Question 1

Inventory shrinkage cannot be determined without a physical count.

Accepted Answer

A) True 
 B)False  True

Question 2

Youkilis Co.sold merchandise to a customer for $2,400 cash.The merchandise had originally cost Youkilis $1,800.Show how the transaction would affect Youkilis's financial statements.

Accepted Answer

I N I I I I I

Question 3

How is the balance sheet of a merchandising firm different from the balance sheet of a service business?

Accepted Answer

A)  It includes the asset,Accounts Receivable. 
B)  It reports the cost of goods sold. 
C)  It includes the asset,Merchandise Inventory. 
D)  It reports various period costs. 
A)  It includes the asset,Accounts Receivable. 
B)  It reports the cost of goods sold. 
C)  It includes the asset,Merchandise Inventory. 
D)  It reports various period costs. C

Question 4

Lemon Company paid freight costs to have goods shipped to one of its customers.What effect will these freight costs have on the company's financial statements?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 5

On June 1,2012,merchandise subject to terms 2/10,n/30 was sold on account to a customer for $23,500.On June 3,the customer returned merchandise with a purchase price of $5,100.
a)What is the amount of cash collected by the seller if payment is made by the customer on June 8,2012?
b)What is the amount of cash collected by the seller if payment is made by the customer on June 30,2012?

Accepted Answer

a)($23,500 - $5,100)

Question 6

Strand Company uses the perpetual inventory method.The company purchased an item of inventory for $80 and sold the item to a customer for $120.What effect will the sale have on the company's inventory account?

Accepted Answer

A)  The account balance will decrease by $120 
B)  The account balance will decrease by $80 
C)  The account balance will increase by $40 
D)  No effect 
A)  The account balance will decrease by $120 
B)  The account balance will decrease by $80 
C)  The account balance will increase by $40 
D)  No effect

Question 7

Unger Company uses the perpetual inventory method.Unger sold goods that cost $3,500 for $7,200.If the sale was made to a customer on account,the sale will:

Accepted Answer

A)  increase total assets by $3,700. 
B)  increase total liabilities by $7,200. 
C)  increase total liabilities by $3,500. 
D)  increase total assets by $7,200. 
A)  increase total assets by $3,700. 
B)  increase total liabilities by $7,200. 
C)  increase total liabilities by $3,500. 
D)  increase total assets by $7,200.

Question 8

Gains and losses are shown separately on the income statement to communicate the expectation that they are nonrecurring.

Accepted Answer

A) True 
 B)False

Question 9

On which financial statement(s)does the Cost of Goods Sold account appear?

Accepted Answer

The answer of On which financial statement(s)does the Cost of...

Question 10

On January 1,2012,Shaffer Co.purchased inventory for $1,000 cash with credit terms of 2/10,n/30.If Shaffer does not pay within the discount period,what is the effective annual interest rate?

Accepted Answer

A)  9.13% 
B)  12.17% 
C)  18.25% 
D)  36.5% 
A)  9.13% 
B)  12.17% 
C)  18.25% 
D)  36.5%

Question 11

Discuss the major differences between a perpetual inventory system and a periodic inventory system.

Accepted Answer

The perpetual system derives its name fr

Question 12

Net income does not change as a result of using the single-step format over the multistep format.

Accepted Answer

A) True 
 B)False

Question 13

Product costs are also referred to as

Accepted Answer

A)  period costs. 
B)  selling and administrative expenses. 
C)  operating expenses. 
D)  inventory costs. 
A)  period costs. 
B)  selling and administrative expenses. 
C)  operating expenses. 
D)  inventory costs.

Question 14

A merchandising firm's accounting system must allocate the Cost of Goods Available for Sale between

Accepted Answer

A)  the Merchandise Inventory balance at the start of the period and the balance at the end of the period. 
B)  Cost of Goods Sold and the ending balance in Merchandise Inventory. 
C)  the beginning balance in Merchandise Inventory and Cost of Goods Sold. 
D)  Purchases of inventory and the ending balance in Merchandise Inventory. 
A)  the Merchandise Inventory balance at the start of the period and the balance at the end of the period. 
B)  Cost of Goods Sold and the ending balance in Merchandise Inventory. 
C)  the beginning balance in Merchandise Inventory and Cost of Goods Sold. 
D)  Purchases of inventory and the ending balance in Merchandise Inventory.

Question 15

As a result of Marathon's four transactions above,the net amount of the company's cash flow from operating activities is

Accepted Answer

A)  $8,340 outflow. 
B)  $12,000 inflow. 
C)  $8,500 outflow. 
D)  $3,660 inflow. 
A)  $8,340 outflow. 
B)  $12,000 inflow. 
C)  $8,500 outflow. 
D)  $3,660 inflow.

Question 16

Under a periodic inventory system,the buyer does not use which of the following accounts in recording the acquisition of merchandise inventory and related transactions?

Accepted Answer

A)  Purchases 
B)  Purchase Returns and Allowances 
C)  Purchase Discounts 
D)  Merchandise Inventory 
A)  Purchases 
B)  Purchase Returns and Allowances 
C)  Purchase Discounts 
D)  Merchandise Inventory

Question 17

Explain the difference in "transportation-in" and "transportation-out".Also indicate whether each is a product cost or period cost.

Accepted Answer

Transportation-in is the cost of freight

Question 18

Gains from sales of assets other than inventory are shown as part of sales revenue on the income statement.

Accepted Answer

A) True 
 B)False

Question 19

During the month of March,Wang Company collected $8,000 of accounts receivable.Which of the following represents the effects of the collection of the receivables on Wang's financial statements?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 20

At the beginning of the year,Kelly Sales had $2,400 of merchandise inventory.During the year,Kelly purchased $22,000 of inventory.At the end of the year,a count of the inventory revealed that Kelly had $1,600 of inventory on hand.Kelly uses a periodic inventory system.
Required:
a)What is the amount of goods available for sale?
b)What is cost of goods sold for the year?

Accepted Answer

The answer of At the beginning of the year,Kelly Sales...

Inventory shrinkage cannot be determined without a physical count.

Youkilis Co.sold merchandise to a customer for $2,400 cash.The merchandise had originally cost Youkilis $1,800.Show how the transaction would affect Youkilis's financial statements.

How is the balance sheet of a merchandising firm different from the balance sheet of a service business?

Lemon Company paid freight costs to have goods shipped to one of its customers.What effect will these freight costs have on the company's financial statements?

Strand Company uses the perpetual inventory method.The company purchased an item of inventory for $80 and sold the item to a customer for $120.What effect will the sale have on the company's inventory account?

Unger Company uses the perpetual inventory method.Unger sold goods that cost $3,500 for $7,200.If the sale was made to a customer on account,the sale will:

Gains and losses are shown separately on the income statement to communicate the expectation that they are nonrecurring.

On which financial statement(s)does the Cost of Goods Sold account appear?

On January 1,2012,Shaffer Co.purchased inventory for $1,000 cash with credit terms of 2/10,n/30.If Shaffer does not pay within the discount period,what is the effective annual interest rate?

Discuss the major differences between a perpetual inventory system and a periodic inventory system.

Net income does not change as a result of using the single-step format over the multistep format.

Product costs are also referred to as

A merchandising firm's accounting system must allocate the Cost of Goods Available for Sale between

As a result of Marathon's four transactions above,the net amount of the company's cash flow from operating activities is

Under a periodic inventory system,the buyer does not use which of the following accounts in recording the acquisition of merchandise inventory and related transactions?

Explain the difference in "transportation-in" and "transportation-out".Also indicate whether each is a product cost or period cost.

Gains from sales of assets other than inventory are shown as part of sales revenue on the income statement.

During the month of March,Wang Company collected $8,000 of accounts receivable.Which of the following represents the effects of the collection of the receivables on Wang's financial statements?

An Introduction to Accounting

Understanding the Accounting Cycle

Internal Controls,accounting for Cash,and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, partnerships, and Corporations

Filters

Exam 3: Accounting for Merchandising Businesses

Inventory shrinkage cannot be determined without a physical count.

Youkilis Co.sold merchandise to a customer for $2,400 cash.The merchandise had originally cost Youkilis $1,800.Show how the transaction would affect Youkilis's financial statements.

How is the balance sheet of a merchandising firm different from the balance sheet of a service business?

Lemon Company paid freight costs to have goods shipped to one of its customers.What effect will these freight costs have on the company's financial statements?

Strand Company uses the perpetual inventory method.The company purchased an item of inventory for $80 and sold the item to a customer for $120.What effect will the sale have on the company's inventory account?

Unger Company uses the perpetual inventory method.Unger sold goods that cost $3,500 for $7,200.If the sale was made to a customer on account,the sale will:

Gains and losses are shown separately on the income statement to communicate the expectation that they are nonrecurring.

On which financial statement(s)does the Cost of Goods Sold account appear?

On January 1,2012,Shaffer Co.purchased inventory for $1,000 cash with credit terms of 2/10,n/30.If Shaffer does not pay within the discount period,what is the effective annual interest rate?

Discuss the major differences between a perpetual inventory system and a periodic inventory system.

Net income does not change as a result of using the single-step format over the multistep format.

Product costs are also referred to as

A merchandising firm's accounting system must allocate the Cost of Goods Available for Sale between

As a result of Marathon's four transactions above,the net amount of the company's cash flow from operating activities is

Under a periodic inventory system,the buyer does not use which of the following accounts in recording the acquisition of merchandise inventory and related transactions?

Explain the difference in "transportation-in" and "transportation-out".Also indicate whether each is a product cost or period cost.

Gains from sales of assets other than inventory are shown as part of sales revenue on the income statement.

During the month of March,Wang Company collected $8,000 of accounts receivable.Which of the following represents the effects of the collection of the receivables on Wang's financial statements?

An Introduction to Accounting

Understanding the Accounting Cycle

Internal Controls,accounting for Cash,and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, partnerships, and Corporations

Filters