Question 1

Positive operating income will result if gross margin exceeds

Accepted Answer

A) operating expenses. 
B) purchases. 
C) cost of goods sold. 
D) cost of goods sold minus operating expenses.

Question 2

A sale on March 21 with terms of n/10 eom is due to be collected by

Accepted Answer

A) April 30. 
B) March 31. 
C) April 10. 
D) April 1.

Question 3

A discount that buyers take for early payment of merchandise is called a

Accepted Answer

A) customer discount. 
B) purchases discount. 
C) sales discount. 
D) trade discount.

Question 4

Adding freight-out expenses to net purchases gives net cost of purchases.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not considered in computing net cost of purchases?

Accepted Answer

A) Freight-out expenses 
B) Purchases 
C) Freight paid on purchased goods 
D) Purchases returns and allowances

Question 7

In which category would office salaries expense be included?

Accepted Answer

A) Net sales. 
B) Cost of goods sold. 
C) Selling expenses. 
D) General and administrative expenses.

Question 8

Copper,Inc.purchased merchandise worth $1,800 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

Accepted Answer

A)  
B)  
C)  
D)

Question 9

A trade discount is the same as a sales discount.

Accepted Answer

A) True 
 B)False

Question 10

Use this information to answer the following question.  In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000.
Net sales for the period were

Accepted Answer

A) $305,000. 
B) $275,000. 
C) $295,000. 
D) $215,000.

Question 11

Each of the following companies is a merchandising business except a

Accepted Answer

A) candy store. 
B) car wash. 
C) wholesale parts company. 
D) furniture store.

Question 12

Sales Discounts and Sales Returns and Allowances are contra-revenue accounts.

Accepted Answer

A) True 
 B)False

Question 13

If a U.S.company purchases goods for a fixed number of British pounds,and the exchange rate has fallen from $1.55 per pound to $1.50 per pound by the time payment is made,the U.S.company would record an exchange gain.

Accepted Answer

A) True 
 B)False

Question 14

An advantage of the perpetual inventory system is that

Accepted Answer

A) clerical work is reduced. 
B) the need to take a physical inventory is eliminated. 
C) the balance of the Merchandise Inventory account is only accurate on the balance sheet date. 
D) detailed data is available to respond to customers' inquiries about product availability.

Question 15

Terms of "n/10 eom" mean that payment is due 10 days after the end of the month.

Accepted Answer

A) True 
 B)False

Question 16

Feathertouch Company sold merchandise worth $1,600 on credit,terms n/15.The merchandise sold had cost $1,100.What is the required journal entry to record the transaction and to transfer the cost of merchandise inventory to cost of goods sold under the periodic inventory system?

Accepted Answer

A)  
B)  
C)  
D)

Question 17

Joan and Pat Clair are sisters who each own and operate shops selling the latest electronics in neighboring towns.They decide to have a contest to see whose shop can be more profitable for the year.At year-end,Joan's records show sales of $210,000,cost of goods sold of $110,000,and operating expenses of $42,000.The records of Pat's shop reveal sales of $216,000,cost of goods sold of $124,000,and operating expenses of $38,000.Pat's shop also had other revenue of $6,000 received for allowing the shop to be used in taping a television show.Each sister claims to have won the contest.Provide explanations as to why each would think so,and then name the winner

Accepted Answer

The answer of Joan and Pat Clair are sisters who...

Question 18

General and administrative expenses are a category of operating expense.

Accepted Answer

A) True 
 B)False

Question 19

Under the perpetual inventory system,the return of goods from a customer is recorded with a debit to Sales Returns and Allowances.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 6: Accounting for Merchandising Operations

Positive operating income will result if gross margin exceeds

A sale on March 21 with terms of n/10 eom is due to be collected by

A discount that buyers take for early payment of merchandise is called a

Adding freight-out expenses to net purchases gives net cost of purchases.

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

Which of the following is not considered in computing net cost of purchases?

In which category would office salaries expense be included?

Copper,Inc.purchased merchandise worth $1,800 on credit,terms n/30.What is the required journal entry to record the transaction under the periodic inventory system?

A trade discount is the same as a sales discount.

Use this information to answer the following question. In addition,beginning merchandise inventory was $22,000 and ending merchandise inventory was $14,000. Net sales for the period were

Each of the following companies is a merchandising business except a

Sales Discounts and Sales Returns and Allowances are contra-revenue accounts.

If a U.S.company purchases goods for a fixed number of British pounds,and the exchange rate has fallen from $1.55 per pound to $1.50 per pound by the time payment is made,the U.S.company would record an exchange gain.

An advantage of the perpetual inventory system is that

Terms of "n/10 eom" mean that payment is due 10 days after the end of the month.

Feathertouch Company sold merchandise worth $1,600 on credit,terms n/15.The merchandise sold had cost $1,100.What is the required journal entry to record the transaction and to transfer the cost of merchandise inventory to cost of goods sold under the periodic inventory system?

General and administrative expenses are a category of operating expense.

Under the perpetual inventory system,the return of goods from a customer is recorded with a debit to Sales Returns and Allowances.

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?