Exam 4: Accounting for Merchandising Businesses

Merchandise is sold for $2,500,terms FOB destination,2/10,n/30,with transportation costs of $150.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period,the amount of the sales discount is $40.

Merchandise with an invoice price of $6,000 is purchased subject to terms of 2/10,n/30,FOB destination.Transportation costs paid by the seller totaled $125. What is the net cost of the merchandise?

Cash paid to purchase long-term investments would be reported in the statement of cash flows in

On the income statement,the merchandise inventory at the beginning of the period is added to sales to yield the cost of merchandise sold during the period.

When the perpetual inventory system is used,the inventory sold is shown on the income statement as

Merchandise inventory shrinkage will decrease Retained Earnings.

Using the indirect method for preparing the statement of cash flows,what is the net cash flow from operating activities if net income is $39,000;depreciation expense is $9,000;and the decrease in accounts payable is $5,000.

For the perpetual inventory system,which of the following effects does NOT occur upon the return from a customer of merchandise sold on account?

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 cash discount.

Using a perpetual inventory system,the return of merchandise purchased on account includes a(n)

A criticism of a single-step income statement is that net income is NOT available for analysis.

If merchandise costing $2,500,terms FOB destination,2/10,n/30,with transportation costs of $100,is paid within 10 days,the amount of the purchases discount is $52.

In credit terms of 1/10,n/30,the "10" represents the

Which of the following is NOT an example of selling expenses?

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

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

When merchandise that was sold on account is returned,which accounts are affected?

A sales invoice included the following information: merchandise price,$4,500;transportation,$300;terms 1/10,n/eom,FOB shipping point.Assuming that a credit for merchandise returned of $600 is granted prior to payment,that the transportation is prepaid by the seller,and that the invoice is paid within the discount period,what is the amount of cash received by the seller?

Which of the following statements is TRUE?

If Martin,Inc.sold $550,000 worth of merchandise,had $50,000 returned,and then the balance paid during the 2% discount period,how much was Martin's net sales?