Question 1

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is:

Accepted Answer

A)  The ending inventory amount. 
B)  The beginning inventory amount. 
C)  Equal to the cost of goods sold. 
D)  Equal to the cost of goods purchased. 
E)  Equal to the gross profit. 
A)  The ending inventory amount. 
B)  The beginning inventory amount. 
C)  Equal to the cost of goods sold. 
D)  Equal to the cost of goods purchased. 
E)  Equal to the gross profit.

Question 2

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000.
$350,000 - $323,000 = $27,000

Accepted Answer

A) True 
 B)False

Question 3

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

Accepted Answer

A) True 
 B)False

Question 4

Describe the difference between wholesalers and retailers.

Accepted Answer

The answer of Describe the difference between wholesalers and retailers....

Question 5

When a company has no reportable nonoperating activities, its income from operations is reported as ___________________.

Accepted Answer

The answer of When a company has no reportable nonoperating...

Question 6

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Accepted Answer

A) True 
 B)False

Question 7

Liquidity problems are likely to exist when a company's acid-test ratio:

Accepted Answer

A)  Is less than the current ratio. 
B)  Is 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is substantially lower than 1 to 1. 
E)  Is higher than the current ratio. 
A)  Is less than the current ratio. 
B)  Is 1 to 1. 
C)  Is higher than 1 to 1. 
D)  Is substantially lower than 1 to 1. 
E)  Is higher than the current ratio.

Question 8

A company has net sales and cost of goods sold of $825,000 and $547,000, respectively. Its net income is $98,500. The company's gross margin and operating expenses are ________ and ___________, respectively.

Accepted Answer

A)  $209,000; $191,470 
B)  $278,000; $179,500 
C)  $278,000; $98,500 
D)  $179,500; $98,500 
E)  $645,500; $179,500 
A)  $209,000; $191,470 
B)  $278,000; $179,500 
C)  $278,000; $98,500 
D)  $179,500; $98,500 
E)  $645,500; $179,500

Question 9

The amounts and timing of payment from a buyer to a seller are the ___________________.

Accepted Answer

The answer of The amounts and timing of payment from...

Question 10

Cost of goods sold is also called cost of sales.

Accepted Answer

A) True 
 B)False

Question 11

On October 1, Courtland Company sold merchandise in the amount of $5,800 to Carter Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Courtland uses the periodic inventory system. On October 4, Carter returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Courtland must make on October 4 is:

Accepted Answer

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

Question 12

Beginning inventory plus the net cost of purchases is the ____________________.

Accepted Answer

Merchandis

Question 13

The acid-test ratio differs from the current ratio in that:

Accepted Answer

A)  Liabilities are divided by current assets. 
B)  Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio. 
C)  The acid-test ratio measures profitability and the current ratio does not. 
D)  The acid-test ratio excludes short-term investments from the calculation. 
E)  The acid-test ratio is a measure of liquidity but the current ratio is not. 
A)  Liabilities are divided by current assets. 
B)  Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio. 
C)  The acid-test ratio measures profitability and the current ratio does not. 
D)  The acid-test ratio excludes short-term investments from the calculation. 
E)  The acid-test ratio is a measure of liquidity but the current ratio is not.

Question 14

A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Accepted Answer

A) True 
 B)False

Question 15

A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals:

Accepted Answer

A)  $(217,000). 
B)  $375,000. 
C)  $157,500. 
D)  $217,500. 
E)  $532,500. 
A)  $(217,000). 
B)  $375,000. 
C)  $157,500. 
D)  $217,500. 
E)  $532,500.

Question 16

The following statements regarding gross profit are true except:

Accepted Answer

A)  Gross profit is also called gross margin. 
B)  Gross profit less other operating expenses equals income from operations. 
C)  Gross profit is not calculated on the multiple-step income statement. 
D)  Gross profit must cover all operating expenses to yield a return for the owner of the business. 
E)  Gross profit equals net sales less cost of goods sold. 
A)  Gross profit is also called gross margin. 
B)  Gross profit less other operating expenses equals income from operations. 
C)  Gross profit is not calculated on the multiple-step income statement. 
D)  Gross profit must cover all operating expenses to yield a return for the owner of the business. 
E)  Gross profit equals net sales less cost of goods sold.

Question 17

A ___________ inventory system updates the accounting record for inventory only at the end of a period.

Accepted Answer

The answer of A ___________ inventory system updates the accounting...

Question 18

Gross profit is also called gross margin.

Accepted Answer

A) True 
 B)False

Question 19

FOB shipping point (or FOB factory) implies that ownership of goods transfers to the buyer at the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 20

A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

Accepted Answer

A)  $200. 
B)  $1,564. 
C)  $1,568. 
D)  $1,600. 
E)  $1,800. 
A)  $200. 
B)  $1,564. 
C)  $1,568. 
D)  $1,600. 
E)  $1,800.

Exam 5: Accounting for Merchandising Operations

When preparing an unadjusted trial balance using a periodic inventory system, the amount shown for Merchandise Inventory is:

Sales of $350,000 and net sales of $323,000 could reflect sales discounts of $27,000. $350,000 - $323,000 = $27,000

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

Describe the difference between wholesalers and retailers.

When a company has no reportable nonoperating activities, its income from operations is reported as ___________________.

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Liquidity problems are likely to exist when a company's acid-test ratio:

A company has net sales and cost of goods sold of $825,000 and $547,000, respectively. Its net income is $98,500. The company's gross margin and operating expenses are ________ and ___________, respectively.

The amounts and timing of payment from a buyer to a seller are the ___________________.

Cost of goods sold is also called cost of sales.

Beginning inventory plus the net cost of purchases is the ____________________.

The acid-test ratio differs from the current ratio in that:

A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

A company had sales of $375,000 and its gross profit was $157,500. Its cost of goods sold equals:

The following statements regarding gross profit are true except:

A ___________ inventory system updates the accounting record for inventory only at the end of a period.

Gross profit is also called gross margin.

FOB shipping point (or FOB factory) implies that ownership of goods transfers to the buyer at the buyer's place of business.

A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

A company has net sales and cost of goods sold of $825,000 and $547,000, respectively. Its net income is $98,500. The company's gross margin and operating expenses are and ___, respectively.