Question 1

The basic purpose of a subsidiary ledger is to:

Accepted Answer

A) Provide a chronological record of all business transactions. 
B) Provide details about the individual items comprising the balance of a general ledger account. 
C) Enable accountants to prepare financial statements. 
D) Provide persons outside of the organization with detailed information about the company's operations. 
A) Provide a chronological record of all business transactions. 
B) Provide details about the individual items comprising the balance of a general ledger account. 
C) Enable accountants to prepare financial statements. 
D) Provide persons outside of the organization with detailed information about the company's operations.

Question 2

Which of the following would not tend to make a manufacturer choose a perpetual inventory system?

Accepted Answer

A) Management wants information about quantities of specific products. 
B) A low volume of sales transactions and a computerized accounting system. 
C) A high volume of sales transactions and a manual accounting system. 
D) Items in inventory with high per unit costs. 
A) Management wants information about quantities of specific products. 
B) A low volume of sales transactions and a computerized accounting system. 
C) A high volume of sales transactions and a manual accounting system. 
D) Items in inventory with high per unit costs.

Question 3

In a periodic inventory system,when a sale is made there is no entry made to record the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 4

In a periodic inventory system,the ending inventory can be determined from the accounting records,and a physical count of the merchandise on hand will confirm the amount.

Accepted Answer

A) True 
 B)False

Question 5

All of the following accounts normally have debit balances except:

Accepted Answer

A) Transportation-in. 
B) Cost of Goods Sold. 
C) Sales Returns & Allowances. 
D) Purchase Returns & Allowances. 
A) Transportation-in. 
B) Cost of Goods Sold. 
C) Sales Returns & Allowances. 
D) Purchase Returns & Allowances.

Question 6

Inventory systems
Bookmarks,Inc.sells used books at its store in the resort community of Lake Bryn Mawr.The owner maintains a large inventory of used books purchased from estate sales,flea markets,and customers.During the tourist seasons of summer and winter,the store is exceptionally busy with customers.Each customer usually makes small purchases ranging in amount from one to twenty dollars.What type of inventory system would you recommend to the owner of Bookmarks,Inc.? Explain the reasoning behind your advice.

Accepted Answer

The owner would be well advised to use a

Question 7

Which of the following companies would be more likely to use a perpetual inventory system?

Accepted Answer

A) Corner deli. 
B) Home Depot. 
C) James Dean,CPA. 
D) A manufacturer of custom sailboats. 
A) Corner deli. 
B) Home Depot. 
C) James Dean,CPA. 
D) A manufacturer of custom sailboats.

Question 8

Instead of paying for merchandise purchased on account,Olympic Corp.returned this merchandise to the supplier.Olympic should record this transaction by debiting Accounts Payable and crediting Sales Returns and Allowances.

Accepted Answer

A) True 
 B)False

Question 9

The basic purpose of offering customers cash discounts such as 2/10,n/30 is to:

Accepted Answer

A) Increase sales. 
B) Reduce net sales. 
C) Speed up the collection of accounts receivable. 
D) Focus management's attention upon customers that fail to take advantage of all available cash discounts. 
A) Increase sales. 
B) Reduce net sales. 
C) Speed up the collection of accounts receivable. 
D) Focus management's attention upon customers that fail to take advantage of all available cash discounts.

Question 10

The following information is available:   Calculate the gross profit:

Accepted Answer

A) $0. 
B) $1,500. 
C) $450. 
D) $900. 
A) $0. 
B) $1,500. 
C) $450. 
D) $900.

Question 11

To arrive at net sales:

Accepted Answer

A) Add sales discounts to sales. 
B) Subtract the cost of goods sold from the sales price. 
C) Subtract sales returns and sales discounts from sales. 
D) Subtract accounts receivable from sales. 
A) Add sales discounts to sales. 
B) Subtract the cost of goods sold from the sales price. 
C) Subtract sales returns and sales discounts from sales. 
D) Subtract accounts receivable from sales.

Question 12

Periodic inventory systems are used primarily by:

Accepted Answer

A) Small businesses with manual accounting systems. 
B) Large manufacturing companies. 
C) Small businesses that sell a low volume of high-priced items. 
D) Companies that sell a high volume of low-priced items and record sales transactions on point-of-sale terminals. 
A) Small businesses with manual accounting systems. 
B) Large manufacturing companies. 
C) Small businesses that sell a low volume of high-priced items. 
D) Companies that sell a high volume of low-priced items and record sales transactions on point-of-sale terminals.

Question 13

Regardless of the number of special journals used,every business needs a general journal.

Accepted Answer

A) True 
 B)False

Question 14

The cost of the transportation of inventory purchased:

Accepted Answer

A) Are expensed in the current period. 
B) Increases income. 
C) Becomes part of the cost of inventory. 
D) Reduces the sales price. 
A) Are expensed in the current period. 
B) Increases income. 
C) Becomes part of the cost of inventory. 
D) Reduces the sales price.

Question 15

In a periodic inventory system,a complete physical inventory must be taken at year-end in order to compute the amount of purchases made during the period.

Accepted Answer

A) True 
 B)False

Question 16

When making sales,the sales taxes received are:

Accepted Answer

A) Revenue. 
B) A liability. 
C) An expense if incurred. 
D) A reduction in inventory value. 
A) Revenue. 
B) A liability. 
C) An expense if incurred. 
D) A reduction in inventory value.

Question 17

Subsidiary ledgers
Explain the nature of subsidiary ledgers,and give two specific examples.For each of these examples,explain (1)the unit of organization within this ledger,and (2)the usefulness of this ledger in business operations.

Accepted Answer

Subsidiary ledgers provide detailed info

Question 18

The cost of delivering merchandise to the customer is:

Accepted Answer

A) Part of cost of goods sold. 
B) Used in the calculation of net sales. 
C) An operating expense. 
D) A reduction of gross profit. 
A) Part of cost of goods sold. 
B) Used in the calculation of net sales. 
C) An operating expense. 
D) A reduction of gross profit.

Question 19

In a periodic inventory system,which of the following accounts may be closed by debiting Cost of Goods Sold?

Accepted Answer

A) Sales,Inventory (beginning),and Gross Profit. 
B) Inventory (beginning)and Purchases. 
C) Purchases and Inventory (ending). 
D) Sales,Inventory (beginning),and Cost of Goods Available for Sale. 
A) Sales,Inventory (beginning),and Gross Profit. 
B) Inventory (beginning)and Purchases. 
C) Purchases and Inventory (ending). 
D) Sales,Inventory (beginning),and Cost of Goods Available for Sale.

Question 20

Pet Foods Plus purchased bagged dog food at an invoice price of $6,000 and terms of 2/10,n/30.Half of the bags had been damaged in shipment and delivery was refused.If Pet Foods Plus pays the remaining amount of the invoice within the discount period,the amount paid should be:

Accepted Answer

A) $2,940. 
B) $3,000. 
C) $5,880. 
D) $6,000. 
A) $2,940. 
B) $3,000. 
C) $5,880. 
D) $6,000.

Exam 6: Merchandising Activities

The basic purpose of a subsidiary ledger is to:

Which of the following would not tend to make a manufacturer choose a perpetual inventory system?

In a periodic inventory system,when a sale is made there is no entry made to record the cost of goods sold.

In a periodic inventory system,the ending inventory can be determined from the accounting records,and a physical count of the merchandise on hand will confirm the amount.

All of the following accounts normally have debit balances except:

Which of the following companies would be more likely to use a perpetual inventory system?

Instead of paying for merchandise purchased on account,Olympic Corp.returned this merchandise to the supplier.Olympic should record this transaction by debiting Accounts Payable and crediting Sales Returns and Allowances.

The basic purpose of offering customers cash discounts such as 2/10,n/30 is to:

The following information is available: Calculate the gross profit:

To arrive at net sales:

Periodic inventory systems are used primarily by:

Regardless of the number of special journals used,every business needs a general journal.

The cost of the transportation of inventory purchased:

In a periodic inventory system,a complete physical inventory must be taken at year-end in order to compute the amount of purchases made during the period.

When making sales,the sales taxes received are:

Subsidiary ledgers Explain the nature of subsidiary ledgers,and give two specific examples.For each of these examples,explain (1)the unit of organization within this ledger,and (2)the usefulness of this ledger in business operations.

The cost of delivering merchandise to the customer is:

In a periodic inventory system,which of the following accounts may be closed by debiting Cost of Goods Sold?

Pet Foods Plus purchased bagged dog food at an invoice price of $6,000 and terms of 2/10,n/30.Half of the bags had been damaged in shipment and delivery was refused.If Pet Foods Plus pays the remaining amount of the invoice within the discount period,the amount paid should be:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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