Question 1

Give an example of a product cost for a retailing business.

Accepted Answer

Transportation-in,st

Question 2

Indicate how accounting for lost and stolen merchandise differs between firms using a perpetual inventory system and those using a periodic inventory system.Which system provides the best way to identify and account for such losses,and why?

Accepted Answer

In both systems,such losses are not know

Question 3

Operating income is the amount of income that is generated from the normal recurring operations of a business.

Accepted Answer

A) True 
 B)False

Question 4

The following information for the year 2012 is taken from the accounts of Thornwood Company.The company uses the periodic inventory method.   Based on this information,the inventory at December 31,2012 is

Accepted Answer

A)  $4,600 
B)  $5,000 
C)  $4,900 
D)  $12,100 
A)  $4,600 
B)  $5,000 
C)  $4,900 
D)  $12,100

Question 5

Which of the following would be primarily a merchandising business?

Accepted Answer

A)  Williams Consulting 
B)  Rodriguez Department Store 
C)  Hester,Attorney at Law 
D)  Frerotte Accounting Service 
A)  Williams Consulting 
B)  Rodriguez Department Store 
C)  Hester,Attorney at Law 
D)  Frerotte Accounting Service

Question 6

What type of financial statement matches sales revenue items with related expense items and distinguishes between recurring operating activities and nonoperating items such as gains and losses?

Accepted Answer

Multistep

Question 7

Income statements that display a single comparison of all revenues minus all expenses are called single-step income statements.

Accepted Answer

A) True 
 B)False

Question 8

The Operating Income line appears on a multistep income statement but not on a single-step income statement.

Accepted Answer

A) True 
 B)False

Question 9

Kotsay Co.sold goods with the terms 1/10,n/30.What do the terms mean?

Accepted Answer

The customer may take a 1% dis

Question 10

What is the relationship between gross margin and net income?

Accepted Answer

A)  Gross Margin - Merchandise Inventory at the end of the period = Net Income 
B)  Gross Margin - Selling and Administrative Expenses = Net Income 
C)  Gross Margin + Selling and Administrative Expenses = Net income 
D)  Sales Revenue x Gross Margin Percentage = Net Income 
A)  Gross Margin - Merchandise Inventory at the end of the period = Net Income 
B)  Gross Margin - Selling and Administrative Expenses = Net Income 
C)  Gross Margin + Selling and Administrative Expenses = Net income 
D)  Sales Revenue x Gross Margin Percentage = Net Income

Question 11

A company using the perpetual inventory method paid cash for transportation-in.Which of the following choices reflects the effects of this event on the 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 12

When Tiffany & Co.discontinued Iridesse,a chain of stores dedicated to pearl-only jewelry,due to losses sustained since its founding,Tiffany & Co.recorded an expense equal to the amount of the cumulative operating losses.

Accepted Answer

A) True 
 B)False

Question 13

Youkilis Company paid $2,000 of selling expenses with cash.Show how the transaction would affect Youkilis's financial statements.

Accepted Answer

The answer of Youkilis Company paid $2,000 of selling expenses...

Question 14

The Gross Margin line appears on a single-step income statement but not on a multistep income statement.

Accepted Answer

A) True 
 B)False

Question 15

If goods are shipped FOB destination,who is responsible for the shipping costs - the buyer or the seller?

Accepted Answer

The answer of If goods are shipped FOB destination,who is...

Question 16

The balance in the Merchandise Inventory account at December 31,2013 is:

Accepted Answer

A)  $300. 
B)  $1,500. 
C)  $800. 
D)  $11,150. 
A)  $300. 
B)  $1,500. 
C)  $800. 
D)  $11,150.

Question 17

Merchandising businesses

Accepted Answer

A)  manufacture the goods they sell. 
B)  generate revenue primarily by providing services to customers. 
C)  buy the merchandise they sell from suppliers. 
D)  include dry cleaning companies and law firms. 
A)  manufacture the goods they sell. 
B)  generate revenue primarily by providing services to customers. 
C)  buy the merchandise they sell from suppliers. 
D)  include dry cleaning companies and law firms.

Question 18

Rice Company sold merchandise costing $1,600 for $2,500 cash.All of the merchandise was later returned by the customer.If the perpetual inventory method is used,what effect will the sales return have on the accounting equation?

Accepted Answer

A)  Total assets and total equity increase by $900. 
B)  Total assets increase by $1,600 and total equity is decreased by $2,500. 
C)  Total assets and total equity decrease by $2,500. 
D)  Total assets and total equity decrease by $900. 
A)  Total assets and total equity increase by $900. 
B)  Total assets increase by $1,600 and total equity is decreased by $2,500. 
C)  Total assets and total equity decrease by $2,500. 
D)  Total assets and total equity decrease by $900.

Question 19

An entry to record the amount of inventory shrinkage decreases both assets and equity.

Accepted Answer

A) True 
 B)False

Question 20

The gross margin for the year 2012 is:

Accepted Answer

A)  $7,250. 
B)  $4,250. 
C)  $8,150. 
D)  $9,350. 
A)  $7,250. 
B)  $4,250. 
C)  $8,150. 
D)  $9,350.

Give an example of a product cost for a retailing business.

Indicate how accounting for lost and stolen merchandise differs between firms using a perpetual inventory system and those using a periodic inventory system.Which system provides the best way to identify and account for such losses,and why?

Operating income is the amount of income that is generated from the normal recurring operations of a business.

The following information for the year 2012 is taken from the accounts of Thornwood Company.The company uses the periodic inventory method. Based on this information,the inventory at December 31,2012 is

Which of the following would be primarily a merchandising business?

What type of financial statement matches sales revenue items with related expense items and distinguishes between recurring operating activities and nonoperating items such as gains and losses?

Income statements that display a single comparison of all revenues minus all expenses are called single-step income statements.

The Operating Income line appears on a multistep income statement but not on a single-step income statement.

Kotsay Co.sold goods with the terms 1/10,n/30.What do the terms mean?

What is the relationship between gross margin and net income?

A company using the perpetual inventory method paid cash for transportation-in.Which of the following choices reflects the effects of this event on the financial statements?

When Tiffany & Co.discontinued Iridesse,a chain of stores dedicated to pearl-only jewelry,due to losses sustained since its founding,Tiffany & Co.recorded an expense equal to the amount of the cumulative operating losses.

Youkilis Company paid $2,000 of selling expenses with cash.Show how the transaction would affect Youkilis's financial statements.

The Gross Margin line appears on a single-step income statement but not on a multistep income statement.

If goods are shipped FOB destination,who is responsible for the shipping costs - the buyer or the seller?

The balance in the Merchandise Inventory account at December 31,2013 is:

Merchandising businesses

Rice Company sold merchandise costing $1,600 for $2,500 cash.All of the merchandise was later returned by the customer.If the perpetual inventory method is used,what effect will the sales return have on the accounting equation?

An entry to record the amount of inventory shrinkage decreases both assets and equity.

The gross margin for the year 2012 is:

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

Give an example of a product cost for a retailing business.

Indicate how accounting for lost and stolen merchandise differs between firms using a perpetual inventory system and those using a periodic inventory system.Which system provides the best way to identify and account for such losses,and why?

Operating income is the amount of income that is generated from the normal recurring operations of a business.

The following information for the year 2012 is taken from the accounts of Thornwood Company.The company uses the periodic inventory method. Based on this information,the inventory at December 31,2012 is

Which of the following would be primarily a merchandising business?

What type of financial statement matches sales revenue items with related expense items and distinguishes between recurring operating activities and nonoperating items such as gains and losses?

Income statements that display a single comparison of all revenues minus all expenses are called single-step income statements.

The Operating Income line appears on a multistep income statement but not on a single-step income statement.

Kotsay Co.sold goods with the terms 1/10,n/30.What do the terms mean?

What is the relationship between gross margin and net income?

A company using the perpetual inventory method paid cash for transportation-in.Which of the following choices reflects the effects of this event on the financial statements?

When Tiffany & Co.discontinued Iridesse,a chain of stores dedicated to pearl-only jewelry,due to losses sustained since its founding,Tiffany & Co.recorded an expense equal to the amount of the cumulative operating losses.

Youkilis Company paid $2,000 of selling expenses with cash.Show how the transaction would affect Youkilis's financial statements.

The Gross Margin line appears on a single-step income statement but not on a multistep income statement.

If goods are shipped FOB destination,who is responsible for the shipping costs - the buyer or the seller?

The balance in the Merchandise Inventory account at December 31,2013 is:

Merchandising businesses

Rice Company sold merchandise costing $1,600 for $2,500 cash.All of the merchandise was later returned by the customer.If the perpetual inventory method is used,what effect will the sales return have on the accounting equation?

An entry to record the amount of inventory shrinkage decreases both assets and equity.

The gross margin for the year 2012 is:

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