Exam 6: Accounting for Merchandising Operations

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

When customers pay with bank credit cards,cash sales are considered to have taken place.

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

If it takes 45 days to sell inventory,30 days to collect for the sale,and creditors' payment terms are 60 days,the financing period is 135 days.

FOB shipping point means that the seller incurs the shipping costs.

The calculation of cost of goods available for sale during the year is not affected by the previous year's ending merchandise inventory.

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

Distinguish between cost of goods sold and operating expenses,describing the nature of these two items and their placement on a multistep income statement.

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

The single-step and multistep income statements result in different net income amounts.

Income from operations is arrived at after considering all except

Use this information to answer the following question. If the income statement were prepared in a multistep form,excess of other expenses over other revenues would be

Which of the following is necessary for computing cost of goods sold but not necessary for computing the cost of goods available for sale?

Purchase discounts are discounts that a buyer takes for the early payment of merchandise.

The operating cycle is the average days' inventory on hand minus the average number of days to collect credit sales.

The entry to record payment of a $3,000 purchase within the 2 percent discount period would include a(n)

Which of the following is not classified as a selling expense on the income statement?

Freight paid on goods shipped to customers is classified as a selling expense.

Use this information to answer the following question. In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000. -Cost of goods sold for the period was

The financing period is also referred to as the cash gap.