Question 1

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 2

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Accepted Answer

A) True 
 B)False

Question 3

Fiona's Store had the following transactions during December,the last month of the accounting period:   (1)Prepare general journal entries to record these transactions,using a perpetual inventory system.
(2)Prepare general journal entries to record these transactions,using a periodic inventory system.

Accepted Answer

The answer of Fiona's Store had the following transactions during...

Question 4

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

Sales are recorded at list price less an

Question 5

Merchandise inventory includes merchandise and office supplies.

Accepted Answer

A) True 
 B)False

Question 6

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 7

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period,then:

Accepted Answer

A)  The cost of goods sold was larger than net purchases. 
B)  Net income was larger than gross profit. 
C)  The cost of goods sold was smaller than net purchases. 
D)  The cost of goods available for sale was smaller than the cost of goods sold. 
E)  Gross profit was larger than the cost of goods sold. 
A)  The cost of goods sold was larger than net purchases. 
B)  Net income was larger than gross profit. 
C)  The cost of goods sold was smaller than net purchases. 
D)  The cost of goods available for sale was smaller than the cost of goods sold. 
E)  Gross profit was larger than the cost of goods sold.

Question 8

A business sold some inventory on credit for $5,000 before taxes.The sale is subject to 5% goods and services tax (GST)and 7% provincial sales tax (PST).The business uses a perpetual inventory system.What is the amount that will be recorded in the GST payable account as a result of this sale?

Accepted Answer

A)  $250 debit 
B)  $250 credit 
C)  $350 debit 
D)  $350 credit 
E)  None of these answers is correct. 
A)  $250 debit 
B)  $250 credit 
C)  $350 debit 
D)  $350 credit 
E)  None of these answers is correct.

Question 9

Classified multiple-step income statements:

Accepted Answer

A)  Are required by Canada Revenue Agency. 
B)  Are generally used for internal reporting. 
C)  Are required for the perpetual system. 
D)  List cost of goods sold as an operating expense. 
E)  Do not report gross profit. 
A)  Are required by Canada Revenue Agency. 
B)  Are generally used for internal reporting. 
C)  Are required for the perpetual system. 
D)  List cost of goods sold as an operating expense. 
E)  Do not report gross profit.

Question 10

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Accepted Answer

A)  Is not possible; it should be a credit to Sales Returns and Allowances and a debit to Accounts Receivable. 
B)  Recognizes that a customer returned merchandise. 
C)  Requires a debit memorandum to recognize the customer's return. 
D)  Recognizes a cash discount taken by a customer. 
E)  All of these answers are correct. 
A)  Is not possible; it should be a credit to Sales Returns and Allowances and a debit to Accounts Receivable. 
B)  Recognizes that a customer returned merchandise. 
C)  Requires a debit memorandum to recognize the customer's return. 
D)  Recognizes a cash discount taken by a customer. 
E)  All of these answers are correct.

Question 11

Z-Mart purchased $5,000 worth of merchandise on credit.Transportation costs were an additional $100,paid cash to the cartage company on delivery.Z-Mart returned $275 worth of merchandise and paid the invoice on time,and took a 2% purchase discount.The amount of this payment was:

Accepted Answer

A)  $3,600.50 
B)  $3,725.00 
C)  $3,993.50 
D)  $4,630.50 
E)  $4,728.50 
A)  $3,600.50 
B)  $3,725.00 
C)  $3,993.50 
D)  $4,630.50 
E)  $4,728.50

Question 12

Businesses normally get a full credit for both the goods and services tax (GST)and/or Harmonized Sales Tax (HST),and the provincial sales tax (PST)that they have paid.

Accepted Answer

A) True 
 B)False

Question 13

Explain the difference between single-step and multiple-step income statements.

Accepted Answer

A single-step income statement format in

Question 14

The agreed cost of an item to be purchased by a business on credit is $4,000.The applicable cost will be debited to advertising expense.The item is subject to 5% goods and services tax (GST)and 7% provincial sales tax (PST).When this transaction is recorded,what amount will be credited to accounts payable?

Accepted Answer

A)  $4,000 
B)  $4,200 
C)  $4,240 
D)  $4,480 
E)  None of these answers is correct. 
A)  $4,000 
B)  $4,200 
C)  $4,240 
D)  $4,480 
E)  None of these answers is correct.

Question 15

Gross profit is derived from:

Accepted Answer

A)  Sales. 
B)  Beginning inventory. 
C)  Ending inventory. 
D)  Cost of goods sold. 
E)  All of these answers are correct. 
A)  Sales. 
B)  Beginning inventory. 
C)  Ending inventory. 
D)  Cost of goods sold. 
E)  All of these answers are correct.

Question 16

Merchandise inventory is:

Accepted Answer

A)  Reported on the balance sheet under plant and equipment. 
B)  Products a company owns for resale to customers. 
C)  Reported on the income statement as an expense. 
D)  Includes supplies. 
E)  Included on a service company's balance sheet. 
A)  Reported on the balance sheet under plant and equipment. 
B)  Products a company owns for resale to customers. 
C)  Reported on the income statement as an expense. 
D)  Includes supplies. 
E)  Included on a service company's balance sheet.

Question 17

Complete the work sheet for the year ended October 31,2015.

Accepted Answer

The answer of Complete the work sheet for the year...

Question 18

Sales discounts can benefit a seller by _______________ the receipt of cash.

Accepted Answer

The answer of Sales discounts can benefit a seller by...

Question 19

A merchandising company's _______________ begins with the purchase of merchandise and ends with the collection of cash from sales.

Accepted Answer

The answer of A merchandising company's _______________ begins with the...

Question 20

Gross profit is also called gross margin.

Accepted Answer

A) True 
 B)False

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Fiona's Store had the following transactions during December,the last month of the accounting period: (1)Prepare general journal entries to record these transactions,using a perpetual inventory system. (2)Prepare general journal entries to record these transactions,using a periodic inventory system.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Merchandise inventory includes merchandise and office supplies.

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period,then:

A business sold some inventory on credit for $5,000 before taxes.The sale is subject to 5% goods and services tax (GST)and 7% provincial sales tax (PST).The business uses a perpetual inventory system.What is the amount that will be recorded in the GST payable account as a result of this sale?

Classified multiple-step income statements:

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Z-Mart purchased $5,000 worth of merchandise on credit.Transportation costs were an additional $100,paid cash to the cartage company on delivery.Z-Mart returned $275 worth of merchandise and paid the invoice on time,and took a 2% purchase discount.The amount of this payment was:

Businesses normally get a full credit for both the goods and services tax (GST)and/or Harmonized Sales Tax (HST),and the provincial sales tax (PST)that they have paid.

Explain the difference between single-step and multiple-step income statements.

Gross profit is derived from:

Merchandise inventory is:

Complete the work sheet for the year ended October 31,2015.

Sales discounts can benefit a seller by _______________ the receipt of cash.

A merchandising company's _______________ begins with the purchase of merchandise and ends with the collection of cash from sales.

Gross profit is also called gross margin.

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Exam 5: Accounting for Merchandising Activities

Each sales transaction for sellers using a perpetual inventory system involves recognizing revenue and cost of goods sold.

Merchandising sales and costs reported on the income statement usually differ from cash receipts and payments for the period.

Describe the recording process for sales of merchandise inventory using a perpetual inventory system.

Merchandise inventory includes merchandise and office supplies.

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period,then:

A business sold some inventory on credit for $5,000 before taxes.The sale is subject to 5% goods and services tax (GST)and 7% provincial sales tax (PST).The business uses a perpetual inventory system.What is the amount that will be recorded in the GST payable account as a result of this sale?

Classified multiple-step income statements:

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Z-Mart purchased $5,000 worth of merchandise on credit.Transportation costs were an additional $100,paid cash to the cartage company on delivery.Z-Mart returned $275 worth of merchandise and paid the invoice on time,and took a 2% purchase discount.The amount of this payment was:

Businesses normally get a full credit for both the goods and services tax (GST)and/or Harmonized Sales Tax (HST),and the provincial sales tax (PST)that they have paid.

Explain the difference between single-step and multiple-step income statements.

Gross profit is derived from:

Merchandise inventory is:

Complete the work sheet for the year ended October 31,2015.

Sales discounts can benefit a seller by _______________ the receipt of cash.

A merchandising company's _______________ begins with the purchase of merchandise and ends with the collection of cash from sales.

Gross profit is also called gross margin.

Accounting in Business

Analyzing and Reporting Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Receivables

Filters