Question 1

Which of the following is considered a period cost?

Accepted Answer

A) Transportation cost on goods received from suppliers. 
B) Advertising expense for the current month. 
C) Cost of merchandise purchased. 
D) None of the above is considered a period cost. 
A) Transportation cost on goods received from suppliers. 
B) Advertising expense for the current month. 
C) Cost of merchandise purchased. 
D) None of the above is considered a period cost.

Question 2

A company purchased inventory on account. If the perpetual inventory method is used, which of the following choices accurately reflects how the purchase affects the company's financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 3

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

Accepted Answer

Multistep

Question 4

The gross margin from these transactions of Grace Company is

Accepted Answer

A) $7,820 
B) $6,820 
C) $7,220 
D) None of these 
A) $7,820 
B) $6,820 
C) $7,220 
D) None of these

Question 5

Which accounts would appear on the balance sheet?

Accepted Answer

A) Account numbers 1, 2, 4, and 5. 
B) Account numbers 1, 3, 7, and 8. 
C) Account numbers 1, 2, and 6. 
D) Account numbers 3, 4, 8, and 9. 
A) Account numbers 1, 2, 4, and 5. 
B) Account numbers 1, 3, 7, and 8. 
C) Account numbers 1, 2, and 6. 
D) Account numbers 3, 4, 8, and 9.

Question 6

Indicate whether each of the following statements is true or false.
_____ a) The freight terms FOB shipping point increase the cost of inventory to the buyer.
_____ b) The term FOB means that goods are shipped free of charge to buyer and seller.
_____ c) FOB shipping point means that purchaser's responsibility ends at shipping point.
_____ d) FOB destination means that seller's responsibility ends at destination.
_____ e) When the seller of merchandise records freight under the terms FOB shipping point, the seller records an expense.

Accepted Answer

a) True b) False c) False d) True e) Fal

Question 7

The return on sales ratio indicates the amount of each sales dollar that is left over after covering the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 8

The term "FOB Destination" means

Accepted Answer

A) The seller pays the shipping cost. 
B) The buyer records an increase in inventory. 
C) The buyer pays the shipping cost. 
D) The buyer assumes ownership of the goods during shipment. 
A) The seller pays the shipping cost. 
B) The buyer records an increase in inventory. 
C) The buyer pays the shipping cost. 
D) The buyer assumes ownership of the goods during shipment.

Question 9

Yancey Company granted a sales discount of $360 to a customer when it collected the amount due on account. Yancey uses the perpetual inventory system. Which of the following answers reflects the effects of the discount only on the financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 10

Which of the following items is not a product cost?

Accepted Answer

A) Transportation cost on goods delivered to customers. 
B) Cost of merchandise purchased for resale. 
C) Transportation cost on merchandise purchased from suppliers. 
D) All of these are product costs. 
A) Transportation cost on goods delivered to customers. 
B) Cost of merchandise purchased for resale. 
C) Transportation cost on merchandise purchased from suppliers. 
D) All of these are product costs.

Question 11

Greencroft Company sold merchandise costing $1,800 for $2,600 cash. The merchandise was later returned by the customer for a refund. 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 $800. 
B) Total assets decrease by $2,600 and total equity is decreased by $1,800. 
C) Total assets and total equity decrease by $2,600. 
D) Total assets and total equity decrease by $800. 
A) Total assets and total equity increase by $800. 
B) Total assets decrease by $2,600 and total equity is decreased by $1,800. 
C) Total assets and total equity decrease by $2,600. 
D) Total assets and total equity decrease by $800.

Question 12

For a company that uses a perpetual inventory system, a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.

Accepted Answer

A) True 
 B)False

Question 13

If the buyer is to pay the transportation cost of delivering merchandise, the freight or shipping terms would be stated as:

Accepted Answer

The answer of If the buyer is to pay the...

Question 14

The entry to record the amount of inventory shrinkage affects the balance sheet, but not the income statement.

Accepted Answer

A) True 
 B)False

Question 15

Ardent Company uses the perpetual method. The company's inventory account had a $6,500 balance as of December 31, 2013. A physical count of inventory shows only $5,800 of merchandise in stock at December 31, 2013. The entry to recognize the missing inventory will

Accepted Answer

A) increase assets. 
B) increase expense. 
C) decrease cash flow from operating activities. 
D) all of these. 
A) increase assets. 
B) increase expense. 
C) decrease cash flow from operating activities. 
D) all of these.

Question 16

Gains and losses are recorded for increases and decreases in the market value of assets such as land.

Accepted Answer

A) True 
 B)False

Question 17

Which accounts would affect gross margin?

Accepted Answer

A) Account numbers 2 and 9. 
B) Account numbers 3 and 9. 
C) Account numbers 3, 4, 7, and 9. 
D) Account numbers 3, 7, 8 and 9. 
A) Account numbers 2 and 9. 
B) Account numbers 3 and 9. 
C) Account numbers 3, 4, 7, and 9. 
D) Account numbers 3, 7, 8 and 9.

Question 18

The following information for the year 2014 is taken from the accounts of Thayer Company. The company uses the periodic inventory method.   Based on this information, the inventory at December 31, 2014 is

Accepted Answer

A) $27,600. 
B) $20,200. 
C) $19,400. 
D) $12,200. 
A) $27,600. 
B) $20,200. 
C) $19,400. 
D) $12,200.

Question 19

A company using a perpetual inventory system treats transportation-out as part of the cost of merchandise.

Accepted Answer

A) True 
 B)False

Question 20

Frank Co. sold merchandise to a customer for $1,200 cash. The merchandise had originally cost Frank $700.

Accepted Answer

(I) (N) (I) (I) (I) (I) (I)
Explanation:

Which of the following is considered a period cost?

A company purchased inventory on account. If the perpetual inventory method is used, which of the following choices accurately reflects how the purchase affects the company's financial statements?

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

The gross margin from these transactions of Grace Company is

Which accounts would appear on the balance sheet?

The return on sales ratio indicates the amount of each sales dollar that is left over after covering the cost of goods sold.

The term "FOB Destination" means

Yancey Company granted a sales discount of $360 to a customer when it collected the amount due on account. Yancey uses the perpetual inventory system. Which of the following answers reflects the effects of the discount only on the financial statements?

Which of the following items is not a product cost?

Greencroft Company sold merchandise costing $1,800 for $2,600 cash. The merchandise was later returned by the customer for a refund. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation?

For a company that uses a perpetual inventory system, a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.

If the buyer is to pay the transportation cost of delivering merchandise, the freight or shipping terms would be stated as:

The entry to record the amount of inventory shrinkage affects the balance sheet, but not the income statement.

Ardent Company uses the perpetual method. The company's inventory account had a $6,500 balance as of December 31, 2013. A physical count of inventory shows only $5,800 of merchandise in stock at December 31, 2013. The entry to recognize the missing inventory will

Gains and losses are recorded for increases and decreases in the market value of assets such as land.

Which accounts would affect gross margin?

The following information for the year 2014 is taken from the accounts of Thayer Company. The company uses the periodic inventory method. Based on this information, the inventory at December 31, 2014 is

A company using a perpetual inventory system treats transportation-out as part of the cost of merchandise.

Frank Co. sold merchandise to a customer for $1,200 cash. The merchandise had originally cost Frank $700.

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

Filters

Exam 4: Accounting for Merchandising Businesses

Which of the following is considered a period cost?

A company purchased inventory on account. If the perpetual inventory method is used, which of the following choices accurately reflects how the purchase affects the company's financial statements?

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

The gross margin from these transactions of Grace Company is

Which accounts would appear on the balance sheet?

The return on sales ratio indicates the amount of each sales dollar that is left over after covering the cost of goods sold.

The term "FOB Destination" means

Yancey Company granted a sales discount of $360 to a customer when it collected the amount due on account. Yancey uses the perpetual inventory system. Which of the following answers reflects the effects of the discount only on the financial statements?

Which of the following items is not a product cost?

Greencroft Company sold merchandise costing $1,800 for $2,600 cash. The merchandise was later returned by the customer for a refund. If the perpetual inventory method is used, what effect will the sales return have on the accounting equation?

For a company that uses a perpetual inventory system, a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.

If the buyer is to pay the transportation cost of delivering merchandise, the freight or shipping terms would be stated as:

The entry to record the amount of inventory shrinkage affects the balance sheet, but not the income statement.

Ardent Company uses the perpetual method. The company's inventory account had a $6,500 balance as of December 31, 2013. A physical count of inventory shows only $5,800 of merchandise in stock at December 31, 2013. The entry to recognize the missing inventory will

Gains and losses are recorded for increases and decreases in the market value of assets such as land.

Which accounts would affect gross margin?

The following information for the year 2014 is taken from the accounts of Thayer Company. The company uses the periodic inventory method. Based on this information, the inventory at December 31, 2014 is

A company using a perpetual inventory system treats transportation-out as part of the cost of merchandise.

Frank Co. sold merchandise to a customer for $1,200 cash. The merchandise had originally cost Frank $700.

An Introduction to Accounting

Accounting for Accruals and Deferrals

The Double-Entry Accounting System

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships, Partnerships, and Corporations

Statement of Cash Flows

Financial Statement Analysis Available Online in the Connect Library

Filters