Question 1

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

Accepted Answer

A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory 
A)  debit Cost of Merchandise Sold; credit Sales 
B)  debit Cost of Merchandise Sold; credit Merchandise Inventory 
C)  debit Merchandise Inventory; credit Cost of Merchandise Sold 
D)  debit Accounts Receivable; credit Merchandise Inventory

Question 2

The following data for the current year ended June 30 were extracted from the accounting records of Excel Co.:
   Prepare a multiple-step income statement for the year ended June 30, 2014.

Accepted Answer

The answer of The following data for the current year...

Question 3

Cleary Company had total Sales of $550,000; Sales Discounts of $10,000; Sales Returns of $40,000 and Cost of Merchandise Sold of $200,000 during 2010. The total asset balance at the beginning of the year was $175,000 and at the end of the year was $167,000. Calculate the ratio of net sales to total assets (Round answer to 2 decimal points).

Accepted Answer

A)  1.75 
B)  2.92 
C)  .34 
D)  .57 
A)  1.75 
B)  2.92 
C)  .34 
D)  .57

Question 4

Which of the following accounts usually has a debit balance?

Accepted Answer

A)  Purchase Discounts 
B)  Sales Tax Payable 
C)  Allowance for Doubtful Accounts 
D)  Freight-In 
A)  Purchase Discounts 
B)  Sales Tax Payable 
C)  Allowance for Doubtful Accounts 
D)  Freight-In

Question 5

Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled

Accepted Answer

A)  Merchandise Inventory 
B)  Cost of Merchandise Sold 
C)  Cost of Merchandise Available for Sale 
D)  Purchases 
A)  Merchandise Inventory 
B)  Cost of Merchandise Sold 
C)  Cost of Merchandise Available for Sale 
D)  Purchases

Question 6

If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination.

Accepted Answer

A) True 
 B)False

Question 7

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?

Accepted Answer

A)  Accounts Payable-Emma Co., debit $15,000; Freight In, credit $750; Cash, credit $14,250 
B)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit $15,450 
C)  Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750 
D)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050 
A)  Accounts Payable-Emma Co., debit $15,000; Freight In, credit $750; Cash, credit $14,250 
B)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, credit $300; Cash, credit $15,450 
C)  Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750 
D)  Accounts Payable-Emma Co., debit $15,750; Merchandise Inventory, debit $300; Cash, credit $16,050

Question 8

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 9

If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as

Accepted Answer

A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB seller 
A)  FOB shipping point 
B)  FOB destination 
C)  FOB n/30 
D)  FOB seller

Question 10

When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry

Accepted Answer

A)  debit Merchandise Inventory; credit Cash 
B)  debit Cash; credit Merchandise Inventory 
C)  debit Cash; credit Sales Returns and Allowances 
D)  debit Sales Returns and Allowances; credit Cash 
A)  debit Merchandise Inventory; credit Cash 
B)  debit Cash; credit Merchandise Inventory 
C)  debit Cash; credit Sales Returns and Allowances 
D)  debit Sales Returns and Allowances; credit Cash

Question 11

Cost of Merchandise Sold is often the largest expense on a merchandising company income statement.

Accepted Answer

A) True 
 B)False

Question 12

Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.

Accepted Answer

A) True 
 B)False

Question 13

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

Accepted Answer

A)  selling expenses 
B)  general expenses 
C)  other expenses 
D)  administrative expenses 
A)  selling expenses 
B)  general expenses 
C)  other expenses 
D)  administrative expenses

Question 14

When merchandise that was sold is returned, a credit to sales returns and allowances is made.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Merchandise Inventory normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 17

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

Accepted Answer

A) True 
 B)False

Question 18

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, & Z.

Accepted Answer

@#IMG-DLM&_TB2013_00 OR Rearra

Question 19

Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?

Accepted Answer

A)  10,500 
B)  30,772 
C)  7,972 
D)  31,400 
A)  10,500 
B)  30,772 
C)  7,972 
D)  31,400

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Merchandising Businesses

In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is

The following data for the current year ended June 30 were extracted from the accounting records of Excel Co.: Prepare a multiple-step income statement for the year ended June 30, 2014.

Which of the following accounts usually has a debit balance?

Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled

If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination.

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.

If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as

When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry

Cost of Merchandise Sold is often the largest expense on a merchandising company income statement.

Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

When merchandise that was sold is returned, a credit to sales returns and allowances is made.

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

Merchandise Inventory normally has a debit balance.

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, & Z.

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

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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