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Exam 5: Accounting for Merchandising Operations

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Question 41

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A debit to Sales Returns and Allowances and a credit to Accounts Receivable:

A) Reflects an increase in amount due from a customer.
B) Recognizes that a customer returned merchandise and/or received an allowance.
C) Requires a debit memorandum to recognize the customer's return.
D) Is recorded when a customer takes a discount.
E) Reflects a decrease in amount due a supplier.

F) None of the above
G) A) and C)

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Question 42

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

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Reducing F...

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Question 43

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Merchandise inventory:

Roller Blade Company uses the perpetual inventory system and had the following transactions during October: Prepare journal entries to record each of the preceding transactions.

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

___________ expenses are those expenses that support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

What are the difference(s) between the periodic and the perpetual inventory systems?

A perpetual inventory system requires updating of the inventory account only at the beginning of an accounting period.

A perpetual inventory system continually updates accounting records for inventory transactions.

Ceres Computer Sales uses the perpetual inventory system and had the following transactions during December. Required: Prepare the general journal entries to record these transactions.

Brig Company had $800,000 in net sales, $350,000 in gross profit, and $200,000 in operating expenses. Cost of goods sold equals:

Prepare journal entries to record the following merchandise transactions of Geo Company, which applies the perpetual inventory system.

The gross margin ratio equals net sales less ___________ divided by net sales.

A company reported the following year-end information: Required: 1. Explain the purpose of the acid-test ratio. 2. Calculate the acid-test ratio for this company. 3. What does the acid-test ratio reveal about this company?

Quick assets include cash, inventory, and current receivables.

Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

A buyer records the costs of shipping goods in a Delivery Expense, or transportation-out account when the buyer is responsible for these costs.

A merchandising company's operating cycle begins with the sale of merchandise and ends with the collection of cash from the sale.

___________________ refer to reductions in the selling price of merchandise sold to customers, often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.