Question 1

Retailers record all credit card sales as credit sales.

Accepted Answer

A) True 
 B)False

Question 2

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

Accepted Answer

A) True 
 B)False

Question 3

In a perpetual inventory system, when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  credit to Sales Returns and Allowances 
B)  debit to Merchandise Inventory 
C)  credit to Merchandise Inventory 
D)  debit to Cost of Merchandise Sold 
A)  credit to Sales Returns and Allowances 
B)  debit to Merchandise Inventory 
C)  credit to Merchandise Inventory 
D)  debit to Cost of Merchandise Sold

Question 5

The primary difference between a periodic and perpetual inventory system is that a

Accepted Answer

A)  periodic system determines the inventory on hand only at the end of the accounting period 
B)  periodic system keeps a record showing the inventory on hand at all times 
C)  periodic system provides an easy means to determine inventory shrinkage 
D)  periodic system records the cost of the sale on the date the sale is made 
A)  periodic system determines the inventory on hand only at the end of the accounting period 
B)  periodic system keeps a record showing the inventory on hand at all times 
C)  periodic system provides an easy means to determine inventory shrinkage 
D)  periodic system records the cost of the sale on the date the sale is made

Question 6

Based upon the following data, determine the cost of merchandise sold for August.

Accepted Answer

Cost of me

Question 7

Which of the following items should not be included in the cost of ending merchandise inventory?

Accepted Answer

A)  purchased units in transit, shipped FOB shipping point 
B)  purchased units in transit, shipped FOB destination 
C)  units on hand in the warehouse 
D)  sold units in transit, not invoiced and shipped FOB destination 
A)  purchased units in transit, shipped FOB shipping point 
B)  purchased units in transit, shipped FOB destination 
C)  units on hand in the warehouse 
D)  sold units in transit, not invoiced and shipped FOB destination

Question 8

A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

Accepted Answer

A)  $970 
B)  $650 
C)  $300 
D)  $620 
A)  $970 
B)  $650 
C)  $300 
D)  $620

Question 9

Cleary Company had total Sales of $550,000; Sales Discounts of $10,000; Sales Returns of $40,000 and Cost of Merchandise Sold of $200,000 during 2010. The total asset balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the ratio of net sales to total assets (Round answer to 2 decimal points).

Accepted Answer

A)  1.75 
B)  2.92 
C)  .34 
D)  .57 
A)  1.75 
B)  2.92 
C)  .34 
D)  .57

Question 10

Which of the following costs would be included in merchandise inventory?

Accepted Answer

The answer of Which of the following costs would be...

Question 11

Income that cannot  be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Income on the multiple-step income statement.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the following statement:

Accepted Answer

"Operating cycles for all merchandising

Question 13

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Accepted Answer

A) True 
 B)False

Question 14

Gross profit minus selling expenses equals net income.

Accepted Answer

A) True 
 B)False

Question 15

Which account will be included in both service and merchandising companies closing entries?

Accepted Answer

A)  Sales 
B)  Cost of Merchandise Sold 
C)  Purchase Discounts 
D)  Sales Returns and Allowances 
A)  Sales 
B)  Cost of Merchandise Sold 
C)  Purchase Discounts 
D)  Sales Returns and Allowances

Question 16

The ratio of net sales to assets measures how effectively a business is using its assets to generate sales.

Accepted Answer

A) True 
 B)False

Question 17

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

Accepted Answer

A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory 
A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory

Question 18

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 19

Sellers and buyers are required to record trade discounts.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Sales Returns and Allowances 
B)  Sales 
C)  Merchandise Inventory 
D)  Delivery Expense 
A)  Sales Returns and Allowances 
B)  Sales 
C)  Merchandise Inventory 
D)  Delivery Expense

Exam 5: Accounting for Merchandising Businesses

Retailers record all credit card sales as credit sales.

Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales.

In a perpetual inventory system, when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction.

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

The primary difference between a periodic and perpetual inventory system is that a

Based upon the following data, determine the cost of merchandise sold for August.

Which of the following items should not be included in the cost of ending merchandise inventory?

A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

Which of the following costs would be included in merchandise inventory?

Income that cannot be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Income on the multiple-step income statement.

Discuss the following statement:

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Gross profit minus selling expenses equals net income.

Which account will be included in both service and merchandising companies closing entries?

The ratio of net sales to assets measures how effectively a business is using its assets to generate sales.

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Sellers and buyers are required to record trade discounts.

Which of the following accounts has a normal credit balance?

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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