Exam 4: Accounting for Merchandising Businesses

Ramirez Company returns merchandise previously purchased on account.It had not yet been paid for.Ramirez uses the perpetual inventory system.Which of the following reflects the effects on the financial statements of only the purchase return?

A common size income statement is prepared by dividing all amounts on the statement by net income.

Which factor has removed most of the practical limitations associated with use of the perpetual inventory system?

The following are the income statements of the Hancock Company for two consecutive years.Increases in which of the expenses contributed to the net loss in Year 2?

[The following information applies to the questions displayed below.] Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $12,500 of merchandise on account under terms 2/10, n/30. 2) The company returned $1,200 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $18,800 cash. -What is the gross margin that results from these four transactions?

A company's chart of accounts includes,in part,the following account numbers and corresponding account titles: -Which accounts would affect gross margin?

When a company recognizes cost of goods sold,how does that event impact the elements of the financial statements? (Ignore the effects of recognizing sales revenue. )

Which of the following items is not a product cost?

Foote Company was granted a purchase discount of $200 on merchandise the company had purchased a few days ago.Foote uses the perpetual inventory system.Which of the following reflects the effects of this event on the financial statements?

Which of the following account titles is normally used in a periodic inventory system?

A company's chart of accounts includes,in part,the following account numbers and corresponding account titles: -Which accounts would appear on the income statement?

How is the net income percentage calculated?

Which of the following describes the purpose of a common size financial statement?

What do the credit terms,2/15,n/30 mean?

Howell Company granted a sales allowance of $360 to a customer who was not totally satisfied with the quality of goods received.The customer did not return the goods and had not yet paid for them.Which of the following reflects the effects of this event on the financial statements?

Leonard Company paid freight costs to have goods shipped to one of its customers.What effect will the payment of these freight costs have on the company's financial statements?

Jake Co.purchased on account merchandise with a list price of $90,000.Payment terms were 1/15,n/45.If collection occurs within 18 days,what discount will Jake Co.recognize on the merchandise?

Which of the following retailers would be expected to have the highest gross margin percentage?

The following T-accounts are from the ledger of Hill Company.Hill uses the periodic inventory system. Which of the following is true about Hill Company?

Glen Company uses the perpetual inventory system. The company entered into the following events: 1) Purchased merchandise inventory that cost $10,000 under terms of 2/10, n/30. 2) Made payment to the supplier within the discount period. 3) Sold all of the goods to customers on account for $22,000. What is Glen's cost of goods sold as a result of these three transactions?