Question 1

On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.

Accepted Answer

A) True 
 B)False

Question 2

Under a periodic inventory system,closing entries will include

Accepted Answer

A) Dr.Sales,Purchases Returns and Allowances,Purchases Discounts 
B) Cr.Purchases,Sales Discounts,Sales Returns and Allowances 
C) Adjust Merchandise Inventory account to match physical inventory 
D) All are correct

Question 3

Details of a purchase invoice and related credit memo are summarized as follows:
  
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period.Determine the following:

Accepted Answer

The answer of Details of a purchase invoice and related...

Question 4

The Corbit Corp.sold merchandise $10,000 for cash.The cost of the merchandise sold was $7,590.The journal entry(s)to record this transaction would be

Accepted Answer

A) Cash 10,000 Merchandise Inventory 10,000
Cost of Merchandise Sold 7,590
Sales 7,590 
B) Cash 10,000 Sales 10,000
Cost of Merchandise Sold 7,590
Merchandise Inventory 7,590 
C) Cash 10,000 Sales 10,000
Cost of Merchandise Sold 10,000
Merchandise Inventory 10,000 
D) Cash 7,590 Sales 7,590
Cost of Merchandise Sold 7,590
Merchandise Inventory 7,590

Question 5

Merchandise is sold for cash.The selling price of the merchandise is $5,000 and the sale is subject to a 7% state sales tax.The journal entry to record the sale would include

Accepted Answer

A) A credit to Cash for $5,000. 
B) A credit to Sales for $5,350. 
C) A credit to Sales Tax Payable for $350. 
D) None of these answers are correct.

Question 6

When the three sections of a balance sheet are presented on a page in a downward sequence,it is called the

Accepted Answer

A) account form 
B) comparative form 
C) horizontal form 
D) report form

Question 7

Which of the following accounts usually has a debit balance?

Accepted Answer

A) Purchase Discounts 
B) Sales Tax Payable 
C) Allowance for Doubtful Accounts 
D) Freight-In

Question 8

Which account will be included in both service and merchandising companies closing entries?

Accepted Answer

A) Sales 
B) Cost of Merchandise Sold 
C) Purchase Discounts 
D) Sales Returns and Allowances

Question 9

The primary difference between a periodic and perpetual inventory system is that a

Accepted Answer

A) periodic system determines the inventory on hand only at the end of the accounting period 
B) periodic system keeps a record showing the inventory on hand at all times 
C) periodic system provides an easy means to determine inventory shrinkage 
D) periodic system records the cost of the sale on the date the sale is made

Question 10

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include the following account

Accepted Answer

A) No entry is made. 
B) Cost of merchandise sold 
C) Inventory 
D) Purchases

Question 11

Isaac Co.sells merchandise on credit to Sonar Co in the amount of $9,600.The invoice is dated on April 15 with terms of 1/15,net 45.If Sonar Co.chooses not to take the discount,by when should the payment be made?

Accepted Answer

A) April 30 
B) May 30 
C) May 15 
D) April 25

Question 12

Match between columns
                        Premises: Freight in
Purchases
Sales Returns and Allowances
Purchases Returns and Allowances
Delivery Expense

Accepted Answer

The Answer of both systems? and perpetual inventory system and is...

Question 13

Prepare a multiple-step income statement for Armour Co.from the following data for the year ended December 31,2014.

Accepted Answer

The answer of Prepare a multiple-step income statement for Armour...

Question 14

The records of Nevada Co.indicated that $420,000 of merchandise should be on hand on December 31,2010.The physical inventory indicates that $370,000 of merchandise is actually on hand.Journalize the adjusting entry for the inventory shrinkage for the year ended December 31,2010.

Accepted Answer

The answer of The records of Nevada Co.indicated that $420,000...

Question 15

If the physical count of the inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000,what would be the necessary adjusting entry to record inventory shortage?

Accepted Answer

A) Merchandise inventory debit $158,000;Cost of Merchandise Sold credit $158,000. 
B) Merchandise inventory debit $5,000;Cost of Merchandise Sold credit $5,000. 
C) Cost of Merchandise Sold debit $163,000;Merchandise Inventory credit $158,000. 
D) Cost of Merchandise Sold debit $5,000;Merchandise Inventory credit $5,000.

Question 16

Construct a chart of accounts,assigning account numbers and arranging the accounts in balance sheet and income statement order ("1" for assets,and so on).Each account number is three digits.Contra accounts should designated with a decimal of the account (100.1 for contra of account 100).Assets and liabilities should be in order of liquidity,expenses should be in alphabetical order.

Accepted Answer

The answer of Construct a chart of accounts,assigning account numbers...

Question 17

Sales Returns and Allowances is a contra-revenue account.

Accepted Answer

A) True 
 B)False

Question 18

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 19

Using the following information,what is the amount of gross profit?

Accepted Answer

A) $34,870 
B) $31,880 
C) $27,460 
D) $62,090

Question 20

When comparing a retail business to a service business,the financial statement that changes the most is the

Accepted Answer

A) Balance Sheet 
B) Income Statement 
C) Statement of Owner's Equity 
D) Statement of Cash Flow

Exam 5: Accounting for Merchandising Businesses

On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.

Under a periodic inventory system,closing entries will include

Details of a purchase invoice and related credit memo are summarized as follows: Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period.Determine the following:

The Corbit Corp.sold merchandise $10,000 for cash.The cost of the merchandise sold was $7,590.The journal entry(s) to record this transaction would be

Merchandise is sold for cash.The selling price of the merchandise is $5,000 and the sale is subject to a 7% state sales tax.The journal entry to record the sale would include

When the three sections of a balance sheet are presented on a page in a downward sequence,it is called the

Which of the following accounts usually has a debit balance?

Which account will be included in both service and merchandising companies closing entries?

The primary difference between a periodic and perpetual inventory system is that a

Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include the following account

Isaac Co.sells merchandise on credit to Sonar Co in the amount of $9,600.The invoice is dated on April 15 with terms of 1/15,net 45.If Sonar Co.chooses not to take the discount,by when should the payment be made?

Which of the following accounts would be included in the chart of accounts of a merchandising company using the: (a)periodic inventory system, (b)perpetual inventory system,or (c)both systems?

Prepare a multiple-step income statement for Armour Co.from the following data for the year ended December 31,2014.

The records of Nevada Co.indicated that $420,000 of merchandise should be on hand on December 31,2010.The physical inventory indicates that $370,000 of merchandise is actually on hand.Journalize the adjusting entry for the inventory shrinkage for the year ended December 31,2010.

If the physical count of the inventory revealed $158,000 of merchandise on hand and the inventory records reported $163,000,what would be the necessary adjusting entry to record inventory shortage?

Sales Returns and Allowances is a contra-revenue account.

Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business.

Using the following information,what is the amount of gross profit?

When comparing a retail business to a service business,the financial statement that changes the most is the