Question 1

When an adjusting entry is made to record inventory shrinkage,the Inventory account is debited and the Cost of Goods Sold account is credited.

Accepted Answer

A) True 
 B)False

Question 2

Sales revenue is recognized in the period in which:

Accepted Answer

A) Merchandise is delivered to the customer. 
B) The customer orders the merchandise. 
C) Cash payment is received by the seller. 
D) Purchases are made to replace the merchandise sold. 
A) Merchandise is delivered to the customer. 
B) The customer orders the merchandise. 
C) Cash payment is received by the seller. 
D) Purchases are made to replace the merchandise sold.

Question 3

Which of the following appears in the income statement of a merchandising business,but not in the income statement of a business that renders only services?

Accepted Answer

A) Interest revenue. 
B) Gross profit. 
C) Advertising expense. 
D) Income tax expense. 
A) Interest revenue. 
B) Gross profit. 
C) Advertising expense. 
D) Income tax expense.

Question 4

The operating cycle of a merchandising company consists of (1)purchases of merchandise; (2)sales of the merchandise; and (3)collection of accounts receivable.

Accepted Answer

A) True 
 B)False

Question 5

Wholesalers buy from retailers and sell to the general public.

Accepted Answer

A) True 
 B)False

Question 6

At the beginning of 2015,Wilson Stores has an inventory of $300,000.Because sales growth was strong during 2015,the owner wants to increase inventory on hand to $450,000 at December 31,2015.If net sales for 2015 are expected to be $2,600,000,and the gross profit rate is expected to be 35%,compute the cost of the merchandise the owner should expect to purchase during 2015.

Accepted Answer

A) $750,000. 
B) $1,240,000. 
C) $1,690,000. 
D) $1,840,000. 
A) $750,000. 
B) $1,240,000. 
C) $1,690,000. 
D) $1,840,000.

Question 7

Inventory shrinkage is not caused by:

Accepted Answer

A) Shoplifting. 
B) Breakage. 
C) Price reductions by competitors. 
D) Spoilage. 
A) Shoplifting. 
B) Breakage. 
C) Price reductions by competitors. 
D) Spoilage.

Question 8

The terms "sales discount" "purchase discount" and "cash discount" all

Accepted Answer

A) True 
 B)False

Question 9

If ending inventory and cost of goods sold are added together,they should equal gross profit.

Accepted Answer

A) True 
 B)False

Question 10

In a periodic inventory system,the cost of goods sold is determined by the following end-of-period computation: Beginning Inventory + Purchases - Ending inventory = Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 11

Which account listed below is classified as a contra-revenue account?

Accepted Answer

A) Cost of Goods Sold. 
B) Gross profit. 
C) Sales Discounts. 
D) Purchases. 
A) Cost of Goods Sold. 
B) Gross profit. 
C) Sales Discounts. 
D) Purchases.

Question 12

Beacon Food Stores purchased canned goods at an invoice price of $4,000 and terms of 2/10,n/30.Half of the goods had been mislabeled and were returned immediately to the supplier.If Beacon Food pays the remaining amount of the invoice within the discount period,the amount paid should be:

Accepted Answer

A) $1,920. 
B) $1,960. 
C) $3,920. 
D) $4,000. 
A) $1,920. 
B) $1,960. 
C) $3,920. 
D) $4,000.

Question 13

If a transaction takes place with terms 2/10,n/30,the "10"

Accepted Answer

A) True 
 B)False

Question 14

Which of the following credit terms is the most advantageous to the purchaser of merchandise?

Accepted Answer

A) 1/10,n/30. 
B) 5/10,n/60. 
C) 2/10,n/30. 
D) 5/10,n/20. 
A) 1/10,n/30. 
B) 5/10,n/60. 
C) 2/10,n/30. 
D) 5/10,n/20.

Question 15

A factor that might suggest that a periodic inventory system is appropriate is that all merchandise is stored at the sales site.

Accepted Answer

A) True 
 B)False

Question 16

Sales discounts and allowances:

Accepted Answer

A) When properly recorded will reduce net profit. 
B) When properly recorded will increase net profit. 
C) Will not affect net profit. 
D) Are always immaterial and need not be recorded. 
A) When properly recorded will reduce net profit. 
B) When properly recorded will increase net profit. 
C) Will not affect net profit. 
D) Are always immaterial and need not be recorded.

Question 17

Bartner Furniture,Inc.purchased inventory at $1,200 list price and the terms were 3/10,n/30.Bartner paid the full invoice price on the 10th day,what amount of cash did Bartner pay to settle the account?

Accepted Answer

A) $1,176. 
B) $1,236. 
C) $1,164. 
D) $1,200. 
A) $1,176. 
B) $1,236. 
C) $1,164. 
D) $1,200.

Question 18

When using a perpetual inventory system,the Inventory account is credited when a sale is made.

Accepted Answer

A) True 
 B)False

Question 19

The operating cycle:

Accepted Answer

A) Is repeated once per year for manufacturers and merchandisers. 
B) Has seven steps. 
C) Starts with using cash to purchase merchandise and ends with collecting the cash back from customers. 
D) Is longer for a retailer than for a manufacturer. 
A) Is repeated once per year for manufacturers and merchandisers. 
B) Has seven steps. 
C) Starts with using cash to purchase merchandise and ends with collecting the cash back from customers. 
D) Is longer for a retailer than for a manufacturer.

Question 20

Merchandising companies that are small and do not use a perpetual inventory system may elect to use:

Accepted Answer

A) A physical inventory system. 
B) A periodic inventory system. 
C) An inventory shrinkage method. 
D) An inventory subsidiary ledger system. 
A) A physical inventory system. 
B) A periodic inventory system. 
C) An inventory shrinkage method. 
D) An inventory subsidiary ledger system.

Exam 6: Merchandising Activities

When an adjusting entry is made to record inventory shrinkage,the Inventory account is debited and the Cost of Goods Sold account is credited.

Sales revenue is recognized in the period in which:

Which of the following appears in the income statement of a merchandising business,but not in the income statement of a business that renders only services?

The operating cycle of a merchandising company consists of (1)purchases of merchandise; (2)sales of the merchandise; and (3)collection of accounts receivable.

Wholesalers buy from retailers and sell to the general public.

Inventory shrinkage is not caused by:

The terms "sales discount" "purchase discount" and "cash discount" all

If ending inventory and cost of goods sold are added together,they should equal gross profit.

In a periodic inventory system,the cost of goods sold is determined by the following end-of-period computation: Beginning Inventory + Purchases - Ending inventory = Cost of Goods Sold.

Which account listed below is classified as a contra-revenue account?

Beacon Food Stores purchased canned goods at an invoice price of $4,000 and terms of 2/10,n/30.Half of the goods had been mislabeled and were returned immediately to the supplier.If Beacon Food pays the remaining amount of the invoice within the discount period,the amount paid should be:

If a transaction takes place with terms 2/10,n/30,the "10"

Which of the following credit terms is the most advantageous to the purchaser of merchandise?

A factor that might suggest that a periodic inventory system is appropriate is that all merchandise is stored at the sales site.

Sales discounts and allowances:

Bartner Furniture,Inc.purchased inventory at $1,200 list price and the terms were 3/10,n/30.Bartner paid the full invoice price on the 10th day,what amount of cash did Bartner pay to settle the account?

When using a perpetual inventory system,the Inventory account is credited when a sale is made.

The operating cycle:

Merchandising companies that are small and do not use a perpetual inventory system may elect to use:

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

Filters

Bartner Furniture,Inc.purchased inventory at $1,200 list price and the terms were 3/10,n/30.Bartner paid the full invoice price on the 10^th day,what amount of cash did Bartner pay to settle the account?