Question 1

Sellers and buyers are required to record trade discounts.

Accepted Answer

A) True 
 B)False

Question 2

The term "inventory" can indicate

Accepted Answer

A)  merchandise held for sale in the normal course of business 
B)  equipment used to manufacture products 
C)  supplies 
D)  any asset 
A)  merchandise held for sale in the normal course of business 
B)  equipment used to manufacture products 
C)  supplies 
D)  any asset

Question 3

Under a perpetual inventory system

Accepted Answer

A)  accounting records continuously disclose the amount of inventory 
B)  increases in inventory resulting from purchases are debited to Purchases 
C)  there is no need for a year-end physical count 
D)  the purchase returns and allowances account is credited when goods are returned to vendors 
A)  accounting records continuously disclose the amount of inventory 
B)  increases in inventory resulting from purchases are debited to Purchases 
C)  there is no need for a year-end physical count 
D)  the purchase returns and allowances account is credited when goods are returned to vendors

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  sales on account 
B)  sales returns 
C)  cash sales 
D)  sales when the credit card company remits the cash 
A)  sales on account 
B)  sales returns 
C)  cash sales 
D)  sales when the credit card company remits the cash

Question 6

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 7

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

Accepted Answer

A)  $5,200 
B)  $5,096 
C)  $4,704 
D)  $4,900 
A)  $5,200 
B)  $5,096 
C)  $4,704 
D)  $4,900

Question 8

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system.
(a) Journalize the sale event.
(b) Journal the cost of merchandise sold.

Accepted Answer

(a) Mar. 3 Cash 3,450.00
Sales

Question 9

Which of the following items would affect the cost of merchandise inventory acquired during the period?

Accepted Answer

A)  quantity discounts 
B)  cash discounts 
C)  freight-in 
D)  all of these costs 
A)  quantity discounts 
B)  cash discounts 
C)  freight-in 
D)  all of these costs

Question 10

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 11

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Gross profit is equal to:

Accepted Answer

A)  sales plus (sales discounts and sales returns and allowances) plus cost of merchandise sold 
B)  sales plus sales returns and allowances less sales discounts less cost of merchandise sold 
C)  sales plus sales discounts less sales returns and allowances less cost of merchandise sold 
D)  sales less (sales discounts and sales returns and allowances) less cost of merchandise sold 
A)  sales plus (sales discounts and sales returns and allowances) plus cost of merchandise sold 
B)  sales plus sales returns and allowances less sales discounts less cost of merchandise sold 
C)  sales plus sales discounts less sales returns and allowances less cost of merchandise sold 
D)  sales less (sales discounts and sales returns and allowances) less cost of merchandise sold

Question 14

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Accepted Answer

A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo 
A)  sales invoice 
B)  purchase invoice 
C)  credit memo 
D)  debit memo

Question 15

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Accepted Answer

A)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000 
B)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Accounts Receivable-Madison, debit $300; Cash, credit $300 
C)  Accounts Receivable-Madison, debit $20,500; Sales, credit $20,500 
D)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Freight Out, debit $300; Cash, credit $300 
A)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000 
B)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Accounts Receivable-Madison, debit $300; Cash, credit $300 
C)  Accounts Receivable-Madison, debit $20,500; Sales, credit $20,500 
D)  Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Freight Out, debit $300; Cash, credit $300

Question 16

Journalize the following transactions:
   Journal

Accepted Answer

The answer of Journalize the following transactions:
   Journal
...

Question 17

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be

Accepted Answer

A)  Cash 7,200 Merchandise Inventory 7,200
Cost of Merchandise Sold 3,950
Sales 3,950 
B)  Cash 7,200 Sales 7,200
Cost of Merchandise Sold 3,950
Merchandise Inventory 3,950 
C)  Cash 7,200 Sales 7,200
Cost of Merchandise Sold 7,200
Merchandise Inventory 7,200 
D)  Cash 3,950 Sales 3,950
Cost of Merchandise Sold 3,950
Merchandise Inventory 3,950 
A)  Cash 7,200 Merchandise Inventory 7,200
Cost of Merchandise Sold 3,950
Sales 3,950 
B)  Cash 7,200 Sales 7,200
Cost of Merchandise Sold 3,950
Merchandise Inventory 3,950 
C)  Cash 7,200 Sales 7,200
Cost of Merchandise Sold 7,200
Merchandise Inventory 7,200 
D)  Cash 3,950 Sales 3,950
Cost of Merchandise Sold 3,950
Merchandise Inventory 3,950

Question 18

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Accepted Answer

A)  debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales 
B)  debit to Cash and a credit to Sales 
C)  debit to Cash, credit to Credit Card Expense, and a credit to Sales 
D)  debit to Sales, debit to Credit Card Expense, and a credit to Cash 
A)  debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales 
B)  debit to Cash and a credit to Sales 
C)  debit to Cash, credit to Credit Card Expense, and a credit to Sales 
D)  debit to Sales, debit to Credit Card Expense, and a credit to Cash

Question 19

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following accounts would be included in the chart of accounts of a merchandising company using the: (a) periodic inventory system, (b) perpetual inventory system, or (c) both systems?
(1) Purchases
(2) Freight in
(3) Sales Returns and Allowances
(4) Delivery Expense
(5) Purchases Returns and Allowances

Accepted Answer

(1) a (2)

Sellers and buyers are required to record trade discounts.

The term "inventory" can indicate

Under a perpetual inventory system

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

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

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

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system. (a) Journalize the sale event. (b) Journal the cost of merchandise sold.

Which of the following items would affect the cost of merchandise inventory acquired during the period?

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

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

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

Gross profit is equal to:

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Journalize the following transactions: Journal

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

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

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Exam 5: Accounting for Merchandising Businesses

Sellers and buyers are required to record trade discounts.

The term "inventory" can indicate

Under a perpetual inventory system

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

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

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

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system. (a) Journalize the sale event. (b) Journal the cost of merchandise sold.

Which of the following items would affect the cost of merchandise inventory acquired during the period?

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

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

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

Gross profit is equal to:

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Journalize the following transactions: Journal

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

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

Filters