Question 1

Which of the following activities is not a component of the operating cycle?

Accepted Answer

A) Payment of employees' wages 
B) Sale of merchandise 
C) Purchase of merchandise 
D) Collection of cash from merchandise sales 
A) Payment of employees' wages 
B) Sale of merchandise 
C) Purchase of merchandise 
D) Collection of cash from merchandise sales

Question 2

The financing period is also referred to as the cash gap.

Accepted Answer

A) True 
 B)False

Question 3

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Accepted Answer

A) Merchandise Inventory 
B) Purchases Returns and Allowances 
C) Accounts Payable 
D) Sales 
A) Merchandise Inventory 
B) Purchases Returns and Allowances 
C) Accounts Payable 
D) Sales

Question 4

If it takes 30 days to sell inventory,60 days to collect for the sale,and creditors' terms are 10 days,the financing period is 80 days.

Accepted Answer

A) True 
 B)False

Question 5

The entry to record a purchase of $12,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)

Accepted Answer

A) increase to Accounts Payable for $12,000. 
B) increase to Purchases Discounts for $240. 
C) decrease to Purchases for $12,000. 
D) decrease to Accounts Payable for $11,760. 
A) increase to Accounts Payable for $12,000. 
B) increase to Purchases Discounts for $240. 
C) decrease to Purchases for $12,000. 
D) decrease to Accounts Payable for $11,760.

Question 6

When freight-in is a relatively small amount,most companies include the cost in

Accepted Answer

A) operating expenses. 
B) cost of goods sold. 
C) administrative expenses. 
D) merchandise inventory. 
A) operating expenses. 
B) cost of goods sold. 
C) administrative expenses. 
D) merchandise inventory.

Question 7

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Accepted Answer

The financ

Question 8

Under the perpetual inventory system,the Cost of Goods Sold account is updated continually throughout the period.

Accepted Answer

A) True 
 B)False

Question 9

Computerization has led to a large increase in the use of the perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Accepted Answer

A) Sales commissions. 
B) Office salaries. 
C) Interest income. 
D) Sales. 
A) Sales commissions. 
B) Office salaries. 
C) Interest income. 
D) Sales.

Question 11

Under the periodic inventory system,the Purchases account is used to accumulate all purchases of merchandise for resale.

Accepted Answer

A) True 
 B)False

Question 12

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

Accepted Answer

A) increase Merchandise Inventory and decrease Cost of Goods Sold. 
B) increase Cost of Goods Sold and decrease Purchases. 
C) increase Cost of Goods Sold and decrease Merchandise Inventory. 
D) make no additional entry until the end of the period. 
A) increase Merchandise Inventory and decrease Cost of Goods Sold. 
B) increase Cost of Goods Sold and decrease Purchases. 
C) increase Cost of Goods Sold and decrease Merchandise Inventory. 
D) make no additional entry until the end of the period.

Question 13

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

Accepted Answer

A) True 
 B)False

Question 14

If a U.S.company sells goods for a fixed number of British pounds,and the exchange rate has risen from $1.60 per pound to $1.65 per pound by the time collection is made,the U.S.company would record an exchange loss.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not classified as a selling expense on the income statement?

Accepted Answer

A) Sales salaries expense. 
B) Interest expense. 
C) Freight-out expense. 
D) Advertising expense. 
A) Sales salaries expense. 
B) Interest expense. 
C) Freight-out expense. 
D) Advertising expense.

Question 16

Freight-in is considered a cost of merchandise purchased.

Accepted Answer

A) True 
 B)False

Question 17

The faster goods are sold and collection is made,the shorter the financing period.

Accepted Answer

A) True 
 B)False

Question 18

When the buyer bears the transportation charge,it is called freight-out.

Accepted Answer

A) True 
 B)False

Question 19

When customers pay with bank credit cards,cash sales are considered to have taken place.

Accepted Answer

A) True 
 B)False

Question 20

Income from operations is the difference between gross margin and operating expenses.

Accepted Answer

A) True 
 B)False

Which of the following activities is not a component of the operating cycle?

The financing period is also referred to as the cash gap.

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

If it takes 30 days to sell inventory,60 days to collect for the sale,and creditors' terms are 10 days,the financing period is 80 days.

The entry to record a purchase of $12,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)

When freight-in is a relatively small amount,most companies include the cost in

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Under the perpetual inventory system,the Cost of Goods Sold account is updated continually throughout the period.

Computerization has led to a large increase in the use of the perpetual inventory system.

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Under the periodic inventory system,the Purchases account is used to accumulate all purchases of merchandise for resale.

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

If a U.S.company sells goods for a fixed number of British pounds,and the exchange rate has risen from $1.60 per pound to $1.65 per pound by the time collection is made,the U.S.company would record an exchange loss.

Which of the following is not classified as a selling expense on the income statement?

Freight-in is considered a cost of merchandise purchased.

The faster goods are sold and collection is made,the shorter the financing period.

When the buyer bears the transportation charge,it is called freight-out.

When customers pay with bank credit cards,cash sales are considered to have taken place.

Income from operations is the difference between gross margin and operating expenses.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 6: Accounting for Merchandising Operations

Which of the following activities is not a component of the operating cycle?

The financing period is also referred to as the cash gap.

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

If it takes 30 days to sell inventory,60 days to collect for the sale,and creditors' terms are 10 days,the financing period is 80 days.

The entry to record a purchase of $12,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)

When freight-in is a relatively small amount,most companies include the cost in

For a company that takes an average of 50 days to sell inventory,takes an average of 110 days to collect for its sales,and has payment terms of 45 days on its purchases,what is the financing period? Show calculations.

Under the perpetual inventory system,the Cost of Goods Sold account is updated continually throughout the period.

Computerization has led to a large increase in the use of the perpetual inventory system.

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Under the periodic inventory system,the Purchases account is used to accumulate all purchases of merchandise for resale.

Under the perpetual inventory system,in addition to making the entry to record a sales return,a company would

The terms "2/10,n/30" mean that a 2 percent discount is allowed on payments made over 10 but before 30 days after the invoice date.

If a U.S.company sells goods for a fixed number of British pounds,and the exchange rate has risen from $1.60 per pound to $1.65 per pound by the time collection is made,the U.S.company would record an exchange loss.

Which of the following is not classified as a selling expense on the income statement?

Freight-in is considered a cost of merchandise purchased.

The faster goods are sold and collection is made,the shorter the financing period.

When the buyer bears the transportation charge,it is called freight-out.

When customers pay with bank credit cards,cash sales are considered to have taken place.

Income from operations is the difference between gross margin and operating expenses.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters