Question 1

Net sales is equal to sales minus cost of merchandise sold.

Accepted Answer

A) True 
 B)False

Question 2

Gadget Palace is a retailer selling unique hardware. Gadget Palace uses perpetual inventory. Use a General Journal to journalize the following four transactions during the month of August:

Accepted Answer

@#IMG-DLM&Computation of payment:
 @#IMG-DLM& Whil

Question 3

Match between columns
                        Premises: Sales
Merchandise Inventory
Delivery Expense
Sales Discounts
Sales Returns and Allowance
Cost of Merchandise Sold
Sales Tax Payable

Accepted Answer

The Answer of Credit and debit is...

Question 4

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $10,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Accepted Answer

A)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000 
B)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and Accounts Receivable-Madison, debit $300; Cash, credit $300 
C)  Accounts Receivable-Madison, debit $10,300; Sales, credit $10,300 
D)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and Freight Out, debit $300; Cash, credit $300 
A)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000 
B)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and Accounts Receivable-Madison, debit $300; Cash, credit $300 
C)  Accounts Receivable-Madison, debit $10,300; Sales, credit $10,300 
D)  Accounts Receivable-Madison, debit $10,000; Sales, credit $10,000, and Freight Out, debit $300; Cash, credit $300

Question 5

Where are selling and administrative expenses found on the multiple-step income statement?

Accepted Answer

A)  before gross profit 
B)  after sales and before gross profit 
C)  after net income before expenses 
D)  after gross profit 
A)  before gross profit 
B)  after sales and before gross profit 
C)  after net income before expenses 
D)  after gross profit

Question 6

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, & Z.

Accepted Answer

@#IMG-DLM& OR Rearranged in th

Question 7

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

Accepted Answer

A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned 
A)  n/30 
B)  FOB shipping point 
C)  FOB destination 
D)  consigned

Question 8

A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Accepted Answer

A)  $12,670 
B)  $9,070 
C)  $8,420 
D)  $17,230 
A)  $12,670 
B)  $9,070 
C)  $8,420 
D)  $17,230

Question 9

Under a periodic inventory system, closing entries will include

Accepted Answer

A)  Dr. Sales, Purchases Returns and Allowances, Purchases Discounts 
B)  Cr. Purchases, Sales Discounts, Sales Returns and Allowances 
C)  Adjust Merchandise Inventory account to match physical inventory 
D)  All are correct 
A)  Dr. Sales, Purchases Returns and Allowances, Purchases Discounts 
B)  Cr. Purchases, Sales Discounts, Sales Returns and Allowances 
C)  Adjust Merchandise Inventory account to match physical inventory 
D)  All are correct

Question 10

The term "inventory" can indicate

Accepted Answer

A)  merchandise held for sale in the normal course of business 
B)  equipment used to manufacture products 
C)  supplies 
D)  any asset 
A)  merchandise held for sale in the normal course of business 
B)  equipment used to manufacture products 
C)  supplies 
D)  any asset

Question 11

Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Accepted Answer

$7,972 (Net Sales $3

Question 12

The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.

Accepted Answer

A) True 
 B)False

Question 13

Travis Company purchased merchandise on account from a supplier for $5,700, terms 2/10, net 30. Travis returned $1,100 of the merchandise and received full credit. Travis Company paid for the merchandise within the discount period.
Under a perpetual inventory system, record all of the journal entries required for the above transactions.

Accepted Answer

The answer of Travis Company purchased merchandise on account from...

Question 14

Under a periodic inventory system, the merchandise on hand at the end of the year is determined by a physical count of the inventory.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following accounts will not be found on the Cost of Merchandise Sold section on the Income Statement?

Accepted Answer

A)  Purchases 
B)  Freight In 
C)  Sales Returns and Allowances 
D)  Merchandise Inventory 
A)  Purchases 
B)  Freight In 
C)  Sales Returns and Allowances 
D)  Merchandise Inventory

Question 16

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Accepted Answer

A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo 
A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo

Question 17

In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account.

Accepted Answer

A) True 
 B)False

Question 18

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Accepted Answer

A)  debit to Cost of Merchandise Sold 
B)  credit to Accounts Payable 
C)  credit to Merchandise Inventory 
D)  credit to Sales 
A)  debit to Cost of Merchandise Sold 
B)  credit to Accounts Payable 
C)  credit to Merchandise Inventory 
D)  credit to Sales

Question 19

Multiple-step income statements show

Accepted Answer

A)  gross profit but not income from operations 
B)  neither gross profit nor income from operations 
C)  both gross profit and income from operations 
D)  income from operations but not gross profit 
A)  gross profit but not income from operations 
B)  neither gross profit nor income from operations 
C)  both gross profit and income from operations 
D)  income from operations but not gross profit

Question 20

Using the perpetual inventory system, journalize the entries for the following selected transactions:

Accepted Answer

The answer of Using the perpetual inventory system, journalize the...

Exam 5: Accounting for Merchandising Businesses

Net sales is equal to sales minus cost of merchandise sold.

Gadget Palace is a retailer selling unique hardware. Gadget Palace uses perpetual inventory. Use a General Journal to journalize the following four transactions during the month of August:

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $10,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Where are selling and administrative expenses found on the multiple-step income statement?

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, & Z.

If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are

A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to

Under a periodic inventory system, closing entries will include

The term "inventory" can indicate

The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.

Under a periodic inventory system, the merchandise on hand at the end of the year is determined by a physical count of the inventory.

Which of the following accounts will not be found on the Cost of Merchandise Sold section on the Income Statement?

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account.

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Multiple-step income statements show

Using the perpetual inventory system, journalize the entries for the following selected transactions:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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