Question 1

On October 1,Courtland Company sold merchandise in the amount of $5,800 to Carter Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Courtland uses the periodic inventory system.On October 4,Carter returns some of the merchandise.The selling price of the merchandise is $500 and the cost of the merchandise returned is $350.The entry or entries that Courtland must make on October 4 is:

Accepted Answer

A)  
B)  
C)  
D)  
E)  F) None of the above
G) B) and C)

Question 2

Sales discounts can benefit a seller by decreasing the delay in receiving cash and ___________.

Accepted Answer

reducing f...

Question 3

Multiple-step income statements:

Accepted Answer

A)  Are required by the FASB.
B)  Contain more detail than a simple listing of revenues and expenses.
C)  Are required for the perpetual inventory system.
D)  List cost of goods sold as an operating expense.
E)  Can only be used in perpetual inventory systems.F) C) and E)
G) C) and D)

Question 4

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Accepted Answer

A)  4.2%.
B)  24.1%.
C)  75.9%.
D)  $83,750.
E)  $264,050.F) A) and E)
G) B) and E)

Question 5

The amount recorded for merchandise inventory includes all of the following except:

Accepted Answer

A)  Purchase discounts.
B)  Returns and allowances.
C)  Freight costs paid by the buyer.
D)  Freight costs paid by the seller.
E)  Trade discounts.F) A) and E)
G) A) and D)

Question 6

Merchandise inventory:

Accepted Answer

A)  Is a long-term asset.
B)  Is a current asset.
C)  Includes supplies.
D)  Is classified with investments on the balance sheet.
E)  Must be sold within one month.F) C) and E)
G) A) and C)

Question 7

Ceres Computer Sales uses the perpetual inventory system and had the following transactions during December.
Dec 1 Sold merchandise on credit for $5,000,terms 3/10,n/30.The items sold had a
cost of $3,500.
3 Purchased merchandise for cash,$720.
4 Purchased merchandise on credit for $2,600,terms 1/20,n/30.
5 Issued a credit memorandum for $300 to a customer who returned
merchandise purchased November 29.The returned items had a cost of $210.
11 Received payment for merchandise sold December 1.
15 Received a credit memorandum for the return of faulty merchandise purchased
on December 4 for $600.
18 Paid freight charges of $200 for merchandise ordered last month.(FOB
shipping point)
23 Paid for the merchandise purchased December 4 less the portion that was
returned.
24 Sold merchandise on credit for $7,000,terms 2/10,n/30.The items had a cost
of $4,900.
31 Received payment for merchandise sold on December 24.
Required:
Prepare the general journal entries to record these transactions.

Accepted Answer

The answer of Ceres Computer Sales uses the perpetual inventory...

Question 8

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

Accepted Answer

A)  $8,924.
B)  $9,700.
C)  $10,000.
D)  $9,800.
E)  $8,724.F) A) and C)
G) A) and E)

Question 9

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Accepted Answer

A) True 
 B)False

Question 10

Cost of goods sold:

Accepted Answer

A)  Is another term for merchandise sales.
B)  Is the term used for the cost of buying and preparing merchandise for sale.
C)  Is another term for revenue.
D)  Is also called gross margin.
E)  Is a term only used by service firms.F) C) and E)
G) B) and E)

Question 11

Match between columns
                        Premises: The catalog price of an item before any trade discount is deducted.
An income statement format that shows only one subtotal for total expenses.
The expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers.
The abbreviation for free on board; refers to the point when ownership of goods passes to the buyer.
A ratio used to assess a company's ability to pay its current liabilities; defined as quick assets divided by current liabilities.
Inventory losses that can occur as a result of theft or deterioration.
The abbreviation for end-of-month; used to describe credit terms for some transactions.
Expenses that support overall operations and includes expenses related to accounting, human resource management and financial management.
An income statement format that shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.
Products a company owns and intends to sell.

Accepted Answer

The Answer of Merchandise inventory and Multiple-step income statement and is...

Question 12

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

Accepted Answer

A)  5%.
B)  9.6%.
C)  35%.
D)  65%.
E)  285.7%.F) A) and C)
G) All of the above

Question 13

A company had net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income was $17,530.The company's gross margin ratio equals:

Accepted Answer

A)  18.9%
B)  24.5%
C)  27.8%
D)  34.7%
E)  35.2%F) A) and D)
G) A) and B)

Question 14

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

Accepted Answer

A)  The ending inventory amount.
B)  The beginning inventory amount.
C)  Equal to the cost of goods sold.
D)  Equal to the cost of goods purchased.
E)  Equal to the gross profit.F) D) and E)
G) All of the above

Question 15

Merchandise inventory consists of products that a company acquires to resell to customers.

Accepted Answer

A) True 
 B)False

Question 16

_____________________ refers to products that a company owns and intends to sell.

Accepted Answer

Merchandis...

Question 17

A seller usually prepares a ____________________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

Accepted Answer

The answer of A seller usually prepares a ____________________ to...

Question 18

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Accepted Answer

A) True 
 B)False

Question 19

Explain the cost flows and operating activities of a merchandising company.

Accepted Answer

Beginning inventory plus the net cost of...

Question 20

All of the following statements regarding inventory shrinkage are true except:

Accepted Answer

A)  Inventory shrinkage refers to the loss of inventory.
B)  Inventory shrinkage is determined by comparing a physical count of inventory with recorded inventory amounts.
C)  Inventory shrinkage is recognized by debiting an operating expense.
D)  Inventory shrinkage is recognized by debiting Cost of Goods Sold.
E)  Inventory shrinkage can be caused by theft or deterioration.F) A) and B)
G) None of the above

Exam 5: Accounting for Merchandising Operations

A seller usually prepares a ____________________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

Correct Answer
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Merchandise inventory consists of products that a company acquires to resell to customers.

Correct Answer
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All of the following statements regarding inventory shrinkage are true except:

Correct Answer
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Multiple-step income statements:

Correct Answer
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Sales discounts can benefit a seller by decreasing the delay in receiving cash and ___________.

Correct Answer
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reducing f...
View Answer

_____________________ refers to products that a company owns and intends to sell.

Correct Answer
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Merchandis...
View Answer

Correct Answer
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The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Correct Answer
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Cost of goods sold:

Correct Answer
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Correct Answer
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Explain the cost flows and operating activities of a merchandising company.

Correct Answer
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Beginning inventory plus the net cost of...
View Answer

A company had net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income was $17,530.The company's gross margin ratio equals:

Correct Answer
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If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Correct Answer
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Merchandise inventory:

Correct Answer
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The amount recorded for merchandise inventory includes all of the following except:

Correct Answer
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Match the following definitions and terms by placing the letter for the terms A through J in the blank space next to the best definition.

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

Correct Answer
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A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

Correct Answer
verified

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

Correct Answer
verified

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Correct Answer
verified

Exam 5: Accounting for Merchandising Operations

A seller usually prepares a ____________________ to confirm a buyer's return or allowance,and informs the buyer of the seller's credit to the buyer's Account Receivable on the seller's books.

Correct AnswerverifiedShow Answer

Merchandise inventory consists of products that a company acquires to resell to customers.

Correct AnswerverifiedShow Answer

All of the following statements regarding inventory shrinkage are true except:

Correct AnswerverifiedShow Answer

Multiple-step income statements:

Correct AnswerverifiedShow Answer

Sales discounts can benefit a seller by decreasing the delay in receiving cash and ___________.

Correct Answerverifiedreducing f...View AnswerShow Answer

_____________________ refers to products that a company owns and intends to sell.

Correct AnswerverifiedMerchandis...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

Correct AnswerverifiedShow Answer

Cost of goods sold:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain the cost flows and operating activities of a merchandising company.

Correct AnswerverifiedBeginning inventory plus the net cost of...View AnswerShow Answer

A company had net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income was $17,530.The company's gross margin ratio equals:

Correct AnswerverifiedShow Answer

If goods are shipped FOB shipping point,the seller does not record revenue from the sale until the goods arrive at their destination because the transaction is not complete until that point.

Correct AnswerverifiedShow Answer

Merchandise inventory:

Correct AnswerverifiedShow Answer

The amount recorded for merchandise inventory includes all of the following except:

Correct AnswerverifiedShow Answer

Match the following definitions and terms by placing the letter for the terms A through J in the blank space next to the best definition.

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

Correct AnswerverifiedShow Answer

A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

Correct AnswerverifiedShow Answer

A company's net sales were $676,600,its cost of goods sold was $236,810 and its net income was $33,750.Its gross margin ratio equals:

Correct AnswerverifiedShow Answer

A company's gross profit was $83,750 and its net sales were $347,800.Its gross margin ratio equals:

Correct AnswerverifiedShow Answer

Correct Answer
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reducing f...
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Merchandis...
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Beginning inventory plus the net cost of...
View Answer

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