Question 1

For each of the following, calculate the cost of inventory reported on the balance sheet.

Accepted Answer

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Question 2

As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 3

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Accepted Answer

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Question 4

Details of a purchase invoice and related credit memo are summarized as follows:
   Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:

Accepted Answer

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Question 5

Who pays the freight costs when the terms are FOB shipping point?

Accepted Answer

A)  the ultimate customer 
B)  the buyer 
C)  the seller 
D)  either the seller or the buyer 
A)  the ultimate customer 
B)  the buyer 
C)  the seller 
D)  either the seller or the buyer

Question 6

Match between columns
                        Premises:  Account used to record merchandise purchased under a periodic inventory system.
 Account used to record shipping cost of merchandise by the buyer under a periodic inventory system.
 Expense account for recording shipping costs paid by the seller.
 Account where returned merchandise or price adjustments are recorded by the seller.
 Early payment discount offered to customers by the seller.
 Discounts off the list price offered by wholesalers.
 Account used to record merchandise purchased under a perpetual inventory system.
 Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system.

Accepted Answer

The Answer of Purchases and Merchandise Inventory and Sales Discounts is...

Question 7

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 8

Who pays the freight cost when the terms are FOB destination?

Accepted Answer

A)  the seller 
B)  the buyer 
C)  the customer 
D)  either the buyer or the seller 
A)  the seller 
B)  the buyer 
C)  the customer 
D)  either the buyer or the seller

Question 9

What is the major difference between a periodic and perpetual inventory system?

Accepted Answer

A)  Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month. 
D)  All are correct. 
A)  Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account 
B)  Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory. 
C)  Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month. 
D)  All are correct.

Question 10

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination.

Accepted Answer

A) True 
 B)False

Question 11

Computerized systems can be used to capture accounting information such as accounts receivable, inventory items, accounts payable, and sales.

Accepted Answer

A) True 
 B)False

Question 12

Match each of the following terms with the appropriate definition below.

Accepted Answer

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Question 13

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight-in.

Accepted Answer

A) True 
 B)False

Question 14

Sellers and buyers are required to record trade discounts.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Sales Returns and Allowances is a contra-revenue account.

Accepted Answer

A) True 
 B)False

Question 17

A business using the perpetual inventory system, with its detailed subsidiary records, does need to take a physical inventory.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The seller records the sales tax as part of the sales amount.

Accepted Answer

A) True 
 B)False

Question 20

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

Accepted Answer

A)  selling expense 
B)  miscellaneous expense 
C)  administrative expense 
D)  other expense 
A)  selling expense 
B)  miscellaneous expense 
C)  administrative expense 
D)  other expense

For each of the following, calculate the cost of inventory reported on the balance sheet.

As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet.

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Details of a purchase invoice and related credit memo are summarized as follows: Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:

Who pays the freight costs when the terms are FOB shipping point?

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

Who pays the freight cost when the terms are FOB destination?

What is the major difference between a periodic and perpetual inventory system?

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination.

Computerized systems can be used to capture accounting information such as accounts receivable, inventory items, accounts payable, and sales.

Match each of the following terms with the appropriate definition below.

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight-in.

Sellers and buyers are required to record trade discounts.

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

Sales Returns and Allowances is a contra-revenue account.

A business using the perpetual inventory system, with its detailed subsidiary records, does need to take a physical inventory.

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

The seller records the sales tax as part of the sales amount.

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

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

Exam 6: Accounting for Merchandising Businesses

For each of the following, calculate the cost of inventory reported on the balance sheet.

As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet.

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Details of a purchase invoice and related credit memo are summarized as follows: Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:

Who pays the freight costs when the terms are FOB shipping point?

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

Who pays the freight cost when the terms are FOB destination?

What is the major difference between a periodic and perpetual inventory system?

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination.

Computerized systems can be used to capture accounting information such as accounts receivable, inventory items, accounts payable, and sales.

Match each of the following terms with the appropriate definition below.

In a periodic inventory system, the cost of merchandise purchased includes the cost of freight-in.

Sellers and buyers are required to record trade discounts.

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

Sales Returns and Allowances is a contra-revenue account.

A business using the perpetual inventory system, with its detailed subsidiary records, does need to take a physical inventory.

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

The seller records the sales tax as part of the sales amount.

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

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