Question 1

National Storage Company had sales of $1,000,000, sales discounts of $2,500, sales returns and allowances of $15,000, and cost of goods sold of $525,000. Calculate National's gross profit.

Accepted Answer

Gross Profit = Sales - Sales D...

Question 2

________ are the amounts and timing of payment from a buyer to a seller.

Accepted Answer

The answer of ________ are the amounts and timing of...

Question 3

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Accepted Answer

A) True 
 B)False

Question 4

On September 12, Ryan Company sold merchandise in the amount of $5,800 to Johnson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. 
-Johnson uses the periodic inventory system and the net method of accounting for purchases. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Johnson makes on September 18 is:

Accepted Answer

A)     Sales 4,000 Sales Refind Payable 80 Accounts receivable 3,920\begin{array} { | l | r | r | } \hline 	ext { Sales } & 4,000 & \\hline 	ext { Sales Refind Payable } & & 80 \\hline 	ext { Accounts receivable } & & 3,920 \\hline\end{array} Sales  Sales Refind Payable  Accounts receivable ​4,000​803,920​​ 
B)     Purchases 5,684 Cash 5,684\begin{array} { | l | r | r | } \hline 	ext { Purchases } & 5,684 & \\hline 	ext { Cash } & & 5,684 \\hline\end{array} Purchases  Cash ​5,684​5,684​​ 
C)     Accounts payable 5,684 Cash 5,684\begin{array} { | l | r | r | } \hline 	ext { Accounts payable } & 5,684 & \\hline 	ext { Cash } & & 5,684 \\hline\end{array} Accounts payable  Cash ​5,684​5,684​​ 
D)     Sales 5,800 Sales Refind Payable 116 Accounts receivable 5,684\begin{array} { | l | r | r | } \hline 	ext { Sales } & 5,800 & \\hline 	ext { Sales Refind Payable } & & 116 \\hline 	ext { Accounts receivable } & & 5,684 \\hline\end{array} Sales  Sales Refind Payable  Accounts receivable ​5,800​1165,684​​ 
E)     Cash 5,684 Purchases discounts 116 Accounts payable 5,800\begin{array} { | l | r | r | } \hline 	ext { Cash } & 5,684 & \\hline 	ext { Purchases discounts } & 116 & \\hline 	ext { Accounts payable } & & 5,800 \\hline\end{array} Cash  Purchases discounts  Accounts payable ​5,684116​5,800​​F) A) and B)
G) C) and E)

Question 5

A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals:

Accepted Answer

A)   1.14.
B)   1.41.
C)   .52.
D)   0.88.
E)   1.91.F) B) and E)
G) A) and E)

Question 6

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:

Accepted Answer

A)   Cost of goods sold.
B)   Non-operating activities.
C)   General and administrative expenses.
D)   Purchasing expenses.
E)   Selling expenses.F) A) and B)
G) C) and E)

Question 7

On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. 
-Babson pays the invoice on March 17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:

Accepted Answer

A)     Cash 7,644 Sales discounts 156 Accounts receivable 7,800\begin{array} { | l | r | r | } \hline 	ext { Cash } & 7,644 & \\hline 	ext { Sales discounts } & 156 & \\hline 	ext { Accounts receivable } & & 7,800 \\hline\end{array} Cash  Sales discounts  Accounts receivable ​7,644156​7,800​​ 
B)     Cash 4.410 Sales discounts 90 Accounts receivable 4,500\begin{array} { | l | r | r | } \hline 	ext { Cash } & 4.410 & \\hline 	ext { Sales discounts } & 90 & \\hline 	ext { Accounts receivable } & & 4,500 \\hline\end{array} Cash  Sales discounts  Accounts receivable ​4.41090​4,500​​ 
C)     Cash 4,500 Accounts receivable 4,500\begin{array} { | l | r | r | } \hline 	ext { Cash } & 4,500 & \\hline 	ext { Accounts receivable } & & 4,500 \\hline\end{array} Cash  Accounts receivable ​4,500​4,500​​ 
D)     Cash 7,644 Accounts receivable 7,644\begin{array} { | l | l | l | } \hline 	ext { Cash } & 7,644 & \\hline 	ext { Accounts receivable } & & 7,644 \\hline\end{array} Cash  Accounts receivable ​7,644​7,644​​ 
E)     Cash 7,800 Accounts receivable 7,800\begin{array} { | l | r | r | } \hline 	ext { Cash } & 7,800 & \\hline 	ext { Accounts receivable } & & 7,800 \\hline\end{array} Cash  Accounts receivable ​7,800​7,800​​F) A) and B)
G) A) and C)

Question 8

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

Accepted Answer

A) True 
 B)False

Question 9

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Accepted Answer

A) True 
 B)False

Question 10

What does the acronym FOB stand for? Describe the differences between FOB shipping point (or FOB factory) and FOB destination.

Accepted Answer

FOB stands for free on board, and it det...

Question 11

Cost of goods sold:

Accepted Answer

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

Question 12

Describe the difference(s) between the periodic and the perpetual inventory accounting systems.

Accepted Answer

Under a perpetual system each purchase, ...

Question 13

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses.
- Net income equals:

Accepted Answer

A)   $402,000.
B)   $390,000.
C)   $408,000.
D)   $115,000.
E)   $770,000.F) B) and E)
G) B) and D)

Question 14

A company uses the perpetual inventory system and recorded the following entry:   Accounts Payable 2,500 Merchandise Inventory 50 Cash 2,450\begin{array} { | l | r | r | } \hline 	ext { Accounts Payable } & 2,500 & \\hline 	ext { Merchandise Inventory } & & 50 \\hline 	ext { Cash } & & 2,450 \\hline\end{array} Accounts Payable  Merchandise Inventory  Cash ​2,500​502,450​​  This entry reflects a:

Accepted Answer

A)   Return of merchandise.
B)   Payment of the account payable less a 1% cash discount taken.
C)   Payment of the account payable less a 2% cash discount taken.
D)   Sale of merchandise on credit.
E)   Purchase of merchandise on credit. F) B) and E)
G) A) and B)

Question 15

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. 
-On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, The correct journal entry to record the purchase on July 5 is:

Accepted Answer

A)   Debit Accounts Payable $1,800; credit Merchandise Inventory $1,800.
B)   Debit Merchandise Inventory $1,600; credit Cash $1,600.
C)   Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.
D)   Debit Merchandise Inventory $1,800; credit Accounts Payable $1,800.
E)   Debit Merchandise Inventory $1,800; credit Sales Returns $200; credit Cash $1,600.F) B) and C)
G) D) and E)

Question 16

Explain the difference between the single-step and multiple-step income statements.

Accepted Answer

A single-step income statement format in...

Question 17

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Accepted Answer

A) True 
 B)False

Question 18

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Accepted Answer

The answer of ________ can benefit a seller by decreasing...

Question 19

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

Accepted Answer

A)   $200.
B)   $1,800.
C)   $1,568.
D)   $1,564.
E)   $1,600.F) B) and C)
G) C) and D)

Question 20

Non-operating activities that include interest expense, losses from asset disposals, and casualty losses are reported as__________  .

Accepted Answer

other expe...

Exam 5: Accounting for Merchandising Operations

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

Correct Answer
verified

Cost of goods sold:

Correct Answer
verified

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Correct Answer
verified

A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals:

Correct Answer
verified

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Correct Answer
verified

National Storage Company had sales of $1,000,000, sales discounts of $2,500, sales returns and allowances of $15,000, and cost of goods sold of $525,000. Calculate National's gross profit.

Correct Answer
verified
Gross Profit = Sales - Sales D...
View Answer

Correct Answer
verified

________ are the amounts and timing of payment from a buyer to a seller.

Correct Answer
verified

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Correct Answer
verified

A company uses the perpetual inventory system and recorded the following entry: $\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 2,500 & \\\hline \text { Merchandise Inventory } & & 50 \\\hline \text { Cash } & & 2,450 \\\hline\end{array}$ This entry reflects a:

Correct Answer
verified

Correct Answer
verified

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Correct Answer
verified

Correct Answer
verified

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. - Net income equals:

Correct Answer
verified

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:

Correct Answer
verified

What does the acronym FOB stand for? Describe the differences between FOB shipping point (or FOB factory) and FOB destination.

Correct Answer
verified
FOB stands for free on board, and it det...
View Answer

Describe the difference(s) between the periodic and the perpetual inventory accounting systems.

Correct Answer
verified
Under a perpetual system each purchase, ...
View Answer

Non-operating activities that include interest expense, losses from asset disposals, and casualty losses are reported as__________ .

Correct Answer
verified
other expe...
View Answer

Explain the difference between the single-step and multiple-step income statements.

Correct Answer
verified
A single-step income statement format in...
View Answer

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

Correct Answer
verified

Exam 5: Accounting for Merchandising Operations

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 8, it paid the full amount due. The amount of the cash paid on July 8 equals:

Correct AnswerverifiedShow Answer

Cost of goods sold:

Correct AnswerverifiedShow Answer

In a periodic inventory system, cost of goods sold is recorded as each sale occurs.

Correct AnswerverifiedShow Answer

A company's current assets are $23,420, its quick assets are $13,890 and its current liabilities are $12,220. Its acid-test ratio equals:

Correct AnswerverifiedShow Answer

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Correct AnswerverifiedShow Answer

National Storage Company had sales of $1,000,000, sales discounts of $2,500, sales returns and allowances of $15,000, and cost of goods sold of $525,000. Calculate National's gross profit.

Correct AnswerverifiedGross Profit = Sales - Sales D...View AnswerShow Answer

Correct AnswerverifiedShow Answer

________ are the amounts and timing of payment from a buyer to a seller.

Correct AnswerverifiedShow Answer

Under both the periodic and perpetual inventory systems, the temporary account Purchases Returns and Allowances is used to accumulate the cost of all returns and allowances for a period.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

________ can benefit a seller by decreasing the delay in receiving cash and reducing future collection efforts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cushman Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. - Net income equals:

Correct AnswerverifiedShow Answer

Expenses that support the overall operations of a business and include the expenses relating to accounting, human resource management, and financial management are called:

Correct AnswerverifiedShow Answer

What does the acronym FOB stand for? Describe the differences between FOB shipping point (or FOB factory) and FOB destination.

Correct AnswerverifiedFOB stands for free on board, and it det...View AnswerShow Answer

Describe the difference(s) between the periodic and the perpetual inventory accounting systems.

Correct AnswerverifiedUnder a perpetual system each purchase, ...View AnswerShow Answer

Non-operating activities that include interest expense, losses from asset disposals, and casualty losses are reported as__________ .

Correct Answerverifiedother expe...View AnswerShow Answer

Explain the difference between the single-step and multiple-step income statements.

Correct AnswerverifiedA single-step income statement format in...View AnswerShow Answer

A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Gross Profit = Sales - Sales D...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
FOB stands for free on board, and it det...
View Answer

Correct Answer
verified
Under a perpetual system each purchase, ...
View Answer

Correct Answer
verified
other expe...
View Answer

Correct Answer
verified
A single-step income statement format in...
View Answer

Correct Answer
verified