Question 1

Sales Returns and Allowances is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 2

If merchandise costing $2,500,terms FOB destination,2/10,n/30,with prepaid transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $48.

Accepted Answer

A) True 
 B)False

Question 3

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

Accepted Answer

A) True 
 B)False

Question 4

When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.

Accepted Answer

A) True 
 B)False

Question 5

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

Accepted Answer

A) True 
 B)False

Question 6

Net sales is equal to sales plus cost of merchandise sold.

Accepted Answer

A) True 
 B)False

Question 7

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 8

Under a perpetual inventory system,

Accepted Answer

A) accounting records continuously disclose the amount of inventory. 
B) increases in inventory resulting from purchases are debited to Purchases. 
C) there is no need for a year-end physical count. 
D) the purchase returns and allowances account is credited when goods are returned to vendors. 
A) accounting records continuously disclose the amount of inventory. 
B) increases in inventory resulting from purchases are debited to Purchases. 
C) there is no need for a year-end physical count. 
D) the purchase returns and allowances account is credited when goods are returned to vendors.

Question 9

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

Accepted Answer

A) True 
 B)False

Question 10

The following data for the current year ended December 31,2010,were extracted from the accounting records of Gilbert Co.:
   
Prepare a multiple-step income statement for the year ended December 31,2010.

Accepted Answer

The answer of The following data for the current year...

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

If cash dividends of $145,000 were declared during the year and the decrease in dividends payable from the beginning to the end of the year was $7,000,the statement of cash flows would report $152,000 in the financing activities section.

Accepted Answer

A) True 
 B)False

Question 13

Gross profit is equal to:

Accepted Answer

A) sales plus (sales discounts and sales returns and allowances)plus cost of merchandise sold. 
B) sales plus sales returns and allowances less sales discounts less cost of merchandise sold. 
C) sales plus sales discounts less sales returns and allowances less cost of merchandise sold. 
D) sales less (sales discounts and sales returns and allowances)less cost of merchandise sold. 
A) sales plus (sales discounts and sales returns and allowances)plus cost of merchandise sold. 
B) sales plus sales returns and allowances less sales discounts less cost of merchandise sold. 
C) sales plus sales discounts less sales returns and allowances less cost of merchandise sold. 
D) sales less (sales discounts and sales returns and allowances)less cost of merchandise sold.

Question 14

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a

Accepted Answer

A) sales invoice. 
B) purchase invoice. 
C) credit memorandum. 
D) debit memorandum. 
A) sales invoice. 
B) purchase invoice. 
C) credit memorandum. 
D) debit memorandum.

Question 15

A sales invoice included the following information: merchandise price,$5,000;terms 1/10,n/eom.Assuming that a credit for merchandise returned of $600 is granted prior to payment,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?

Accepted Answer

A) $4,656 
B) $4,400 
C) $4,356 
D) $4,950 
A) $4,656 
B) $4,400 
C) $4,356 
D) $4,950

Question 16

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 17

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are __________ net income in the cash flows from operating activities section.

Accepted Answer

A) subtracted from 
B) added to 
C) not used when calculating 
D) cannot tell from the information given 
A) subtracted from 
B) added to 
C) not used when calculating 
D) cannot tell from the information given

Question 18

Based on the information below,illustrate the effects on the accounts and financial statements of the Seller and the Buyer.Both use a perpetual inventory system.
   
(a)Seller

(a)Buyer

(b)Seller

(b)Buyer

(c)Seller

(c)Buyer

Accepted Answer

(a)Seller
 @#IMG-DLM& @#IMG-DLM& (a)Buye

Question 19

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is

Accepted Answer

A) increase Cost of Merchandise Sold;increase Sales. 
B) increase Cost of Merchandise Sold;decrease Merchandise Inventory. 
C) increase Merchandise Inventory;decrease Cost of Merchandise Sold. 
D) increase Accounts Receivable;decrease Merchandise Inventory. 
A) increase Cost of Merchandise Sold;increase Sales. 
B) increase Cost of Merchandise Sold;decrease Merchandise Inventory. 
C) increase Merchandise Inventory;decrease Cost of Merchandise Sold. 
D) increase Accounts Receivable;decrease Merchandise Inventory.

Question 20

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are

Accepted Answer

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

Sales Returns and Allowances is a contra-asset account.

If merchandise costing $2,500,terms FOB destination,2/10,n/30,with prepaid transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $48.

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

Net sales is equal to sales plus cost of merchandise sold.

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

Under a perpetual inventory system,

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

The following data for the current year ended December 31,2010,were extracted from the accounting records of Gilbert Co.: Prepare a multiple-step income statement for the year ended December 31,2010.

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

If cash dividends of $145,000 were declared during the year and the decrease in dividends payable from the beginning to the end of the year was $7,000,the statement of cash flows would report $152,000 in the financing activities section.

Gross profit is equal to:

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a

A sales invoice included the following information: merchandise price,$5,000;terms 1/10,n/eom.Assuming that a credit for merchandise returned of $600 is granted prior to payment,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are __________ net income in the cash flows from operating activities section.

Based on the information below,illustrate the effects on the accounts and financial statements of the Seller and the Buyer.Both use a perpetual inventory system. (a)Seller (a)Buyer (b)Seller (b)Buyer (c)Seller (c)Buyer

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 4: Accounting for Merchandising Businesses

Sales Returns and Allowances is a contra-asset account.

If merchandise costing $2,500,terms FOB destination,2/10,n/30,with prepaid transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $48.

When someone purchases merchandise and incurs the cost of transportation,these costs of purchasing inventory are added to the cost of the inventory.

When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

Net sales is equal to sales plus cost of merchandise sold.

Purchases of merchandise increase the merchandise inventory account under the perpetual inventory system.

Under a perpetual inventory system,

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

The following data for the current year ended December 31,2010,were extracted from the accounting records of Gilbert Co.: Prepare a multiple-step income statement for the year ended December 31,2010.

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

If cash dividends of $145,000 were declared during the year and the decrease in dividends payable from the beginning to the end of the year was $7,000,the statement of cash flows would report $152,000 in the financing activities section.

Gross profit is equal to:

If merchandise sold on account is returned to the seller,the seller may inform the customer of the details by issuing a

A sales invoice included the following information: merchandise price,$5,000;terms 1/10,n/eom.Assuming that a credit for merchandise returned of $600 is granted prior to payment,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?

Repayments of bonds would be shown as a cash outflow in the investing section of the statement of cash flows.

Under the indirect method for preparing the statement of cash flows,increases in current liabilities are __________ net income in the cash flows from operating activities section.

Based on the information below,illustrate the effects on the accounts and financial statements of the Seller and the Buyer.Both use a perpetual inventory system. (a)Seller (a)Buyer (b)Seller (b)Buyer (c)Seller (c)Buyer

In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller,the terms are

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters