold merchandise with a cost of $238 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

Accepted Answer

A) a debit to Sales Revenue and a credit to Cash for $440 
B) a debit to Cash and a credit to Sales Revenue for $440 
C) a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $238 
D) a debit to Merchandise Inventory for $238 and a credit to Cost of Goods Sold for $238 
A) a debit to Sales Revenue and a credit to Cash for $440 
B) a debit to Cash and a credit to Sales Revenue for $440 
C) a debit to Cost of Goods Sold and a credit to Merchandise Inventory for $238 
D) a debit to Merchandise Inventory for $238 and a credit to Cost of Goods Sold for $238

Question 11

Under which of the following terms will the buyer be required to pay transportation costs?

Accepted Answer

A) FOB destination 
B) FOB shipping point 
C) freight out 
D) freight in 
A) FOB destination 
B) FOB shipping point 
C) freight out 
D) freight in

Question 12

A company using the perpetual inventory system purchased merchandise on account for $5,000.Give the journal entry to record this transaction.

Accepted Answer

The answer of A company using the perpetual inventory system...

Question 13

An adjusted trial balance is given below.
 
What will be the final balance in the company's Owner,Capital account after recording the closing entries?

Accepted Answer

A) $38,100 
B) $39,600 
C) $26,300 
D) $2,300 
A) $38,100 
B) $39,600 
C) $26,300 
D) $2,300

Question 14

Journalize the following transaction for a merchandiser that uses the perpetual inventory system.
Received returned goods from a customer,$1,000 (cost,$740).

Accepted Answer

The answer of Journalize the following transaction for a merchandiser...

Question 15

When recording the sale of merchandise inventory,using a periodic inventory system,________.

Accepted Answer

A) a running record of merchandise inventory is maintained during the accounting period 
B) the Sales Revenue account is credited only as an adjusting entry because sales information is not needed during the accounting period 
C) sales discounts and sales returns and allowances are not recorded 
D) there is no need to record an entry to the Merchandise Inventory and the Cost of Goods Sold accounts 
A) a running record of merchandise inventory is maintained during the accounting period 
B) the Sales Revenue account is credited only as an adjusting entry because sales information is not needed during the accounting period 
C) sales discounts and sales returns and allowances are not recorded 
D) there is no need to record an entry to the Merchandise Inventory and the Cost of Goods Sold accounts

Question 16

Merchandise Inventory and Cost of Goods Sold appear ________.

Accepted Answer

A) on the balance sheet and statement of owner's equity,respectively 
B) on the statement of owner's equity and income statement,respectively 
C) on the balance sheet and income statement,respectively 
D) on the income statement and statement of cash flows,respectively 
A) on the balance sheet and statement of owner's equity,respectively 
B) on the statement of owner's equity and income statement,respectively 
C) on the balance sheet and income statement,respectively 
D) on the income statement and statement of cash flows,respectively

Question 17

The Merchandise Inventory account is an asset account that is used only for goods purchased that the business owns and intends to resell to customers.

Accepted Answer

A) True 
 B)False

Question 18

A single-step income statement shows subtotals for gross profit and operating income.

Accepted Answer

A) True 
 B)False

Question 19

Under the perpetual inventory system,the journal entry to record the freight paid by the seller on goods sold is:

Accepted Answer

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

Question 20

When preparing the worksheet for a merchandising business using the perpetual inventory system,the Merchandise Inventory account must be adjusted based on a physical count due to inventory shrinkage.

Accepted Answer

A) True 
 B)False

Exam 5: Merchandising Operations

Operating income is gross profit minus operating expenses.

Purchase discounts are calculated on the amount of the merchandise purchased including freight costs.

From the following details,calculate net sales revenue.

Which of the following is the correct formula for calculating gross profit percentage?

On January 21,2016,Bessant Company received merchandise from Mullies Company.On that date,it found a few of these goods to be damaged.On January 22,it returned the damaged goods to the seller.Such returns will be treated as ________ by Bessant.

The entry to close Cost of Goods Sold includes a debit to Income Summary.

From the following details of a merchandiser,calculate the Cost of Goods Sold.(Assume the merchandiser uses the periodic inventory system. )

Under the terms FOB destination,title to the merchandise will pass to the purchaser when the goods are received by the purchaser.

A company sold merchandise with a cost of $238 for $440 on account.The seller uses the perpetual inventory system.The entry to record the cost of merchandise sold would include ________.

Under which of the following terms will the buyer be required to pay transportation costs?

A company using the perpetual inventory system purchased merchandise on account for $5,000.Give the journal entry to record this transaction.

An adjusted trial balance is given below. What will be the final balance in the company's Owner,Capital account after recording the closing entries?

Journalize the following transaction for a merchandiser that uses the perpetual inventory system. Received returned goods from a customer,$1,000 (cost,$740).

When recording the sale of merchandise inventory,using a periodic inventory system,________.

Merchandise Inventory and Cost of Goods Sold appear ________.

The Merchandise Inventory account is an asset account that is used only for goods purchased that the business owns and intends to resell to customers.

A single-step income statement shows subtotals for gross profit and operating income.

Under the perpetual inventory system,the journal entry to record the freight paid by the seller on goods sold is:

When preparing the worksheet for a merchandising business using the perpetual inventory system,the Merchandise Inventory account must be adjusted based on a physical count due to inventory shrinkage.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters