Exam 5: Accounting for Merchandising Businesses

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

Sellers and buyers are required to record trade discounts.

Multiple-step income statements show

When goods are shipped FOB destination and the seller pays the freight charges,the buyer

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

During the current year,merchandise is sold for $117,500 cash and $241,750 on account.The cost of the merchandise sold is $157,400.What is the amount of the gross profit?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Dorman Co.sold merchandise to Smith Co.on account,$23,500,terms 2/15,net 45.The cost of the merchandise sold is $16,000.Dorman Co.issued a credit memo for $1,750 for merchandise returned that originally cost $1,400.The Smith Co.paid the invoice within the discount period.What is amount of net sales from the above transactions?

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

The form of the balance sheet in which assets,liabilities,and owner's equity are presented in a downward sequence is called the report form.

Purchased goods in transit,shipped FOB destination,should be excluded from ending inventory of the buyer.

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?

The arrangements between buyer and seller as to when payments for merchandise are to be made are called

When companies use a perpetual inventory system,the recording of the purchase of inventory will include a debit to purchases.

Because many companies use computerized accounting systems,periodic inventory is widely used.

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

In a perpetual inventory system,the Merchandise Inventory account is only used to reflect the beginning inventory.

Other income and expenses are items that are related to the primary operating activity.

The entry to record the return of merchandise from a customer would include a

Sales Discounts is a revenue account with a credit balance.