Question 1

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

Accepted Answer

A) True 
 B)False

Question 2

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Accepted Answer

A) True 
 B)False

Question 3

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Accepted Answer

A)  gross profit 
B)  income from operations 
C)  net income 
D)  gross sales 
A)  gross profit 
B)  income from operations 
C)  net income 
D)  gross sales

Question 4

Which one of the following is not a difference between a retail business and a service business?

Accepted Answer

A)  in what is sold 
B)  the inclusion of gross profit in the income statement 
C)  accounting equation 
D)  merchandise inventory included in the balance sheet 
A)  in what is sold 
B)  the inclusion of gross profit in the income statement 
C)  accounting equation 
D)  merchandise inventory included in the balance sheet

Question 5

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

Accepted Answer

A) True 
 B)False

Question 6

Merchandise Inventory normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 7

If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75, processing the purchase order by the purchasing department costs $50, and the company receiving dock personnel cost $25, what is the total cost charged to the merchandise?

Accepted Answer

A)  $3,825 
B)  $3,850 
C)  $3,875 
D)  $3,500 
A)  $3,825 
B)  $3,850 
C)  $3,875 
D)  $3,500

Question 8

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 9

Maxi Company's perpetual inventory records indicate that $820,300 of merchandise should be on hand on October 31, 2014. The physical inventory indicates that $781,900 is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Maxi Company for the year ended October 31, 2014.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 10

Emma Co. sold Isabella Co. merchandise on account FOB shipping point,, 2/10, net 30, for $15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make to record payment of the merchandise if Isabella Co. pays within the discount period?

Accepted Answer

A)  Accounts Payable-Emma Co., debit $15,000; Freight In, credit $750; Cash, credit $14,250 
B)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit $15,450 
C)  Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750 
D)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050 
A)  Accounts Payable-Emma Co., debit $15,000; Freight In, credit $750; Cash, credit $14,250 
B)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit $15,450 
C)  Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750 
D)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050

Question 11

Generally, the revenue account for a merchandising business is entitled

Accepted Answer

A)  Sales 
B)  Fees Earned 
C)  Gross Sales 
D)  Gross Profit 
A)  Sales 
B)  Fees Earned 
C)  Gross Sales 
D)  Gross Profit

Question 12

Journalize the following merchandise transactions:

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 13

When the perpetual inventory system is used, the inventory sold is debited to

Accepted Answer

A)  supplies expense 
B)  cost of merchandise sold 
C)  merchandise inventory 
D)  sales 
A)  supplies expense 
B)  cost of merchandise sold 
C)  merchandise inventory 
D)  sales

Question 14

What type of company would normally offer trade discounts to its customers?

Accepted Answer

A)  Service companies 
B)  Retailers 
C)  Wholesalers 
D)  On-line retailers 
A)  Service companies 
B)  Retailers 
C)  Wholesalers 
D)  On-line retailers

Question 15

Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. If Sonar Co. chooses not to take the discount, by when should the payment be made?

Accepted Answer

A)  April 30 
B)  May 30 
C)  May 15 
D)  April 25 
A)  April 30 
B)  May 30 
C)  May 15 
D)  April 25

Question 16

On March 15th Monroe Sales sells $9,525.00 on account to Garrison Brewer with terms of 2/10, n/30. The cost of merchandise sold was $6,905.00.
(a) Journalize the sale and the recognition of the cost of the sale.
(b) On March 20th a $125.00 credit memo is given to Garrison Brewer due to merchandise that was the wrong color. Journalize this event. The cost of the returned merchandise was $65.
(c) On March 25th Garrison Brewer submits payment in full. Journalize this event.

Accepted Answer

(a)
 @#IMG-DLM&_TB2085_00_TB20

Question 17

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 18

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 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

The cost of merchandise inventory is limited to the purchase price less any purchase discounts.

Accepted Answer

A) True 
 B)False

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Which one of the following is not a difference between a retail business and a service business?

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

Merchandise Inventory normally has a debit balance.

If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75, processing the purchase order by the purchasing department costs $50, and the company receiving dock personnel cost $25, what is the total cost charged to the merchandise?

Under a periodic inventory system, closing entries will include

Maxi Company's perpetual inventory records indicate that $820,300 of merchandise should be on hand on October 31, 2014. The physical inventory indicates that $781,900 is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Maxi Company for the year ended October 31, 2014.

Generally, the revenue account for a merchandising business is entitled

Journalize the following merchandise transactions:

When the perpetual inventory system is used, the inventory sold is debited to

What type of company would normally offer trade discounts to its customers?

Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. If Sonar Co. chooses not to take the discount, by when should the payment be made?

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

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

Multiple-step income statements show

The cost of merchandise inventory is limited to the purchase price less any purchase discounts.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 6: Accounting for Merchandising Businesses

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?

Which one of the following is not a difference between a retail business and a service business?

In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account.

Merchandise Inventory normally has a debit balance.

If the merchandise costs $3,500, insurance in transit costs $250, tariff costs $75, processing the purchase order by the purchasing department costs $50, and the company receiving dock personnel cost $25, what is the total cost charged to the merchandise?

Under a periodic inventory system, closing entries will include

Generally, the revenue account for a merchandising business is entitled

Journalize the following merchandise transactions:

When the perpetual inventory system is used, the inventory sold is debited to

What type of company would normally offer trade discounts to its customers?

Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. If Sonar Co. chooses not to take the discount, by when should the payment be made?

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

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

Multiple-step income statements show

The cost of merchandise inventory is limited to the purchase price less any purchase discounts.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters