Question 1

Computerization has led to a large increase in the use of the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 2

The operating cycle for a merchandiser is

Accepted Answer

A) the period of time it takes to sell a unit of inventory. 
B) the same for all companies. 
C) most generally a year. 
D) the time to buy,hold,sell,and collect payment for a sale. 
A) the period of time it takes to sell a unit of inventory. 
B) the same for all companies. 
C) most generally a year. 
D) the time to buy,hold,sell,and collect payment for a sale.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

Accepted Answer

A physical inventory must be taken to de

Question 5

Whalen Mining,a U.S company,purchases products from a British company for £1,000,000.Between the dates of purchase and payment,the exchange value of the pound decreased from $2.00 to $1.90.Compute Whalen Mining's exchange gain or loss.Where would the gain or loss be reported?

Accepted Answer

Whalen Mining has an exchange gain of $1

Question 6

When the terms are FOB destination,the title passes at the point of origin and the buyer pays the transportation costs.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following goods would not be included in merchandise inventory for a purchasing company?

Accepted Answer

A) Goods in transit shipped FOB shipping point 
B) Goods on hand in the showroom 
C) Goods in transit shipped FOB destination 
D) Goods ordered and received from the supplier 
A) Goods in transit shipped FOB shipping point 
B) Goods on hand in the showroom 
C) Goods in transit shipped FOB destination 
D) Goods ordered and received from the supplier

Question 8

Goods totaling $14,000 purchased February 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on February 10 would be subject to which of the following discounts if paid for on February 12?

Accepted Answer

A) $240 
B) $280 
C) $320 
D) $40 
A) $240 
B) $280 
C) $320 
D) $40

Question 9

Brendan Company sold merchandise worth $1,600 on credit,terms n/15.The merchandise sold had cost $1,100.What is the required journal entry to record the transaction under the perpetual inventory system?

Accepted Answer

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

Question 10

Under the perpetual inventory system,in addition to making the entry to record a sale,a company would

Accepted Answer

A) record an increase in inventory corresponding to the amount of the sale. 
B) record a decrease in inventory and an increase in cost of goods sold for the cost of the merchandise sold. 
C) record an increase in inventory corresponding to the cost of the inventory. 
D) make no additional entry until the end of the period. 
A) record an increase in inventory corresponding to the amount of the sale. 
B) record a decrease in inventory and an increase in cost of goods sold for the cost of the merchandise sold. 
C) record an increase in inventory corresponding to the cost of the inventory. 
D) make no additional entry until the end of the period.

Question 11

The periodic inventory system has traditionally been used most commonly by companies that sell

Accepted Answer

A) low-priced,high-volume merchandise. 
B) low-priced,low-volume merchandise. 
C) high-priced,low-volume merchandise. 
D) high-priced,high-volume merchandise. 
A) low-priced,high-volume merchandise. 
B) low-priced,low-volume merchandise. 
C) high-priced,low-volume merchandise. 
D) high-priced,high-volume merchandise.

Question 12

In which category would office salaries expense be included?

Accepted Answer

A) Net sales. 
B) Cost of goods sold. 
C) Selling expenses. 
D) General and administrative expenses. 
A) Net sales. 
B) Cost of goods sold. 
C) Selling expenses. 
D) General and administrative expenses.

Question 13

If creditors' payment terms are 60 days,financing period is 20 days,and it takes 30 days to collect the amount from customers.What time does it take to sell the inventory?

Accepted Answer

A) 60 days. 
B) 20 days. 
C) 30 days. 
D) 50 days. 
A) 60 days. 
B) 20 days. 
C) 30 days. 
D) 50 days.

Question 14

Interest paid on debt would be entered on the multistep income statement in the category called

Accepted Answer

A) selling expenses. 
B) other revenues and expenses. 
C) general and administrative expenses. 
D) operating expenses. 
A) selling expenses. 
B) other revenues and expenses. 
C) general and administrative expenses. 
D) operating expenses.

Question 15

An American company makes a credit purchase of goods from a company in London for $1,000.On the date of purchase,the exchange rate was $1.50 per pound.However,on the date of payment,the rate had risen to $1.55 per pound.As a result,the American company would record

Accepted Answer

A) an exchange gain of $50. 
B) an exchange loss of $1,550. 
C) an exchange loss of $50. 
D) no exchange gain or loss. 
A) an exchange gain of $50. 
B) an exchange loss of $1,550. 
C) an exchange loss of $50. 
D) no exchange gain or loss.

Question 16

Copper,Inc.purchased merchandise worth $1,800 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Accepted Answer

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

Question 17

An advantage of the single-step income statement is that it is less complex than the multistep form.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not considered an operating expense?

Accepted Answer

A) General office expenses. 
B) Cost of goods sold. 
C) Freight-out expense. 
D) Advertising expense. 
A) General office expenses. 
B) Cost of goods sold. 
C) Freight-out expense. 
D) Advertising expense.

Question 19

If a retailer makes a sale of $100 on a MasterCard,and MasterCard takes a 5 percent discount on the sale,the retailer would record Cash for $100 and Accounts Payable for $5.

Accepted Answer

A) True 
 B)False

Question 20

A merchandiser will earn an operating income of exactly $0 when

Accepted Answer

A) gross margin equals operating expenses. 
B) net sales equals cost of goods sold. 
C) cost of goods sold equals gross margin. 
D) operating expenses equal net sales 
A) gross margin equals operating expenses. 
B) net sales equals cost of goods sold. 
C) cost of goods sold equals gross margin. 
D) operating expenses equal net sales

Exam 5: Accounting for Merchandising Operations

Computerization has led to a large increase in the use of the perpetual inventory system.

The operating cycle for a merchandiser is

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

Under a perpetual inventory system,is it necessary to take a physical inventory at the end of the period? Why or why not?

Whalen Mining,a U.S company,purchases products from a British company for £1,000,000.Between the dates of purchase and payment,the exchange value of the pound decreased from $2.00 to $1.90.Compute Whalen Mining's exchange gain or loss.Where would the gain or loss be reported?

When the terms are FOB destination,the title passes at the point of origin and the buyer pays the transportation costs.

Which of the following goods would not be included in merchandise inventory for a purchasing company?

Goods totaling $14,000 purchased February 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on February 10 would be subject to which of the following discounts if paid for on February 12?

Brendan Company sold merchandise worth $1,600 on credit,terms n/15.The merchandise sold had cost $1,100.What is the required journal entry to record the transaction under the perpetual inventory system?

Under the perpetual inventory system,in addition to making the entry to record a sale,a company would

The periodic inventory system has traditionally been used most commonly by companies that sell

In which category would office salaries expense be included?

If creditors' payment terms are 60 days,financing period is 20 days,and it takes 30 days to collect the amount from customers.What time does it take to sell the inventory?

Interest paid on debt would be entered on the multistep income statement in the category called

An American company makes a credit purchase of goods from a company in London for $1,000.On the date of purchase,the exchange rate was $1.50 per pound.However,on the date of payment,the rate had risen to $1.55 per pound.As a result,the American company would record

Copper,Inc.purchased merchandise worth $1,800 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

An advantage of the single-step income statement is that it is less complex than the multistep form.

Which of the following is not considered an operating expense?

If a retailer makes a sale of $100 on a MasterCard,and MasterCard takes a 5 percent discount on the sale,the retailer would record Cash for $100 and Accounts Payable for $5.

A merchandiser will earn an operating income of exactly $0 when

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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