Question 1

Periodic inventory systems were historically used by companies that sold large quantities of low-value items.

Accepted Answer

A) True 
 B)False  True

Question 2

Merchandisers

Accepted Answer

A)  Earn net income from fares.
B)  Earn net income from commissions.
C)  Earn net income from buying and selling merchandise.
D)  Do not report gross profit.
E)  Receive fees in exchange for services. C

Question 3

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period, then:

Accepted Answer

A)  The cost of goods sold was smaller than net purchases.
B)  The cost of goods sold was larger than net purchases.
C)  Gross profit was larger than the cost of goods sold.
D)  The cost of goods available for sale was smaller than the cost of goods sold.
E)  Net income was larger than gross profit. A

Question 4

Z-Mart purchased $5,000 worth of merchandise on credit. Transportation costs were an additional $100, paid cash to the cartage company on delivery. Z-Mart returned $275 worth of merchandise and paid the invoice on time, and took a 2% purchase discount. The amount of this payment was:

Accepted Answer

A)  $3,725.00
B)  $4,728.50
C)  $3,993.50
D)  $3,600.50
E)  $4,630.50

Question 5

Z-Mart had sales of $569,300. Gross profit was $239,106. What is the cost of goods sold?

Accepted Answer

A)  $330,194.
B)  $276,194.
C)  $808,406.
D)  $357,194.
E)  42%.

Question 6

A car dealership has a used truck on its lot that it bought for $15,000 and is selling it for$20,000. The rate of markup on cost is:

Accepted Answer

A)  16 and % 
B)  30%
C)  33 and % 
D)  25%
E)  None of these answers is correct.

Question 7

A trade discount is

Accepted Answer

A)  A term used by a purchaser to describe a cash discount given to customers for prompt payment.
B)  A term used by a seller to describe a cash discount granted to customers for prompt payment.
C)  A reduction below a list price.
D)  Also called a rebate.
E)  A reduction in price for prompt payment.

Question 8

The periodic inventory system is superior to the perpetual inventory system in preventing shrinkage.

Accepted Answer

A) True 
 B)False

Question 9

Z-Mart had a gross profit of $340,000 based on sales of $700,000was $350,000.

Accepted Answer

A) True 
 B)False

Question 10

Identify and explain the components of income for a merchandising company

Accepted Answer

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

Question 11

For a business, provincial sales tax (PST)paid is included in the amount recorded as an asset or an expense when a purchase is made.

Accepted Answer

A) True 
 B)False

Question 12

Assets tied up in inventory are not productive assets

Accepted Answer

A) True 
 B)False

Question 13

Accepted Answer

The answer of  ...

Question 14

A business sold some inventory on credit for $5,000 before taxesand 7% provincial sales tax (PST). The business uses a perpetual inventory system. What is the amount of the accounts receivable that wasrecorded as a result of this sale?

Accepted Answer

A)  $5,300
B)  $5,350
C)  $5,600
D)  $5,000
E)  None of these answers is correct.

Question 15

Gross profit is

Accepted Answer

A)  Subtracted from operating income to get net income.
B)  A special general ledger account.
C)  Net sales less cost of goods sold.
D)  Only calculated when using the perpetual inventory system.
E)  The same as net income.

Question 16

Merchandise inventory is included in the Plant and Equipment section of the balancesheet.

Accepted Answer

A) True 
 B)False

Question 17

A wholesaler is a company that buys products from manufacturers and sells them to consumers.

Accepted Answer

A) True 
 B)False

Question 18

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used, a debit balance in the account means the government owes money to the business.

Accepted Answer

A) True 
 B)False

Question 19

Z-Mart did not take advantage of a supplier's offer of 2/10, n/30, and paid the invoice at the end of the month. By not taking the discount Z-Mart lost the equivalent of 18%annual interest on the amount of the purchase.

Accepted Answer

A) True 
 B)False

Question 20

A merchandiser earns net income by buying and selling merchandise

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Activities

Periodic inventory systems were historically used by companies that sold large quantities of low-value items.

Merchandisers

If a merchandising company ends a period with a larger inventory than it owned at the beginning of the period, then:

Z-Mart purchased $5,000 worth of merchandise on credit. Transportation costs were an additional $100, paid cash to the cartage company on delivery. Z-Mart returned $275 worth of merchandise and paid the invoice on time, and took a 2% purchase discount. The amount of this payment was:

Z-Mart had sales of $569,300. Gross profit was $239,106. What is the cost of goods sold?

A car dealership has a used truck on its lot that it bought for $15,000 and is selling it for$20,000. The rate of markup on cost is:

A trade discount is

The periodic inventory system is superior to the perpetual inventory system in preventing shrinkage.

Z-Mart had a gross profit of $340,000 based on sales of $700,000was $350,000.

Identify and explain the components of income for a merchandising company

For a business, provincial sales tax (PST)paid is included in the amount recorded as an asset or an expense when a purchase is made.

Assets tied up in inventory are not productive assets

A business sold some inventory on credit for $5,000 before taxesand 7% provincial sales tax (PST) . The business uses a perpetual inventory system. What is the amount of the accounts receivable that wasrecorded as a result of this sale?

Gross profit is

Merchandise inventory is included in the Plant and Equipment section of the balancesheet.

A wholesaler is a company that buys products from manufacturers and sells them to consumers.

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used, a debit balance in the account means the government owes money to the business.

Z-Mart did not take advantage of a supplier's offer of 2/10, n/30, and paid the invoice at the end of the month. By not taking the discount Z-Mart lost the equivalent of 18%annual interest on the amount of the purchase.

A merchandiser earns net income by buying and selling merchandise