Question 1

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

Accepted Answer

A)  Increases Sales Returns and Allowances and decreases Accounts Receivable 
B)  Decreases Cost of Merchandise Sold and increases Merchandise Inventory 
C)  Increases Purchase Returns and Allowances and decreases Merchandise Inventory 
D)  All of these occur. 
A)  Increases Sales Returns and Allowances and decreases Accounts Receivable 
B)  Decreases Cost of Merchandise Sold and increases Merchandise Inventory 
C)  Increases Purchase Returns and Allowances and decreases Merchandise Inventory 
D)  All of these occur.

Question 2

In a multiple-step income statement, sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales.

Accepted Answer

A) True 
 B)False

Question 3

Deana, Inc. Deana, Inc. purchased merchandise for $500,000, received credit for purchase returns of $25,000, took purchase discounts of $10,000, and paid transportation in of $20,000.
Refer to Deana, Inc. If Deana, Inc. had $20,000 in beginning inventory, and sold goods costing $300,000, what is the ending inventory balance?

Accepted Answer

A)  $165,000 
B)  $240,000 
C)  $200,000 
D)  $185,000 
A)  $165,000 
B)  $240,000 
C)  $200,000 
D)  $185,000

Question 4

Merchandise with an invoice price of $6,000 is purchased subject to terms of 2/10, n/30, FOB destination. Transportation costs paid by the seller totaled $125. What is the net cost of the merchandise?

Accepted Answer

A)  $6,125 
B)  $6,005 
C)  $5,880 
D)  $5,755 
A)  $6,125 
B)  $6,005 
C)  $5,880 
D)  $5,755

Question 5

ONI, Inc. purchased $60,000 of equipment for cash. How does this transaction impact the statement of cash flows?

Accepted Answer

A)  Decreases the cash flow from operating activities by $60,000 
B)  Decreases equipment by $60,000 
C)  Decreases the cash flow from investing activities section by $60,000 
D)  This transaction would not affect the statement of cash flows. 
A)  Decreases the cash flow from operating activities by $60,000 
B)  Decreases equipment by $60,000 
C)  Decreases the cash flow from investing activities section by $60,000 
D)  This transaction would not affect the statement of cash flows.

Question 6

The difference between sales and cost of merchandise sold for a merchandising business is:

Accepted Answer

A)  sales. 
B)  net sales. 
C)  gross sales. 
D)  gross profit. 
A)  sales. 
B)  net sales. 
C)  gross sales. 
D)  gross profit.

Question 7

Gold Co. sold merchandise to Bronze Co. on account, $23,000, terms 2/15, net 45. The cost of the merchandise sold is $18,500. Gold Co. issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900. Bronze Co. paid the invoice within the discount period. What is the amount of net income earned by Gold Co. on the transactions?

Accepted Answer

$3,490 (Net Sales $2

Question 8

What is one criticism of the single-step income statement?

Accepted Answer

A)  It is too complex. 
B)  It has too many subsections. 
C)  Gross profit and income from operations are not available for analysis. 
D)  Income taxes are given too much weight. 
A)  It is too complex. 
B)  It has too many subsections. 
C)  Gross profit and income from operations are not available for analysis. 
D)  Income taxes are given too much weight.

Question 9

On the income statement, sales returns and allowances and sales discounts are added to gross sales to yield net sales.

Accepted Answer

A) True 
 B)False

Question 10

Sales Returns and Allowances is a contra-asset account.

Accepted Answer

A) True 
 B)False

Question 11

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

Accepted Answer

A) True 
 B)False

Question 12

If Martin, Inc. sold $550,000 worth of merchandise, had $50,000 returned, and then the balance paid during the 2% discount period, how much was Martin's net sales?

Accepted Answer

A)  $500,000 
B)  $550,000 
C)  $490,000 
D)  $510,000 
A)  $500,000 
B)  $550,000 
C)  $490,000 
D)  $510,000

Question 13

Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet?

Accepted Answer

A)  As a revenue 
B)  As the cost of merchandise sold 
C)  It does not appear on the Balance Sheet 
D)  As a current asset 
A)  As a revenue 
B)  As the cost of merchandise sold 
C)  It does not appear on the Balance Sheet 
D)  As a current asset

Question 14

Which of the following statements is true?

Accepted Answer

A)  The revenue activities of a service business involve providing services to customers. 
B)  The revenue activities of a merchandising business involve the building of a product. 
C)  The revenue activities of a service business involve the building of a product. 
D)  The revenue activities of a merchandising business involve providing services to customers. 
A)  The revenue activities of a service business involve providing services to customers. 
B)  The revenue activities of a merchandising business involve the building of a product. 
C)  The revenue activities of a service business involve the building of a product. 
D)  The revenue activities of a merchandising business involve providing services to customers.

Question 15

For a merchandising firm, the inventory sold is shown on the income statement as:

Accepted Answer

A)  cost of merchandise sold. 
B)  purchases. 
C)  purchases returns and allowances. 
D)  net purchases. 
A)  cost of merchandise sold. 
B)  purchases. 
C)  purchases returns and allowances. 
D)  net purchases.

Question 16

Dig, Inc. had the following merchandise transactions in October: $\begin{array}{|l|l|}
\hline\$ 50,000 & \text { Purchases } \
\hline \$ 4,000 & \text { Purchase retuns } \
\hline \$ 1,000 & \text { Purchase discounts } \
\hline\$ 2,000 & \text { Transportation in } \
\hline & \
\hline
\end{array}$
 What is the total cost of merchandise purchased for Dig, Inc.?

Accepted Answer

A)  $50,000 
B)  $47,000 
C)  $52,000 
D)  $48,000 
A)  $50,000 
B)  $47,000 
C)  $52,000 
D)  $48,000

Question 17

Purchase discounts reduce sales.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following are subtracted from sales to arrive at net sales?

Accepted Answer

A)  Sales returns 
B)  Merchandise inventory 
C)  Accounts receivable 
D)  Cost of merchandise sold 
A)  Sales returns 
B)  Merchandise inventory 
C)  Accounts receivable 
D)  Cost of merchandise sold

Question 19

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30days after the invoice date to take advantage of the cash discount.

Accepted Answer

A) True 
 B)False

Question 20

Generally, the revenue account for a merchandising business is entitled:

Accepted Answer

A)  Sales. 
B)  Net Sales. 
C)  Gross Sales. 
D)  Gross Profit. 
A)  Sales. 
B)  Net Sales. 
C)  Gross Sales. 
D)  Gross Profit.

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

In a multiple-step income statement, sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales.

Merchandise with an invoice price of $6,000 is purchased subject to terms of 2/10, n/30, FOB destination. Transportation costs paid by the seller totaled $125. What is the net cost of the merchandise?

ONI, Inc. purchased $60,000 of equipment for cash. How does this transaction impact the statement of cash flows?

The difference between sales and cost of merchandise sold for a merchandising business is:

What is one criticism of the single-step income statement?

On the income statement, sales returns and allowances and sales discounts are added to gross sales to yield net sales.

Sales Returns and Allowances is a contra-asset account.

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

If Martin, Inc. sold $550,000 worth of merchandise, had $50,000 returned, and then the balance paid during the 2% discount period, how much was Martin's net sales?

Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet?

Which of the following statements is true?

For a merchandising firm, the inventory sold is shown on the income statement as:

Dig, Inc. had the following merchandise transactions in October: \ 50,000 Purchases \ 4,000 Purchase retuns \ 1,000 Purchase discounts \ 2,000 Transportation in What is the total cost of merchandise purchased for Dig, Inc.?

Purchase discounts reduce sales.

Which of the following are subtracted from sales to arrive at net sales?

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30days after the invoice date to take advantage of the cash discount.

Generally, the revenue account for a merchandising business is entitled:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley, Internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 4: Accounting for Merchandising Businesses

For the perpetual inventory system, which of the following effects does not occur upon the return from a customer of merchandise sold on account?

In a multiple-step income statement, sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales.

Merchandise with an invoice price of $6,000 is purchased subject to terms of 2/10, n/30, FOB destination. Transportation costs paid by the seller totaled $125. What is the net cost of the merchandise?

ONI, Inc. purchased $60,000 of equipment for cash. How does this transaction impact the statement of cash flows?

The difference between sales and cost of merchandise sold for a merchandising business is:

What is one criticism of the single-step income statement?

On the income statement, sales returns and allowances and sales discounts are added to gross sales to yield net sales.

Sales Returns and Allowances is a contra-asset account.

Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

If Martin, Inc. sold $550,000 worth of merchandise, had $50,000 returned, and then the balance paid during the 2% discount period, how much was Martin's net sales?

Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet?

Which of the following statements is true?

For a merchandising firm, the inventory sold is shown on the income statement as:

Dig, Inc. had the following merchandise transactions in October: \ 50,000 Purchases \ 4,000 Purchase retuns \ 1,000 Purchase discounts \ 2,000 Transportation in What is the total cost of merchandise purchased for Dig, Inc.?

Purchase discounts reduce sales.

Which of the following are subtracted from sales to arrive at net sales?

A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30days after the invoice date to take advantage of the cash discount.

Generally, the revenue account for a merchandising business is entitled:

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Sarbanes-Oxley, Internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters