Question 1

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Accepted Answer

A) True 
 B)False  False

Question 2

Use this information to answer the following question.  If the income statement were prepared in a multistep form,income from operations would be

Accepted Answer

A) $48,750. 
B) $41,250. 
C) $51,250. 
D) $42,500. 
A) $48,750. 
B) $41,250. 
C) $51,250. 
D) $42,500. A

Question 3

Under the perpetual inventory system,the Cost of Goods Sold account is updated continually throughout the period.

Accepted Answer

A) True 
 B)False  True

Question 4

Positive operating income will result if gross margin exceeds

Accepted Answer

A) operating expenses. 
B) purchases. 
C) cost of goods sold. 
D) cost of goods sold minus operating expenses. 
A) operating expenses. 
B) purchases. 
C) cost of goods sold. 
D) cost of goods sold minus operating expenses.

Question 5

On a multistep income statement,other revenues and expenses are a component of income from operations.

Accepted Answer

A) True 
 B)False

Question 6

When the terms are FOB destination,the title passes at the destination and the seller pays the transportation costs.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Accepted Answer

A) Sales commissions. 
B) Office salaries. 
C) Interest income. 
D) Sales. 
A) Sales commissions. 
B) Office salaries. 
C) Interest income. 
D) Sales.

Question 8

An advantage of the perpetual inventory system is that

Accepted Answer

A) clerical work is reduced. 
B) the need to take a physical inventory is eliminated. 
C) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
D) detailed data is available to respond to customers' inquiries about product availability. 
A) clerical work is reduced. 
B) the need to take a physical inventory is eliminated. 
C) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
D) detailed data is available to respond to customers' inquiries about product availability.

Question 9

Interest expense on a mortgage would be classified on a multistep income statement under the heading

Accepted Answer

A) general and administrative expenses. 
B) selling expenses. 
C) cost of goods sold. 
D) other revenue and expenses. 
A) general and administrative expenses. 
B) selling expenses. 
C) cost of goods sold. 
D) other revenue and expenses.

Question 10

General and administrative expenses are a category of operating expense.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following activities is not a component of the operating cycle?

Accepted Answer

A) Payment of employees' wages 
B) Sale of merchandise 
C) Purchase of merchandise 
D) Collection of cash from merchandise sales 
A) Payment of employees' wages 
B) Sale of merchandise 
C) Purchase of merchandise 
D) Collection of cash from merchandise sales

Question 12

Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $10,000,purchases of $150,000,and sales of $250,000.The company closes its records once a year on December 31.In the accounting records,the merchandise inventory account would be expected to have a balance on December 31 prior to adjusting and closing entries that was

Accepted Answer

A) indeterminate. 
B) less than $5,000. 
C) more than $5,000. 
D) equal to $5,000. 
A) indeterminate. 
B) less than $5,000. 
C) more than $5,000. 
D) equal to $5,000.

Question 13

A retailer accepted Visa charge sales totaling $1,000 and deposited the charge slips in the bank.Assuming a credit card discount expense of 4 percent,what would be the increase to Cash and the increase to Sales,respectively?

Accepted Answer

A) $1,000 and $960 
B) $960 and $1,000 
C) $960 and $960 
D) $1,000 and $1,000 
A) $1,000 and $960 
B) $960 and $1,000 
C) $960 and $960 
D) $1,000 and $1,000

Question 14

On June 3,Lakeland Company sold merchandise worth $1,600 on credit,terms 2/10,n/30.The merchandise sold had cost $1,100.The customer paid the amount on June 15. What is the required journal entry to record the payment received under the periodic inventory system?

Accepted Answer

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

Question 15

The amount of cost of goods available for sale during the year depends on the amounts of

Accepted Answer

A) beginning merchandise inventory,net cost of purchases,and ending merchandise inventory. 
B) beginning merchandise inventory and cost of goods sold. 
C) beginning merchandise inventory,cost of goods sold,and ending merchandise inventory. 
D) beginning merchandise inventory and net cost of purchases. 
A) beginning merchandise inventory,net cost of purchases,and ending merchandise inventory. 
B) beginning merchandise inventory and cost of goods sold. 
C) beginning merchandise inventory,cost of goods sold,and ending merchandise inventory. 
D) beginning merchandise inventory and net cost of purchases.

Question 16

What is the financing period? Is a longer or shorter financing period most desirable?

Accepted Answer

The financing period is the amount of ti

Question 17

Income from operations is arrived at after considering all except

Accepted Answer

A) administrative salaries. 
B) interest income. 
C) the cost of sales. 
D) sales returns and allowances. 
A) administrative salaries. 
B) interest income. 
C) the cost of sales. 
D) sales returns and allowances.

Question 18

On the income statement,freight-in is treated as an operating expense.

Accepted Answer

A) True 
 B)False

Question 19

Terms of "2/10,n/30" are an example of a sales discount.

Accepted Answer

A) True 
 B)False

Question 20

The collection of a $800 account within the 2 percent discount period would result in a(n)

Accepted Answer

A) increase to Accounts Receivable for $784. 
B) decrease to Cash for $784. 
C) increase to Sales Discounts for $16. 
D) decrease to Accounts Receivable for $784. 
A) increase to Accounts Receivable for $784. 
B) decrease to Cash for $784. 
C) increase to Sales Discounts for $16. 
D) decrease to Accounts Receivable for $784.

Exam 5: Accounting for Merchandising Operations

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Use this information to answer the following question. If the income statement were prepared in a multistep form,income from operations would be

Under the perpetual inventory system,the Cost of Goods Sold account is updated continually throughout the period.

Positive operating income will result if gross margin exceeds

On a multistep income statement,other revenues and expenses are a component of income from operations.

When the terms are FOB destination,the title passes at the destination and the seller pays the transportation costs.

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

An advantage of the perpetual inventory system is that

Interest expense on a mortgage would be classified on a multistep income statement under the heading

General and administrative expenses are a category of operating expense.

Which of the following activities is not a component of the operating cycle?

A retailer accepted Visa charge sales totaling $1,000 and deposited the charge slips in the bank.Assuming a credit card discount expense of 4 percent,what would be the increase to Cash and the increase to Sales,respectively?

On June 3,Lakeland Company sold merchandise worth $1,600 on credit,terms 2/10,n/30.The merchandise sold had cost $1,100.The customer paid the amount on June 15. What is the required journal entry to record the payment received under the periodic inventory system?

The amount of cost of goods available for sale during the year depends on the amounts of

What is the financing period? Is a longer or shorter financing period most desirable?

Income from operations is arrived at after considering all except

On the income statement,freight-in is treated as an operating expense.

Terms of "2/10,n/30" are an example of a sales discount.

The collection of a $800 account within the 2 percent discount period would result in a(n)

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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