Question 1

Brig Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:

Accepted Answer

A)  $150,000. 
B)  $450,000. 
C)  $800,000. 
D)  $350,000. 
E)  $200,000. 
A)  $150,000. 
B)  $450,000. 
C)  $800,000. 
D)  $350,000. 
E)  $200,000.

Question 2

What are the difference(s) between the periodic and the perpetual inventory systems?

Accepted Answer

Under a perpetual system each purchase,

Question 3

A perpetual inventory system continually updates accounting records for inventory transactions.

Accepted Answer

A) True 
 B)False

Question 4

Quick assets include cash, inventory, and current receivables.

Accepted Answer

A) True 
 B)False

Question 5

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Accepted Answer

A) True 
 B)False

Question 6

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 7

___________ expenses are those expenses that support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

Accepted Answer

The answer of ___________ expenses are those expenses that support...

Question 8

___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Accepted Answer

The answer of ___________________ refer to reductions in the selling...

Question 9

Sales discounts can benefit a seller by decreasing the delay in receiving cash, and __________.

Accepted Answer

Reducing F

Question 10

Roller Blade Company uses the perpetual inventory system and had the following transactions during October:
Prepare journal entries to record each of the preceding transactions.

Accepted Answer

The answer of Roller Blade Company uses the perpetual inventory...

Question 11

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

Accepted Answer

Physical C

Question 12

A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the buyer is responsible for these costs.

Accepted Answer

A) True 
 B)False

Question 13

Prepare journal entries to record the following merchandise transactions of Geo Company, which applies the perpetual inventory system.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 14

Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Accepted Answer

A) True 
 B)False

Question 15

A company reported the following year-end information:
Required:
1. Explain the purpose of the acid-test ratio.
2. Calculate the acid-test ratio for this company.
3. What does the acid-test ratio reveal about this company?

Accepted Answer

1. The acid-test ratio measures the abil

Question 16

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

Accepted Answer

A)  Reflects an increase in amount due from a customer. 
B)  Recognizes that a customer returned merchandise and/or received an allowance. 
C)  Requires a debit memorandum to recognize the customer's return. 
D)  Is recorded when a customer takes a discount. 
E)  Reflects a decrease in amount due a supplier. 
A)  Reflects an increase in amount due from a customer. 
B)  Recognizes that a customer returned merchandise and/or received an allowance. 
C)  Requires a debit memorandum to recognize the customer's return. 
D)  Is recorded when a customer takes a discount. 
E)  Reflects a decrease in amount due a supplier.

Question 17

The gross margin ratio equals net sales less ___________ divided by net sales.

Accepted Answer

The answer of The gross margin ratio equals net sales...

Question 18

Ceres Computer Sales uses the perpetual inventory system and had the following transactions during December.
Required:
Prepare the general journal entries to record these transactions.

Accepted Answer

The answer of Ceres Computer Sales uses the perpetual inventory...

Question 19

A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 20

Merchandise inventory:

Accepted Answer

A)  Is a long-term asset. 
B)  Is a current asset. 
C)  Includes supplies. 
D)  Is classified with investments on the balance sheet. 
E)  Must be sold within one month. 
A)  Is a long-term asset. 
B)  Is a current asset. 
C)  Includes supplies. 
D)  Is classified with investments on the balance sheet. 
E)  Must be sold within one month.

Exam 5: Accounting for Merchandising Operations

Brig Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:

What are the difference(s) between the periodic and the perpetual inventory systems?

A perpetual inventory system continually updates accounting records for inventory transactions.

Quick assets include cash, inventory, and current receivables.

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

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

___________ expenses are those expenses that support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Sales discounts can benefit a seller by decreasing the delay in receiving cash, and __________.

Roller Blade Company uses the perpetual inventory system and had the following transactions during October: Prepare journal entries to record each of the preceding transactions.

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the buyer is responsible for these costs.

Prepare journal entries to record the following merchandise transactions of Geo Company, which applies the perpetual inventory system.

Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

A company reported the following year-end information: Required: 1. Explain the purpose of the acid-test ratio. 2. Calculate the acid-test ratio for this company. 3. What does the acid-test ratio reveal about this company?

A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

The gross margin ratio equals net sales less ___________ divided by net sales.

Ceres Computer Sales uses the perpetual inventory system and had the following transactions during December. Required: Prepare the general journal entries to record these transactions.

A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

Merchandise inventory:

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

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

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