Question 1

Identify and explain the key components of income for a merchandising company.

Accepted Answer

The answer of Identify and explain the key components of...

Question 2

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. The journal entry or entries that Courtland will make on October 1 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 3

A company reported the following information for the month of November:   Required: Calculate this company's gross margin ratio.

Accepted Answer

The answer of A company reported the following information for...

Question 4

The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.

Accepted Answer

A) True 
 B)False

Question 5

A company's quick assets are $147,000 and its current liabilities are $143,000. This company's acid-test ratio is 1.03.
$147,000/$143,000 = 1.03

Accepted Answer

A) True 
 B)False

Question 6

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

Accepted Answer

The answer of A merchandising company's ___________ begins with the...

Question 7

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Accepted Answer

A) True 
 B)False

Question 8

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge was $500. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Accepted Answer

A)  $9,224. 
B)  $10,200. 
C)  $10,500. 
D)  $10,300. 
E)  $9,424. 
A)  $9,224. 
B)  $10,200. 
C)  $10,500. 
D)  $10,300. 
E)  $9,424.

Question 9

Merchandise inventory consists of products that a company acquires to resell to customers.

Accepted Answer

A) True 
 B)False

Question 10

______________________ are nonoperating activities that include interest expense, losses from asset disposals, and casualty losses.

Accepted Answer

Other Expe

Question 11

Explain the cost flows and operating activities of a merchandising company.

Accepted Answer

The answer of Explain the cost flows and operating activities...

Question 12

The acid-test ratio reflects the ___________ of a company.

Accepted Answer

The answer of The acid-test ratio reflects the ___________ of...

Question 13

FOB _________________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business. The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.

Accepted Answer

The answer of FOB _________________ means ownership of goods transfers...

Question 14

Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals:

Accepted Answer

A)  $5,200. 
B)  $129,800. 
C)  $133,000. 
D)  $135,000. 
E)  $140,200. 
A)  $5,200. 
B)  $129,800. 
C)  $133,000. 
D)  $135,000. 
E)  $140,200.

Question 15

Purchase discounts are the same as trade discounts.

Accepted Answer

A) True 
 B)False

Question 16

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Accepted Answer

A) True 
 B)False

Question 17

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Accepted Answer

A) True 
 B)False

Question 18

The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of both the goods available and the goods sold.

Accepted Answer

A) True 
 B)False

Question 19

The gross margin ratio:

Accepted Answer

A)  Is also called the net profit ratio. 
B)  Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
C)  Is also called the profit margin. 
D)  Is a measure of liquidity. 
E)  Should be greater than 1. 
A)  Is also called the net profit ratio. 
B)  Measures a merchandising firm's ability to earn a profit from the sale of inventory. 
C)  Is also called the profit margin. 
D)  Is a measure of liquidity. 
E)  Should be greater than 1.

Question 20

What is the acid-test ratio? How does it measure a company's liquidity?

Accepted Answer

The answer of What is the acid-test ratio? How does...

Exam 5: Accounting for Merchandising Operations

Identify and explain the key components of income for a merchandising company.

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. The journal entry or entries that Courtland will make on October 1 is:

A company reported the following information for the month of November: Required: Calculate this company's gross margin ratio.

The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.

A company's quick assets are $147,000 and its current liabilities are $143,000. This company's acid-test ratio is 1.03. $147,000/$143,000 = 1.03

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Merchandise inventory consists of products that a company acquires to resell to customers.

______________________ are nonoperating activities that include interest expense, losses from asset disposals, and casualty losses.

Explain the cost flows and operating activities of a merchandising company.

The acid-test ratio reflects the ___________ of a company.

FOB _________________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business. The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.

Herald Company had sales of $135,000, sales discounts of $2,000, and sales returns of $3,200. Herald Company's net sales equals:

Purchase discounts are the same as trade discounts.

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of both the goods available and the goods sold.

The gross margin ratio:

What is the acid-test ratio? How does it measure a company's liquidity?

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

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