Question 1

Retail companies sell goods primarily to other businesses.

Accepted Answer

A) True 
 B)False

Question 2

Advent Company purchased $6,500 of merchandise inventory on account. Advent uses the perpetual inventory method. Which of the following entries would be required to record this transaction?

Accepted Answer

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

Question 3

A company using the perpetual inventory method paid cash for transportation-in. Which of the following choices reflects the effects of this event 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 4

Georgia Co. had beginning inventory of $800 and ending inventory of $400. The cost of goods sold was $3,200. Based on this information, Georgia Co. must have purchased inventory amounting to:

Accepted Answer

A) $2,800. 
B) $3,200. 
C) $3,600. 
D) $4,400. 
A) $2,800. 
B) $3,200. 
C) $3,600. 
D) $4,400.

Question 5

Frank Co. paid $45 of freight cost to have merchandise shipped to one of its customers under terms FOB destination.

Accepted Answer

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

Question 6

Under a periodic system, the account debited for shipping costs on goods received from the vendor is called:

Accepted Answer

A) Merchandise Inventory 
B) Cost of Goods Sold 
C) Transportation-in 
D) Transportation-out 
A) Merchandise Inventory 
B) Cost of Goods Sold 
C) Transportation-in 
D) Transportation-out

Question 7

a) What is the effect on the accounting equation of the seller of granting an "allowance" for merchandise that the customer is not satisfied with?
b) What is the effect of the above situation on the accounting equation of the purchaser?
For both questions, assume that the merchandise had been sold on account, and the invoice had not yet been paid.

Accepted Answer

a) Effect for seller of granting an allo

Question 8

Based on common-sized income statements, which of the companies spent, relative to sales, the most on operating expenses?

Accepted Answer

A) Company A 
B) Company B 
C) Company C 
D) Company D 
A) Company A 
B) Company B 
C) Company C 
D) Company D

Question 9

As a result of the above transactions of Grace Company, the net cash flow from operating activities was

Accepted Answer

A) $23,500 inflow 
B) $7,820 inflow 
C) $16,680 outflow 
D) $6,820 inflow 
A) $23,500 inflow 
B) $7,820 inflow 
C) $16,680 outflow 
D) $6,820 inflow

Question 10

The term "FOB Shipping Point" means

Accepted Answer

A) The buyer records transportation expense. 
B) The seller pays the shipping cost. 
C) The buyer pays the shipping cost. 
D) The buyer does not assume ownership until the goods are receiveD." FOB Shipping Point" means that ownership of the goods is passed to the buyer at the time goods are shipped, and that the buyer (owner of the goods) pays the shipping costs. 
A) The buyer records transportation expense. 
B) The seller pays the shipping cost. 
C) The buyer pays the shipping cost. 
D) The buyer does not assume ownership until the goods are receiveD." FOB Shipping Point" means that ownership of the goods is passed to the buyer at the time goods are shipped, and that the buyer (owner of the goods) pays the shipping costs.

Question 11

With a periodic inventory system, inventory costs are recorded in Merchandise Inventory at the time of purchase.

Accepted Answer

A) True 
 B)False

Question 12

The Grove Company uses the perpetual inventory system. Although its inventory records indicated $18,000 in the inventory, a physical count showed only $16,250. Which of the following answers indicates the effect of the necessary write-down entry?

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 13

Folger Company uses the perpetual inventory method. Folger sold goods that cost $4,600 for $7,200. If the sale was made on account, the sale will:

Accepted Answer

A) increase total assets by $2,600. 
B) increase total equity by $7,200. 
C) decrease total assets by $4,600. 
D) increase total assets by $7,200. 
A) increase total assets by $2,600. 
B) increase total equity by $7,200. 
C) decrease total assets by $4,600. 
D) increase total assets by $7,200.

Question 14

Give an example of a product cost. At what time are product costs recognized as expenses? What is the name of the expense account?

Accepted Answer

Payment of transportation-in, storage co

Question 15

The following are the income statements of the Hayes Company for two consecutive years. Increases in which expenses contributed to the net loss in the 2014 year?

Accepted Answer

A) Cost of goods sold and selling expenses 
B) Selling expenses and administrative expenses 
C) Cost of goods sold and administrative expenses 
D) Administrative expenses 
A) Cost of goods sold and selling expenses 
B) Selling expenses and administrative expenses 
C) Cost of goods sold and administrative expenses 
D) Administrative expenses

Question 16

Product costs are matched against sales revenue

Accepted Answer

A) in the period immediately following the purchase. 
B) in the period immediately following the sale. 
C) when the merchandise is sold. 
D) when the merchandise is purchaseD.Product costs are matched against sales revenue (recognized as expenses) when merchandise is sold. The expense is called cost of goods sold. 
A) in the period immediately following the purchase. 
B) in the period immediately following the sale. 
C) when the merchandise is sold. 
D) when the merchandise is purchaseD.Product costs are matched against sales revenue (recognized as expenses) when merchandise is sold. The expense is called cost of goods sold.

Question 17

Explain the major difference between a merchandising business and a service business.

Accepted Answer

A merchandising business earns

Question 18

Common size financial statements are prepared by converting dollar amounts to percentages.

Accepted Answer

A) True 
 B)False

Question 19

Lonestar Company paid the amount due on a purchase of merchandise on account. Lonestar uses the perpetual inventory system. Which of the following answers reflects the effect of the payment 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 20

Frank Co. purchased $15,000 of merchandise inventory on account from a supplier, Jansen Company.

Accepted Answer

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

Retail companies sell goods primarily to other businesses.

Advent Company purchased $6,500 of merchandise inventory on account. Advent uses the perpetual inventory method. Which of the following entries would be required to record this transaction?

A company using the perpetual inventory method paid cash for transportation-in. Which of the following choices reflects the effects of this event on the financial statements?

Georgia Co. had beginning inventory of $800 and ending inventory of $400. The cost of goods sold was $3,200. Based on this information, Georgia Co. must have purchased inventory amounting to:

Frank Co. paid $45 of freight cost to have merchandise shipped to one of its customers under terms FOB destination.

Under a periodic system, the account debited for shipping costs on goods received from the vendor is called:

Based on common-sized income statements, which of the companies spent, relative to sales, the most on operating expenses?

As a result of the above transactions of Grace Company, the net cash flow from operating activities was

The term "FOB Shipping Point" means

With a periodic inventory system, inventory costs are recorded in Merchandise Inventory at the time of purchase.

The Grove Company uses the perpetual inventory system. Although its inventory records indicated $18,000 in the inventory, a physical count showed only $16,250. Which of the following answers indicates the effect of the necessary write-down entry?

Folger Company uses the perpetual inventory method. Folger sold goods that cost $4,600 for $7,200. If the sale was made on account, the sale will:

Give an example of a product cost. At what time are product costs recognized as expenses? What is the name of the expense account?

The following are the income statements of the Hayes Company for two consecutive years. Increases in which expenses contributed to the net loss in the 2014 year?

Product costs are matched against sales revenue

Explain the major difference between a merchandising business and a service business.

Common size financial statements are prepared by converting dollar amounts to percentages.

Lonestar Company paid the amount due on a purchase of merchandise on account. Lonestar uses the perpetual inventory system. Which of the following answers reflects the effect of the payment on the financial statements?

Frank Co. purchased $15,000 of merchandise inventory on account from a supplier, Jansen Company.

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

Retail companies sell goods primarily to other businesses.

Advent Company purchased $6,500 of merchandise inventory on account. Advent uses the perpetual inventory method. Which of the following entries would be required to record this transaction?

A company using the perpetual inventory method paid cash for transportation-in. Which of the following choices reflects the effects of this event on the financial statements?

Georgia Co. had beginning inventory of $800 and ending inventory of $400. The cost of goods sold was $3,200. Based on this information, Georgia Co. must have purchased inventory amounting to:

Frank Co. paid $45 of freight cost to have merchandise shipped to one of its customers under terms FOB destination.

Under a periodic system, the account debited for shipping costs on goods received from the vendor is called:

Based on common-sized income statements, which of the companies spent, relative to sales, the most on operating expenses?

As a result of the above transactions of Grace Company, the net cash flow from operating activities was

The term "FOB Shipping Point" means

With a periodic inventory system, inventory costs are recorded in Merchandise Inventory at the time of purchase.

The Grove Company uses the perpetual inventory system. Although its inventory records indicated $18,000 in the inventory, a physical count showed only $16,250. Which of the following answers indicates the effect of the necessary write-down entry?

Folger Company uses the perpetual inventory method. Folger sold goods that cost $4,600 for $7,200. If the sale was made on account, the sale will:

Give an example of a product cost. At what time are product costs recognized as expenses? What is the name of the expense account?

The following are the income statements of the Hayes Company for two consecutive years. Increases in which expenses contributed to the net loss in the 2014 year?

Product costs are matched against sales revenue

Explain the major difference between a merchandising business and a service business.

Common size financial statements are prepared by converting dollar amounts to percentages.

Lonestar Company paid the amount due on a purchase of merchandise on account. Lonestar uses the perpetual inventory system. Which of the following answers reflects the effect of the payment on the financial statements?

Frank Co. purchased $15,000 of merchandise inventory on account from a supplier, Jansen Company.

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