Question 1

The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned.

Accepted Answer

A) True 
 B)False

Question 2

Financial information is presented below:  Gross profit would be

Accepted Answer

A)   $77,000.
B)   $64,000.
C)   $70,000.
D)   $83,000.E) A) and B)
F) A) and C)

Question 3

Income from operations appears on

Accepted Answer

A)   both a multiple-step and a single-step income statement.
B)   neither a multiple-step nor a single-step income statement.
C)   a single-step income statement.
D)   a multiple-step income statement.E) B) and C)
F) A) and C)

Question 4

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

Accepted Answer

The answer of Cost of goods sold is deducted from...

Question 5

When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the ________________ account and a credit to the ________________ account.

Accepted Answer

Sales Retu...

Question 6

The income statement for Guinn Company for the year ended December 31, 2010 is as follows:
Prepare the entries to close the revenue and expense accounts at December 31, 2010. You may omit explanations for the transactions.

Accepted Answer

The answer of The income statement for Guinn Company for...

Question 7

The gross profit rate is computed by dividing gross profit by

Accepted Answer

A)   cost of goods sold.
B)   net income.
C)   net sales.
D)   sales.E) C) and D)
F) B) and C)

Question 8

Which of the following is a true statement about inventory systems?

Accepted Answer

A)   Periodic inventory systems require more detailed inventory records.
B)   Perpetual inventory systems require more detailed inventory records.
C)   A periodic system requires cost of goods sold be determined after each sale.
D)   A perpetual system determines cost of goods sold only at the end of the accounting period.E) C) and D)
F) A) and D)

Question 9

Which of the following expressions is incorrect?

Accepted Answer

A)   Gross profit - operating expenses = net income
B)   Sales - cost of goods sold - operating expenses = net income
C)   Net income + operating expenses = gross profit
D)   Operating expenses - cost of goods sold = gross profitE) All of the above
F) A) and C)

Question 10

Two categories of expenses for merchandising companies are

Accepted Answer

A)   cost of goods sold and financing expenses.
B)   operating expenses and financing expenses.
C)   cost of goods sold and operating expenses.
D)   sales and cost of goods sold.E) B) and C)
F) All of the above

Question 11

On October 4, 2010, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a

Accepted Answer

A)   debit of $2,800 to Merchandise Inventory.
B)   credit of $2,800 to Sales.
C)   debit of $1,900 to Merchandise Inventory.
D)   credit of $1,900 to Cost of Goods Sold.E) B) and D)
F) A) and B)

Question 12

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Accepted Answer

contra rev...

Question 13

The Sales Returns and Allowances account does not provide information to management about

Accepted Answer

A)   possible inferior merchandise.
B)   the percentage of credit sales versus cash sales.
C)   inefficiencies in filling orders.
D)   errors in overbilling customers.E) B) and D)
F) All of the above

Question 14

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

Accepted Answer

A) True 
 B)False

Question 15

Financial information is presented below:
Operating Expenses $ 45,000
Sales 150,000
Cost of Goods Sold 77,000
The gross profit rate would be

Accepted Answer

A)   .700.
B)   .187.
C)   .300.
D)   .487.E) A) and B)
F) None of the above

Question 16

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A)   $280
B)   $392
C)   $360
D)   $320E) None of the above
F) C) and D)

Question 17

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point. The freight costs will be paid by the

Accepted Answer

A)   seller.
B)   buyer.
C)   transportation company.
D)   buyer and the seller.E) B) and C)
F) B) and D)

Question 18

Income from operations will always result if

Accepted Answer

A)   the cost of goods sold exceeds operating expenses.
B)   revenues exceed cost of goods sold.
C)   revenues exceed operating expenses.
D)   gross profit exceeds operating expenses.E) A) and B)
F) A) and C)

Question 19

A merchandising company has different types of adjusting entries than a service company.

Accepted Answer

A) True 
 B)False

Question 20

Company A sells $500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Accepted Answer

A)   $350
B)   $490
C)   $450
D)   $400E) C) and D)
F) A) and D)

Exam 5: Accounting for Merchandising Operations

Financial information is presented below: Operating Expenses $ 45,000 Sales 150,000 Cost of Goods Sold 77,000 The gross profit rate would be

Correct AnswerverifiedShow Answer

The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are earned.

Correct AnswerverifiedShow Answer

Gain on sale of equipment and interest expense are reported under other revenues and gains in a multiple-step income statement.

Correct AnswerverifiedShow Answer

Which of the following is a true statement about inventory systems?

Correct AnswerverifiedShow Answer

Two categories of expenses for merchandising companies are

Correct AnswerverifiedShow Answer

Hicks Company purchased merchandise from Beyer Company with freight terms of FOB shipping point. The freight costs will be paid by the

Correct AnswerverifiedShow Answer

Income from operations appears on

Correct AnswerverifiedShow Answer

A merchandising company has different types of adjusting entries than a service company.

Correct AnswerverifiedShow Answer

Company A sells $500 of merchandise on account to Company B with credit terms of 2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is the amount of Company B's check?

Correct AnswerverifiedShow Answer

On October 4, 2010, Terry Corporation had credit sales transactions of $2,800 from merchandise having cost $1,900. The entries to record the day's credit transactions include a

Correct AnswerverifiedShow Answer

Financial information is presented below: Gross profit would be

Correct AnswerverifiedShow Answer

Which of the following expressions is incorrect?

Correct AnswerverifiedShow Answer

Cost of goods sold is deducted from net sales revenue for the period in order to arrive at ________________.

Correct AnswerverifiedShow Answer

The Sales Returns and Allowances account does not provide information to management about

Correct AnswerverifiedShow Answer

The gross profit rate is computed by dividing gross profit by

Correct AnswerverifiedShow Answer

Sales Returns and Allowances and Sales Discounts are both ______________ accounts and have _______________ normal balances.

Correct Answerverifiedcontra rev...View AnswerShow Answer

Company X sells $400 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Correct AnswerverifiedShow Answer

When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the ________________ account and a credit to the ________________ account.

Correct AnswerverifiedSales Retu...View AnswerShow Answer

The income statement for Guinn Company for the year ended December 31, 2010 is as follows: Prepare the entries to close the revenue and expense accounts at December 31, 2010. You may omit explanations for the transactions.

Correct AnswerverifiedShow Answer

Income from operations will always result if

Correct AnswerverifiedShow Answer

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Sales Returns and Allowances and Sales Discounts are both accounts and have _ normal balances.

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contra rev...
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When a customer returns merchandise previously purchased on credit, the entry to record the return requires a debit to the account and a credit to the account.

Correct Answer
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Sales Retu...
View Answer

Correct Answer
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