Question 1

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 monthF) D) and E)
G) A) and B)

Question 2

Describe the difference between wholesalers and retailers.

Accepted Answer

A wholesaler is an intermediary that buy...

Question 3

A company has sales of $2,530,000, sales discounts of $200,000, sales returns and allowances of $323,000, shipping charges of $115,000, sales commissions of $234,000, net income totaled $863,500, and cost of goods sold of $1,012,000. What is the gross profit/margin ratio?

Accepted Answer

The answer of A company has sales of $2,530,000, sales...

Question 4

The gross margin ratio is defined as gross margin divided by net sales.

Accepted Answer

A) True 
 B)False

Question 5

Under the perpetual inventory system, the cost of merchandise purchased is accumulated in the Merchandise Inventory account.

Accepted Answer

A) True 
 B)False

Question 6

A company had: net sales of $82,000; cost of goods sold of $70,000; and other expenses of $2,000. Its gross margin ratio equals:

Accepted Answer

A)   85.37%
B)   2.44%
C)   14.63%
D)   16.67%
E)   683.33%F) A) and B)
G) A) and C)

Question 7

A debit memorandum is:

Accepted Answer

A)   Required whenever a journal entry is recorded
B)   The source document for the purchase of merchandise inventory
C)   Required when a purchase discount is granted
D)   The document a buyer issues to inform the seller of a debit made to the seller's account in the buyer's records
E)   Not necessary in a perpetual inventory systemF) A) and E)
G) B) and D)

Question 8

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:

Prepare the closing entries at December 31 for the current year.

Accepted Answer

The answer of Following is the year-end adjusted trial balance...

Question 9

A service company earns net income by buying and selling merchandise.

Accepted Answer

A) True 
 B)False

Question 10

What is the acid-test ratio? How does it measure a company's liquidity?

Accepted Answer

The acid-test ratio is calculated by div...

Question 11

What are the differences between the periodic and the perpetual inventory systems?

Accepted Answer

Under a perpetual system each purchase, ...

Question 12

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A single-step income statement format in...

Question 15

On October 1, Robertson Company sold merchandise in the amount of $5,800 to Alberts, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robertson uses the periodic inventory system. On October 4, Alberts 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 Robertson must make on October 4 is:

Accepted Answer

A)    Sales returns and allowances 500 Accounts receivable 500 Merchandise inventory 350 Cost of goods sold 350\begin{array} { | c | c | c | } \hline 	ext { Sales returns and allowances } & 500 & \\hline 	ext { Accounts receivable } & & 500 \\hline 	ext { Merchandise inventory } & 350 & \\hline 	ext { Cost of goods sold } & & 350 \\hline\end{array} Sales returns and allowances  Accounts receivable  Merchandise inventory  Cost of goods sold ​500350​500350​​ 
B)    Sales returns and allowances 500 Accounts receivable 500\begin{array} { | c | r | r | } \hline 	ext { Sales returns and allowances } & 500 & \\hline 	ext { Accounts receivable } & & 500 \\hline\end{array} Sales returns and allowances  Accounts receivable ​500​500​​ 
C)    Accounts receivable 500 Sales returns and allowances 500\begin{array}{|c|c|c|}\hline 	ext { Accounts receivable } & 500 & \\hline 	ext { Sales returns and allowances } & & 500 \\hline\end{array} Accounts receivable  Sales returns and allowances ​500​500​​ 
D)    Accounts receivable 500 Sales returns and allowances 500 Cost of goods sold 350 Merchandise inventory 350\begin{array} { | l | r | r | } \hline 	ext { Accounts receivable } & 500 & \\hline 	ext { Sales returns and allowances } & & 500 \\hline 	ext { Cost of goods sold } & 350 & \\hline 	ext { Merchandise inventory } & & 350 \\hline\end{array} Accounts receivable  Sales returns and allowances  Cost of goods sold  Merchandise inventory ​500350​500350​​ 
E)    Sales returns and allowances 350 Accounts receivable 350\begin{array}{|c|c|c|}\hline 	ext { Sales returns and allowances } & 350 & \\hline 	ext { Accounts receivable } & & 350 \\hline\end{array} Sales returns and allowances  Accounts receivable ​350​350​​F) A) and C)
G) None of the above

Question 16

_______________________ are non-operating activities that include interest, dividend and rent revenues and gains from asset disposals.

Accepted Answer

Other reve...

Question 17

A company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is:

Accepted Answer

A)   $6,479.60
B)   $6,482.00
C)   $7,275.00
D)   $7,355.00
E)   $6,680.00F) A) and E)
G) D) and E)

Question 18

A trade discount is:

Accepted Answer

A)   A term used by a purchaser to describe a cash discount given to customers for prompt payment
B)   A reduction in price below the list price
C)   A term used by a seller to describe a cash discount granted to customers for prompt payment
D)   A reduction in price for prompt payment
E)   Also called a rebateF) All of the above
G) A) and D)

Question 19

Sales less sales discounts less sales returns and allowances equals:

Accepted Answer

A)   Net purchases
B)   Cost of goods sold
C)   Net sales
D)   Gross profit
E)   Net incomeF) D) and E)
G) A) and B)

Question 20

Harriet's Toy Shop had net sales of $852,000. The gross profit was $230,000. Calculate Harriet's cost of goods sold.

Accepted Answer

$852,000 -...

Exam 4: Accounting for Merchandising Operations

A company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is:

Correct Answer
verified

Correct Answer
verified

What are the differences between the periodic and the perpetual inventory systems?

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

A service company earns net income by buying and selling merchandise.

Correct Answer
verified

Harriet's Toy Shop had net sales of $852,000. The gross profit was $230,000. Calculate Harriet's cost of goods sold.

Correct Answer
verified
$852,000 -...
View Answer

Distinguish between selling expenses and general and administrative expenses.

Correct Answer
verified
Selling expenses include the expenses of...
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 company has sales of $2,530,000, sales discounts of $200,000, sales returns and allowances of $323,000, shipping charges of $115,000, sales commissions of $234,000, net income totaled $863,500, and cost of goods sold of $1,012,000. What is the gross profit/margin ratio?

Correct Answer
verified

A company had: net sales of $82,000; cost of goods sold of $70,000; and other expenses of $2,000. Its gross margin ratio equals:

Correct Answer
verified

Under the perpetual inventory system, the cost of merchandise purchased is accumulated in the Merchandise Inventory account.

Correct Answer
verified

Merchandise inventory:

Correct Answer
verified

The gross margin ratio is defined as gross margin divided by net sales.

Correct Answer
verified

A debit memorandum is:

Correct Answer
verified

Sales less sales discounts less sales returns and allowances equals:

Correct Answer
verified

A trade discount is:

Correct Answer
verified

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

Correct Answer
verified

_______________________ are non-operating activities that include interest, dividend and rent revenues and gains from asset disposals.

Correct Answer
verified
Other reve...
View Answer

Describe the difference between wholesalers and retailers.

Correct Answer
verified
A wholesaler is an intermediary that buy...
View Answer

What is the acid-test ratio? How does it measure a company's liquidity?

Correct Answer
verified
The acid-test ratio is calculated by div...
View Answer

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year.

Correct Answer
verified

Exam 4: Accounting for Merchandising Operations

A company purchased $7,500 worth of merchandise. Transportation costs were an additional $80. The company later returned $900 worth of merchandise and paid the invoice within the 3% cash discount period. The total amount paid for this merchandise is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What are the differences between the periodic and the perpetual inventory systems?

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

A service company earns net income by buying and selling merchandise.

Correct AnswerverifiedShow Answer

Harriet's Toy Shop had net sales of $852,000. The gross profit was $230,000. Calculate Harriet's cost of goods sold.

Correct Answerverified$852,000 -...View AnswerShow Answer

Distinguish between selling expenses and general and administrative expenses.

Correct AnswerverifiedSelling expenses include the expenses of...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 company has sales of $2,530,000, sales discounts of $200,000, sales returns and allowances of $323,000, shipping charges of $115,000, sales commissions of $234,000, net income totaled $863,500, and cost of goods sold of $1,012,000. What is the gross profit/margin ratio?

Correct AnswerverifiedShow Answer

A company had: net sales of $82,000; cost of goods sold of $70,000; and other expenses of $2,000. Its gross margin ratio equals:

Correct AnswerverifiedShow Answer

Under the perpetual inventory system, the cost of merchandise purchased is accumulated in the Merchandise Inventory account.

Correct AnswerverifiedShow Answer

Merchandise inventory:

Correct AnswerverifiedShow Answer

The gross margin ratio is defined as gross margin divided by net sales.

Correct AnswerverifiedShow Answer

A debit memorandum is:

Correct AnswerverifiedShow Answer

Sales less sales discounts less sales returns and allowances equals:

Correct AnswerverifiedShow Answer

A trade discount is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

_______________________ are non-operating activities that include interest, dividend and rent revenues and gains from asset disposals.

Correct AnswerverifiedOther reve...View AnswerShow Answer

Describe the difference between wholesalers and retailers.

Correct AnswerverifiedA wholesaler is an intermediary that buy...View AnswerShow Answer

What is the acid-test ratio? How does it measure a company's liquidity?

Correct AnswerverifiedThe acid-test ratio is calculated by div...View AnswerShow Answer

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
$852,000 -...
View Answer

Correct Answer
verified
Selling expenses include the expenses of...
View Answer

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

Correct Answer
verified
A wholesaler is an intermediary that buy...
View Answer

Correct Answer
verified
The acid-test ratio is calculated by div...
View Answer

Correct Answer
verified