Question 1

Under a perpetual inventory system

Accepted Answer

A)   accounting records continuously disclose the amount of inventory
B)   increases in inventory resulting from purchases are debited to Purchases
C)   there is no need for a year-end physical count
D)   the purchase returns and allowances account is credited when goods are returned to vendorsE) B) and C)
F) A) and B)

Question 2

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

Accepted Answer

A) True 
 B)False

Question 3

The term "inventory" can indicate

Accepted Answer

A)   merchandise held for sale in the normal course of business
B)   equipment used to manufacture products
C)   supplies
D)   any assetE) A) and D)
F) All of the above

Question 4

What is the major difference between a periodic and perpetual inventory system?

Accepted Answer

A)   Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account
B)   Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
C)   Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
D)   All are correct.E) None of the above
F) All of the above

Question 5

Which of the following items would affect the cost of merchandise inventory acquired during the period?

Accepted Answer

A)   quantity discounts
B)   cash discounts
C)   freight-in
D)   all of these costsE) A) and D)
F) B) and D)

Question 6

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

Accepted Answer

A)   $5,200
B)   $5,096
C)   $4,704
D)   $4,900E) A) and D)
F) B) and C)

Question 7

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Accepted Answer

A) True 
 B)False

Question 8

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Accepted Answer

A)   debit to Cost of Merchandise Sold
B)   credit to Accounts Payable
C)   credit to Merchandise Inventory
D)   credit to SalesE) None of the above
F) A) and B)

Question 9

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Accepted Answer

A)   sales invoice
B)   purchase invoice
C)   credit memo
D)   debit memoE) A) and B)
F) A) and C)

Question 10

When the perpetual inventory system is used, the inventory sold is debited to

Accepted Answer

A)   supplies expense
B)   cost of merchandise sold
C)   merchandise inventory
D)   salesE) B) and C)
F) A) and D)

Question 11

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Accepted Answer

A)   debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales
B)   debit to Cash and a credit to Sales
C)   debit to Cash, credit to Credit Card Expense, and a credit to Sales
D)   debit to Sales, debit to Credit Card Expense, and a credit to CashE) B) and C)
F) A) and D)

Question 12

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Accepted Answer

A)   sales on account
B)   sales returns
C)   cash sales
D)   sales when the credit card company remits the cashE) A) and B)
F) All of the above

Question 13

Journalize the following transactions:
  Journal

Accepted Answer

The answer of Journalize the following transactions:
  Journal
 ...

Question 14

Which of the following accounts would be included in the chart of accounts of a merchandising company using the: (a) periodic inventory system, (b) perpetual inventory system, or (c) both systems?
(1) Purchases
(2) Freight in
(3) Sales Returns and Allowances
(4) Delivery Expense
(5) Purchases Returns and Allowances

Accepted Answer

(1) a (2) ...

Question 15

Gross profit is equal to:

Accepted Answer

A)   sales plus (sales discounts and sales returns and allowances)  plus cost of merchandise sold
B)   sales plus sales returns and allowances less sales discounts less cost of merchandise sold
C)   sales plus sales discounts less sales returns and allowances less cost of merchandise sold
D)   sales less (sales discounts and sales returns and allowances)  less cost of merchandise soldE) A) and B)
F) None of the above

Question 16

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

Accepted Answer

A) True 
 B)False

Question 17

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Accepted Answer

A)   Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000
B)   Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Accounts Receivable-Madison, debit $300; Cash, credit $300
C)   Accounts Receivable-Madison, debit $20,500; Sales, credit $20,500
D)   Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and Freight Out, debit $300; Cash, credit $300E) A) and B)
F) A) and C)

Question 18

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system.
(a) Journalize the sale event.
(b) Journal the cost of merchandise sold.

Accepted Answer

(a) Mar. 3 Cash 3,450.00
Sales...

Question 19

Sellers and buyers are required to record trade discounts.

Accepted Answer

A) True 
 B)False

Question 20

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s)  to record this transaction would be

Accepted Answer

A)   Cash 7,200 Merchandise Inventory 7,200Cost of Merchandise Sold 3,950Sales 3,950
B)   Cash 7,200 Sales 7,200Cost of Merchandise Sold 3,950Merchandise Inventory 3,950
C)   Cash 7,200 Sales 7,200Cost of Merchandise Sold 7,200Merchandise Inventory 7,200
D)   Cash 3,950 Sales 3,950Cost of Merchandise Sold 3,950Merchandise Inventory 3,950E) All of the above
F) B) and D)

Exam 5: Accounting for Merchandising Businesses

Sellers and buyers are required to record trade discounts.

Correct Answer
verified

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

Correct Answer
verified

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

Correct Answer
verified

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Correct Answer
verified

Correct Answer
verified
(1) a (2) ...
View Answer

Which of the following items would affect the cost of merchandise inventory acquired during the period?

Correct Answer
verified

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Correct Answer
verified

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

Correct Answer
verified

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Correct Answer
verified

The term "inventory" can indicate

Correct Answer
verified

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Correct Answer
verified

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Correct Answer
verified

Gross profit is equal to:

Correct Answer
verified

When the perpetual inventory system is used, the inventory sold is debited to

Correct Answer
verified

What is the major difference between a periodic and perpetual inventory system?

Correct Answer
verified

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system. (a) Journalize the sale event. (b) Journal the cost of merchandise sold.

Correct Answer
verified
(a) Mar. 3 Cash 3,450.00
Sales...
View Answer

Journalize the following transactions: Journal

Correct Answer
verified

Under a perpetual inventory system

Correct Answer
verified

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Correct Answer
verified

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be

Correct Answer
verified

Exam 5: Accounting for Merchandising Businesses

Sellers and buyers are required to record trade discounts.

Correct AnswerverifiedShow Answer

Freight in is the amount paid by the company to deliver merchandise sold to a customer.

Correct AnswerverifiedShow Answer

Merchandise with an invoice price of $5,000 is purchased on September 2 subject to terms of 2/10, n/30, FOB destination. Freight costs paid by the seller totaled $200. What is the cost of the merchandise if paid on September 12, assuming the discount is taken?

Correct AnswerverifiedShow Answer

Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

Correct AnswerverifiedShow Answer

Correct Answerverified(1) a (2) ...View AnswerShow Answer

Which of the following items would affect the cost of merchandise inventory acquired during the period?

Correct AnswerverifiedShow Answer

Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made.

Correct AnswerverifiedShow Answer

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are readily available.

Correct AnswerverifiedShow Answer

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

Correct AnswerverifiedShow Answer

The term "inventory" can indicate

Correct AnswerverifiedShow Answer

If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a

Correct AnswerverifiedShow Answer

Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?

Correct AnswerverifiedShow Answer

Gross profit is equal to:

Correct AnswerverifiedShow Answer

When the perpetual inventory system is used, the inventory sold is debited to

Correct AnswerverifiedShow Answer

What is the major difference between a periodic and perpetual inventory system?

Correct AnswerverifiedShow Answer

On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00. Blowout uses a perpetual inventory system. (a) Journalize the sale event. (b) Journal the cost of merchandise sold.

Correct Answerverified(a) Mar. 3 Cash 3,450.00Sales...View AnswerShow Answer

Journalize the following transactions: Journal

Correct AnswerverifiedShow Answer

Under a perpetual inventory system

Correct AnswerverifiedShow Answer

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Correct AnswerverifiedShow Answer

The Corbit Corp. sold merchandise for cash, $7,200. The cost of the merchandise sold was $3,950. The journal entry(s) to record this transaction would be

Correct AnswerverifiedShow Answer

Correct Answer
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(1) a (2) ...
View Answer

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(a) Mar. 3 Cash 3,450.00
Sales...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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