Question 1

An adjusted trial balance of Woods Company as of December 31,2017 is given below.Prepare a multi-step income statement for the year for the company.

Accepted Answer

@#IMG-DLM& 
Operating Expenses

Question 2

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

Accepted Answer

A) True 
 B)False

Question 3

On a balance sheet for a merchandiser,Merchandise Inventory is listed as a(n)________.

Accepted Answer

A) current asset 
B) current liability 
C) expense 
D) revenue 
A) current asset 
B) current liability 
C) expense 
D) revenue

Question 4

The terms of an invoice are 3/10,n/25.This means that a ________.

Accepted Answer

A) discount of 10 percent is allowed if the invoice is paid within three days 
B) discount of 3 percent is allowed if the invoice is paid within 10 days 
C) discount of 25 percent is allowed if the invoice is paid within 10 days 
D) discount of 3 percent is allowed if the invoice is paid after 25 days 
A) discount of 10 percent is allowed if the invoice is paid within three days 
B) discount of 3 percent is allowed if the invoice is paid within 10 days 
C) discount of 25 percent is allowed if the invoice is paid within 10 days 
D) discount of 3 percent is allowed if the invoice is paid after 25 days

Question 5

Under the perpetual inventory system,when a purchaser makes payment within the discount period,the amount of discount will be credited to the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following line items will appear on the income statement of a merchandiser but not of a service company?

Accepted Answer

A) Salaries Expense 
B) Depreciation Expense 
C) Cost of Goods Sold 
D) Supplies Inventory 
A) Salaries Expense 
B) Depreciation Expense 
C) Cost of Goods Sold 
D) Supplies Inventory

Question 7

Owens Jewelers uses the perpetual inventory system.On April 2,Owens sold merchandise with a cost of $5,500 for $7,000 to a customer on account with terms of 1/15,n/30.Which of the following journal entries correctly records the sales revenue?

Accepted Answer

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

Question 8

On the income statement,a service company reports the cost of merchandise inventory that has been sold to customers.

Accepted Answer

A) True 
 B)False

Question 9

The gross profit percentage is one of the most carefully watched measures of ________.

Accepted Answer

A) profitability 
B) liquidity 
C) solvency 
D) marketability 
A) profitability 
B) liquidity 
C) solvency 
D) marketability

Question 10

Complete the following table to show how FOB terms apply to merchandise inventory purchased by a merchandiser.

Accepted Answer

The answer of Complete the following table to show how...

Question 11

The gross profit percentage for Smith Clothing Retailer was 37.7% for the year ended December 31,2016 and 42.5% for the year ended December 31,2017.The industry average gross profit percentage,for both years,is 45.7%.Briefly discuss these findings.

Accepted Answer

The gross profit percentage for Smith ha

Question 12

Which of the following is true of freight in?

Accepted Answer

A) It is an administrative expense. 
B) It is a selling expense. 
C) It is the transportation cost on purchases. 
D) It is the transportation cost on sales. 
A) It is an administrative expense. 
B) It is a selling expense. 
C) It is the transportation cost on purchases. 
D) It is the transportation cost on sales.

Question 13

The term "freight out" refers to ________.

Accepted Answer

A) transportation costs on purchases 
B) cost of inventory purchased 
C) costs that are not actually paid in cash 
D) transportation costs on sales 
A) transportation costs on purchases 
B) cost of inventory purchased 
C) costs that are not actually paid in cash 
D) transportation costs on sales

Question 14

A company purchased inventory for $100,000 on account and recorded it as follows:
   
The vendor's invoice showed terms of 3/10,net 30.Give the journal entry for the payment of the invoice seven days after the invoice date,assuming that the vendor uses the perpetual inventory system.

Accepted Answer

The answer of A company purchased inventory for $100,000 on...

Question 15

The loss of inventory that occurs because of theft,damage,and errors is referred to as inventory shrinkage.

Accepted Answer

A) True 
 B)False

Question 16

Gilbert Company generated sales revenues of $1,800,000 in 2017.Its cost of goods sold amounted to  
Calculate Gilbert's gross profit percentage.

Accepted Answer

A) 55% 
B) 45% 
C) 222% 
D) 182% 
A) 55% 
B) 45% 
C) 222% 
D) 182%

Question 17

Which of the following line items would appear on the income statement of a company that uses the periodic inventory system,but not on that of a company that uses the perpetual inventory system?

Accepted Answer

A) Net Sales Revenue 
B) Cost of Goods Sold 
C) Cost of Goods Available for Sale 
D) Operating expenses 
A) Net Sales Revenue 
B) Cost of Goods Sold 
C) Cost of Goods Available for Sale 
D) Operating expenses

Question 18

A company ships goods to a customer and pays transportation costs.To the seller,the transportation costs are ________.

Accepted Answer

A) freight out 
B) freight in 
C) sales commission 
D) brokerage 
A) freight out 
B) freight in 
C) sales commission 
D) brokerage

Question 19

Freight in is recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 20

Journalize the following purchase transactions for ABC Swimming Pool Supply Company using the periodic inventory system.Explanations are not required.

Accepted Answer

The answer of Journalize the following purchase transactions for ABC...

Exam 5: Merchandising Operations

An adjusted trial balance of Woods Company as of December 31,2017 is given below.Prepare a multi-step income statement for the year for the company.

On the income statement,a merchandising company reports the cost of merchandise inventory that has been sold to customers.

On a balance sheet for a merchandiser,Merchandise Inventory is listed as a(n)________.

The terms of an invoice are 3/10,n/25.This means that a ________.

Under the perpetual inventory system,when a purchaser makes payment within the discount period,the amount of discount will be credited to the Merchandise Inventory account.

Which of the following line items will appear on the income statement of a merchandiser but not of a service company?

Owens Jewelers uses the perpetual inventory system.On April 2,Owens sold merchandise with a cost of $5,500 for $7,000 to a customer on account with terms of 1/15,n/30.Which of the following journal entries correctly records the sales revenue?

On the income statement,a service company reports the cost of merchandise inventory that has been sold to customers.

The gross profit percentage is one of the most carefully watched measures of ________.

Complete the following table to show how FOB terms apply to merchandise inventory purchased by a merchandiser.

The gross profit percentage for Smith Clothing Retailer was 37.7% for the year ended December 31,2016 and 42.5% for the year ended December 31,2017.The industry average gross profit percentage,for both years,is 45.7%.Briefly discuss these findings.

Which of the following is true of freight in?

The term "freight out" refers to ________.

A company purchased inventory for $100,000 on account and recorded it as follows: The vendor's invoice showed terms of 3/10,net 30.Give the journal entry for the payment of the invoice seven days after the invoice date,assuming that the vendor uses the perpetual inventory system.

The loss of inventory that occurs because of theft,damage,and errors is referred to as inventory shrinkage.

Gilbert Company generated sales revenues of $1,800,000 in 2017.Its cost of goods sold amounted to Calculate Gilbert's gross profit percentage.

Which of the following line items would appear on the income statement of a company that uses the periodic inventory system,but not on that of a company that uses the perpetual inventory system?

A company ships goods to a customer and pays transportation costs.To the seller,the transportation costs are ________.

Freight in is recorded in the Merchandise Inventory account if the purchaser uses the perpetual inventory system.

Journalize the following purchase transactions for ABC Swimming Pool Supply Company using the periodic inventory system.Explanations are not required.

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

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