Question 1

The Sales Returns and Allowances account is classified as a(n)

Accepted Answer

A)   asset account.
B)   contra asset account.
C)   expense account.
D)   contra revenue account.E) B) and C)
F) None of the above

Question 2

When goods are returned that relate to a prior cash sale,

Accepted Answer

A)   the Sales Returns and Allowances account should not be used.
B)   the cash account will be credited.
C)   Sales Returns and Allowances will be credited.
D)   Accounts Receivable will be credited.E) A) and B)
F) A) and C)

Question 3

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 4

The operating cycle of a merchandiser is

Accepted Answer

A)   always one year in length.
B)   generally longer than it is for a service company.
C)   about the same as for a service company.
D)   generally shorter than it is for a service company.E) A) and D)
F) A) and B)

Question 5

Gross profit does not appear

Accepted Answer

A)   on a multiple-step income statement.
B)   on a single-step income statement.
C)   to be relevant in analyzing the operation of a merchandiser.
D)   on the income statement if the periodic inventory system is used because it cannot be calculated.E) A) and B)
F) All of the above

Question 6

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

Accepted Answer

A)   $24,000.
B)   $27,000.
C)   $45,000.
D)   $90,000.E) A) and B)
F) C) and D)

Question 7

The number of years of income statement information to be presented is

Accepted Answer

A)   2 years under both GAAP and IFRS.
B)   3 years under both GAAP and IFRS.
C)   2 years under GAAP and 3 years under IFRS.
D)   3 years under GAAP and 2 years under IFRS.E) A) and B)
F) A) and C)

Question 8

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A)   the customer must pay the bill within 10 days.
B)   the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date.
C)   the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.
D)   two sales returns can be made within 10 days of the invoice date and no returns thereafter.E) A) and B)
F) B) and D)

Question 9

Financial information is presented below:   Operating Expenses $60,000 Sales Revenue 225,000 Cost of Goods Sold 135,000\begin{array} { l r } 	ext { Operating Expenses } & \$ 60,000 \	ext { Sales Revenue } & 225,000 \	ext { Cost of Goods Sold } & 135,000\end{array} Operating Expenses  Sales Revenue  Cost of Goods Sold ​$60,000225,000135,000​  Gross profit would be

Accepted Answer

A)   $30,000.
B)   $90,000.
C)   $165,000.
D)   $225,000. E) A) and C)
F) B) and D)

Question 10

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Accepted Answer

A)   $3,675
B)   $3,750
C)   $3,920 d $4,000D) A) and B)
E) None of the above

Question 11

Inventory is classified as a current asset in a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

The Inventory account is used in each of the following except the entry to record

Accepted Answer

A)   goods purchased on account.
B)   the return of goods purchased.
C)   payment of freight on goods sold.
D)   payment within the discount period.E) A) and C)
F) A) and D)

Question 13

Financial information is presented below:   Operating Expenses $90,000 Sales Returns and Allowances 18,000 Sales Discounts 12,000 Sales Revenue 320,000 Cost of Goods Sold 174,000\begin{array} { l r } 	ext { Operating Expenses } & \$ 90,000 \	ext { Sales Returns and Allowances } & 18,000 \	ext { Sales Discounts } & 12,000 \	ext { Sales Revenue } & 320,000 \	ext { Cost of Goods Sold } & 174,000\end{array} Operating Expenses  Sales Returns and Allowances  Sales Discounts  Sales Revenue  Cost of Goods Sold ​$90,00018,00012,000320,000174,000​  The gross profit rate would be

Accepted Answer

A)   .363.
B)   .400.
C)   .456.
D)   .503. E) All of the above
F) A) and C)

Question 14

Net purchases plus freight-in determines

Accepted Answer

A)   cost of goods sold.
B)   cost of goods available for sale.
C)   cost of goods purchased.
D)   total goods available for sale.E) B) and D)
F) B) and C)

Question 15

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Accepted Answer

A) True 
 B)False

Question 16

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Accepted Answer

A)   $475,000.
B)   $500,000.
C)   $525,000.
D)   Unable to determine.E) None of the above
F) B) and D)

Question 17

Paden Company purchased merchandise from Emmett 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) C) and D)
F) A) and C)

Question 18

A Sales Returns and Allowances account is not debited if a customer

Accepted Answer

A)   returns defective merchandise.
B)   receives a credit for merchandise of inferior quality.
C)   utilizes a prompt payment incentive.
D)   returns goods that are not in accordance with specifications.E) A) and B)
F) B) and C)

Question 19

On a classified balance sheet, inventory is classified as

Accepted Answer

A)   an intangible asset.
B)   property, plant, and equipment.
C)   a current asset.
D)   a long-term investment.E) B) and C)
F) A) and C)

Question 20

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's income from operations is

Accepted Answer

A)   $18,000.
B)   $27,000.
C)   $45,000.
D)   $90,000.E) C) and D)
F) B) and D)

Exam 5: Accounting for Merchandising Operations

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Correct Answer
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Correct Answer
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Paden Company purchased merchandise from Emmett Company with freight terms of FOB shipping point. The freight costs will be paid by the

Correct Answer
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Net purchases plus freight-in determines

Correct Answer
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During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Correct Answer
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During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

Correct Answer
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If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Correct Answer
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The operating cycle of a merchandiser is

Correct Answer
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On a classified balance sheet, inventory is classified as

Correct Answer
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The number of years of income statement information to be presented is

Correct Answer
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Gross profit does not appear

Correct Answer
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A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Correct Answer
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The Sales Returns and Allowances account is classified as a(n)

Correct Answer
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When goods are returned that relate to a prior cash sale,

Correct Answer
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The Inventory account is used in each of the following except the entry to record

Correct Answer
verified

Inventory is classified as a current asset in a classified balance sheet.

Correct Answer
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A Sales Returns and Allowances account is not debited if a customer

Correct Answer
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During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's income from operations is

Correct Answer
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Financial information is presented below: $\begin{array} { l r } \text { Operating Expenses } & \$ 60,000 \\\text { Sales Revenue } & 225,000 \\\text { Cost of Goods Sold } & 135,000\end{array}$ Gross profit would be

Correct Answer
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The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Correct Answer
verified

Exam 5: Accounting for Merchandising Operations

Freight-in is an account that is subtracted from the Purchases account to arrive at cost of goods purchased.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Net purchases plus freight-in determines

Correct AnswerverifiedShow Answer

During the year, Slick's Pet Shop's inventory decreased by $25,000. If the company's cost of goods sold for the year was $500,000, purchases must have been

Correct AnswerverifiedShow Answer

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

Correct AnswerverifiedShow Answer

If net sales are $800,000 and cost of goods sold is $600,000, the gross profit rate is 25%.

Correct AnswerverifiedShow Answer

The operating cycle of a merchandiser is

Correct AnswerverifiedShow Answer

On a classified balance sheet, inventory is classified as

Correct AnswerverifiedShow Answer

The number of years of income statement information to be presented is

Correct AnswerverifiedShow Answer

Gross profit does not appear

Correct AnswerverifiedShow Answer

A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Correct AnswerverifiedShow Answer

The Sales Returns and Allowances account is classified as a(n)

Correct AnswerverifiedShow Answer

When goods are returned that relate to a prior cash sale,

Correct AnswerverifiedShow Answer

The Inventory account is used in each of the following except the entry to record

Correct AnswerverifiedShow Answer

Inventory is classified as a current asset in a classified balance sheet.

Correct AnswerverifiedShow Answer

A Sales Returns and Allowances account is not debited if a customer

Correct AnswerverifiedShow Answer

During 2015, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's income from operations is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Correct AnswerverifiedShow Answer

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