Question 1

Cost of goods sold is a type of expense.

Accepted Answer

A) True 
 B)False

Question 2

Under the perpetual inventory system,when merchandise is sold,its cost is transferred from the Merchandise Inventory account to the Sales account.

Accepted Answer

A) True 
 B)False

Question 3

Liberty Industries purchased merchandise worth $1,800 on credit,terms n/30 and returned merchandise worth $200 on the next day.What is the required journal entry to record the merchandise returns under the perpetual inventory system?

Accepted Answer

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

Question 4

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Accepted Answer

The financ

Question 5

Under the periodic inventory system

Accepted Answer

A) the cost of each item is recorded in the Merchandise Inventory account when it is purchased. 
B) when an inventory item is sold,its cost is transaferred to the Cost of Goods Sold account. 
C) the balance of the Merchandise Inventory account equals the cost of goods on hand. 
D) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
A) the cost of each item is recorded in the Merchandise Inventory account when it is purchased. 
B) when an inventory item is sold,its cost is transaferred to the Cost of Goods Sold account. 
C) the balance of the Merchandise Inventory account equals the cost of goods on hand. 
D) the balance of the Merchandise Inventory account is only accurate on the balance sheet date.

Question 6

Sales Discounts and Sales Returns and Allowances have normal credit balances.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Under the perpetual inventory system

Accepted Answer

A) the cost of each item is recorded in the Merchandise Inventory account when it is purchased. 
B) when an inventory item is sold,its cost is transferred to the Sales Revenue account. 
C) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
D) All of these choices. 
A) the cost of each item is recorded in the Merchandise Inventory account when it is purchased. 
B) when an inventory item is sold,its cost is transferred to the Sales Revenue account. 
C) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
D) All of these choices.

Question 9

When the buyer bears the transportation charge,it is called freight-out.

Accepted Answer

A) True 
 B)False

Question 10

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 11

The fee paid by a retailer to a credit card company is considered a contra-revenue account by the retailer.

Accepted Answer

A) True 
 B)False

Question 12

Advertising expense appears as a general and administrative expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Which of the following items is not shown on a single-step income statement?

Accepted Answer

A) Cost of goods sold. 
B) Interest expense. 
C) Selling expenses. 
D) Gross margin. 
A) Cost of goods sold. 
B) Interest expense. 
C) Selling expenses. 
D) Gross margin.

Question 15

Dividend income and interest income are examples of nonoperating revenues.

Accepted Answer

A) True 
 B)False

Question 16

When freight-in is a relatively small amount,most companies include the cost in

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) administrative expenses. 
D) merchandise inventory. 
A) operating expenses. 
B) cost of goods sold. 
C) administrative expenses. 
D) merchandise inventory.

Question 17

Operating expenses include cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 18

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

Accepted Answer

A) True 
 B)False

Question 19

Cost of goods sold would not be found on a single-step income statement.

Accepted Answer

A) True 
 B)False

Question 20

Other revenues and expenses appears as a separate section on a single-step income statement.

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Merchandising Operations

Cost of goods sold is a type of expense.

Under the perpetual inventory system,when merchandise is sold,its cost is transferred from the Merchandise Inventory account to the Sales account.

Liberty Industries purchased merchandise worth $1,800 on credit,terms n/30 and returned merchandise worth $200 on the next day.What is the required journal entry to record the merchandise returns under the perpetual inventory system?

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Under the periodic inventory system

Sales Discounts and Sales Returns and Allowances have normal credit balances.

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

Under the perpetual inventory system

When the buyer bears the transportation charge,it is called freight-out.

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 fee paid by a retailer to a credit card company is considered a contra-revenue account by the retailer.

Advertising expense appears as a general and administrative expense on the income statement.

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

Which of the following items is not shown on a single-step income statement?

Dividend income and interest income are examples of nonoperating revenues.

When freight-in is a relatively small amount,most companies include the cost in

Operating expenses include cost of goods sold.

The operating cycle involves the purchase and sale of merchandise inventory as well as the subsequent collection of cash from credit sales.

Cost of goods sold would not be found on a single-step income statement.

Other revenues and expenses appears as a separate section on a single-step income statement.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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