Question 1

Net income plus operating expenses is equal to

Accepted Answer

A)  cost of merchandise sold 
B)  cost of merchandise available for sale 
C)  net sales 
D)  gross profit 
A)  cost of merchandise sold 
B)  cost of merchandise available for sale 
C)  net sales 
D)  gross profit

Question 2

A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?

Accepted Answer

A)  $4,500 
B)  $10,500 
C)  $10,290 
D)  $14,700 
A)  $4,500 
B)  $10,500 
C)  $10,290 
D)  $14,700

Question 3

Net sales is equal to sales minus cost of merchandise sold.

Accepted Answer

A) True 
 B)False

Question 4

One of the most important differences between a service business and a retail business is in what is sold.

Accepted Answer

A) True 
 B)False

Question 5

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

The answer of Details of a purchase invoice and related...

Question 6

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

Accepted Answer

A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased 
A)  Merchandise Inventory 
B)  Purchases 
C)  Accounts Payable 
D)  Cost of Merchandise Purchased

Question 7

Which of the following accounts has a normal debit balance?

Accepted Answer

A)  Accounts Payable 
B)  Sales Returns and Allowances 
C)  Sales 
D)  Interest Revenue 
A)  Accounts Payable 
B)  Sales Returns and Allowances 
C)  Sales 
D)  Interest Revenue

Question 8

Using the following data taken from Martinez Inc., determine the gross profit to be reported on the income statement for the year ended May 31, 2012.

Accepted Answer

Gross profit = Sales

Question 9

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

Accepted Answer

A)  Sales 
B)  Accounts Receivable 
C)  Merchandise Inventory 
D)  Accounts Payable 
A)  Sales 
B)  Accounts Receivable 
C)  Merchandise Inventory 
D)  Accounts Payable

Question 10

On March 25, 2010, Patton Company sold merchandise on account,$4,500.00. The applicable sales tax percentage is 7.25%. Record the transaction.

Accepted Answer

The answer of On March 25, 2010, Patton Company sold...

Question 11

Discuss the following statement:
"Operating cycles for all merchandising businesses are the same, with similar profit margins."
Include an example(s) to illustrate your explanation.

Accepted Answer

This is not True. While the operations o

Question 12

In many retail businesses, inventory is the largest current asset.

Accepted Answer

A) True 
 B)False

Question 13

Sales Discounts is a revenue account with a credit balance.

Accepted Answer

A) True 
 B)False

Question 14

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) Sales Discounts
(2) Merchandise Inventory
(3) Sales
(4) Purchases Discounts
(5) Cost of Merchandise Sold

Accepted Answer

(1) c (2)

Question 15

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 16

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 17

Cumberland Co. sells $1,200 of inventory to Hancock Co. for cash. Cumberland paid $850 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Accepted Answer

A)  Cash $1,200 Dr., Merchandise Inventory $850 Cr. 
B)  Cash $1,200 Dr, Sales $1,200 Cr., Cost of Merchandise Sold $850 Dr., Merchandise Inventory $850 Cr. 
C)  Cash $1,200 Dr., Sales $1,200 Cr. 
D)  Accounts Receivable $1,200 Dr., Sales $1,200 Cr., Cost of Merchandise Sold $850 Dr., Merchandise Inventory $850 Cr. 
A)  Cash $1,200 Dr., Merchandise Inventory $850 Cr. 
B)  Cash $1,200 Dr, Sales $1,200 Cr., Cost of Merchandise Sold $850 Dr., Merchandise Inventory $850 Cr. 
C)  Cash $1,200 Dr., Sales $1,200 Cr. 
D)  Accounts Receivable $1,200 Dr., Sales $1,200 Cr., Cost of Merchandise Sold $850 Dr., Merchandise Inventory $850 Cr.

Question 18

Using the following information, what is the amount of merchandise available for sale?

Accepted Answer

A)  $35,540 
B)  $36,580 
C)  $37,700 
D)  $34,500 
A)  $35,540 
B)  $36,580 
C)  $37,700 
D)  $34,500

Question 19

Bargain Wholesalers sells pet supplies to retailers, including Pet World Supplies. Bargain Wholesalers uses perpetual inventory. Journalize the following transactions for Bargain Wholesalers:

Accepted Answer

@#IMG-DLM& Computati

Question 20

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

Accepted Answer

A) True 
 B)False

Net income plus operating expenses is equal to

A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?

Net sales is equal to sales minus cost of merchandise sold.

One of the most important differences between a service business and a retail business is in what is sold.

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:

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

Which of the following accounts has a normal debit balance?

Using the following data taken from Martinez Inc., determine the gross profit to be reported on the income statement for the year ended May 31, 2012.

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

On March 25, 2010, Patton Company sold merchandise on account,$4,500.00. The applicable sales tax percentage is 7.25%. Record the transaction.

Discuss the following statement: "Operating cycles for all merchandising businesses are the same, with similar profit margins." Include an example(s) to illustrate your explanation.

In many retail businesses, inventory is the largest current asset.

Sales Discounts is a revenue account with a credit balance.

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

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

Cumberland Co. sells $1,200 of inventory to Hancock Co. for cash. Cumberland paid $850 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Using the following information, what is the amount of merchandise available for sale?

Bargain Wholesalers sells pet supplies to retailers, including Pet World Supplies. Bargain Wholesalers uses perpetual inventory. Journalize the following transactions for Bargain Wholesalers:

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

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

Net income plus operating expenses is equal to

A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?

Net sales is equal to sales minus cost of merchandise sold.

One of the most important differences between a service business and a retail business is in what is sold.

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:

Under the periodic inventory system, the journal entry to record the purchase of merchandise inventory will include a debit to

Which of the following accounts has a normal debit balance?

Using the following data taken from Martinez Inc., determine the gross profit to be reported on the income statement for the year ended May 31, 2012.

Which of the following accounts will only be found in the chart of accounts of a merchandising company?

On March 25, 2010, Patton Company sold merchandise on account,$4,500.00. The applicable sales tax percentage is 7.25%. Record the transaction.

Discuss the following statement: "Operating cycles for all merchandising businesses are the same, with similar profit margins." Include an example(s) to illustrate your explanation.

In many retail businesses, inventory is the largest current asset.

Sales Discounts is a revenue account with a credit balance.

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

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

Cumberland Co. sells $1,200 of inventory to Hancock Co. for cash. Cumberland paid $850 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?

Using the following information, what is the amount of merchandise available for sale?

Bargain Wholesalers sells pet supplies to retailers, including Pet World Supplies. Bargain Wholesalers uses perpetual inventory. Journalize the following transactions for Bargain Wholesalers:

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

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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