Question 1

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Accepted Answer

shipping p...

Question 2

What is the difference between the periodic and perpetual inventory systems?

Accepted Answer

A periodic inventory system updates the ...

Question 3

J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million, and net income of $837 million. Its gross margin ratio equals 3.4%.

Accepted Answer

A) True 
 B)False

Question 4

A company's current assets were $17,980, its quick assets were $11,420, and its current liabilities were $12,190. Its quick ratio equals:

Accepted Answer

A)   0.94
B)   1.07
C)   1.48
D)   1.57
E)   2.40F) C) and E)
G) A) and D)

Question 5

A period's ___________________ becomes the next period's beginning inventory.

Accepted Answer

The answer of A period's ___________________ becomes the next period's...

Question 6

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April:
  Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Accepted Answer

The answer of Steve's Skateboards uses the perpetual inventory system...

Question 7

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Accepted Answer

A) True 
 B)False

Question 8

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 9

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

Sales are recorded at list price less an...

Question 10

If a company sells merchandise with credit terms 2/10, n/60, the credit period is 10 days and the discount period is 60 days.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises:  The abbreviation for free on board; refers to the point when ownership of goods passes to the buyer.
 A ratio used to assess a company's ability to pay its current liabilities; defined as quick assets divided by current liabilities.
 Inventory losses that can occur as a result of theft or deterioration.
 The catalog price of an item before any trade discount is deducted.
 An income statement format that shows detailed computations of net sales and other costs and expenses and reports subtotals for various classes of items.
 An income statement format that shows only one subtotal for total expenses.
 The abbreviation for end-of-month; used to describe credit terms for some transactions.
 Products a company owns and intends to sell.
 The expenses of promoting sales by displaying and advertising merchandise, making sales and delivering goods to customers.
 Expenses that support overall operations and includes expenses related to accounting, human resource management and financial management.

Accepted Answer

The Answer of Acid-test ratio and Single-step income statement and is...

Question 12

Takita Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Takita's gross profit.

Accepted Answer

$500,000 -...

Question 13

Quick assets include cash, inventory, and current receivables.

Accepted Answer

A) True 
 B)False

Question 14

Total Company has current liabilities in the amount of $1,250,000 and an acid test ratio of 3 and a current ratio of 7. What amount of quick assets does Total Company have on the balance sheet?

Accepted Answer

A)   $8,750,000
B)   $ 416,667
C)   $3,750,000
D)   $1,250,000
E)   $2,500,000F) A) and C)
G) B) and D)

Question 15

Describe the difference between wholesalers and retailers.

Accepted Answer

A wholesaler is an intermediary that buy...

Question 16

A company had expenses other than cost of goods sold of $250,000. Determine sales and gross profit given cost of goods sold was $100,000 and net income was $150,000.

Accepted Answer

A)   Sales: $350,000; gross profit: $150,000
B)   Sales: $350,000; gross profit: $50,000
C)   Sales: $500,000; gross profit: $400,000
D)   Sales: $500,000; gross profit: $50,000
E)   Sales: $400,000; gross profit: $500,000F) C) and D)
G) None of the above

Question 17

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 perpetual 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 Merchardise Irventory 350 Cost of Goods Sold 350\begin{array} { | c | r | r | } \hline 	ext { Sales Returns and Allowances } & 500 & \\hline 	ext { Accounts Receivable } & & 500 \\hline 	ext { Merchardise Irventory } & 350 & \\hline 	ext { Cost of Goods Sold } & & 350 \\hline\end{array} Sales Returns and Allowances  Accounts Receivable  Merchardise Irventory  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 Allowarices 500\begin{array} { | c | r | r | } \hline 	ext { Accounts Receivable } & 500 & \\hline 	ext { Sales Returns and Allowarices } & & 500 \\hline\end{array} Accounts Receivable  Sales Returns and Allowarices ​500​500​​ 
D)     Accourts Receivable 500 Sales Returns ard Allowarnes 500 Cost of Goods Sold 350 Merchardise Irventory 350\begin{array} { | c | r | r | } \hline 	ext { Accourts Receivable } & 500 & \\hline 	ext { Sales Returns ard Allowarnes } & & 500 \\hline 	ext { Cost of Goods Sold } & 350 & \\hline 	ext { Merchardise Irventory } & & 350 \\hline\end{array} Accourts Receivable  Sales Returns ard Allowarnes  Cost of Goods Sold  Merchardise Irventory ​500350​500350​​ 
E)     Sales Returns ard Allowances 350 Accourts Receivable 350\begin{array} { | c | r | r | } \hline 	ext { Sales Returns ard Allowances } & 350 & \\hline 	ext { Accourts Receivable } & & 350 \\hline\end{array} Sales Returns ard Allowances  Accourts Receivable ​350​350​​F) None of the above
G) B) and E)

Question 18

Beginning inventory plus net cost of purchases is:

Accepted Answer

A)   Cost of goods sold.
B)   Merchandise available for sale.
C)   Ending inventory.
D)   Sales.
E)   Shown on the balance sheet.F) A) and B)
G) A) and C)

Question 19

Explain the cost flows and operating activities of a merchandising company.

Accepted Answer

Beginning inventory plus the net cost of...

Question 20

A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000.

Accepted Answer

A)   Sales: $136,000; gross profit: $111,000
B)   Sales: $136,000; gross profit: $85,000
C)   Sales: $85,000; gross profit: $136,000
D)   Sales: $111,000; gross profit: $136,000
E)   Sales: $60,000; gross profit: $25,000F) None of the above
G) C) and E)

Exam 4: Accounting for Merchandising Operations

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Correct Answer
verified
Sales are recorded at list price less an...
View Answer

Explain the cost flows and operating activities of a merchandising company.

Correct Answer
verified
Beginning inventory plus the net cost of...
View Answer

Quick assets include cash, inventory, and current receivables.

Correct Answer
verified

A company had expenses other than cost of goods sold of $250,000. Determine sales and gross profit given cost of goods sold was $100,000 and net income was $150,000.

Correct Answer
verified

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Correct Answer
verified
shipping p...
View Answer

Match the following definitions and terms

Total Company has current liabilities in the amount of $1,250,000 and an acid test ratio of 3 and a current ratio of 7. What amount of quick assets does Total Company have on the balance sheet?

Correct Answer
verified

Describe the difference between wholesalers and retailers.

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

A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000.

Correct Answer
verified

Correct Answer
verified

Takita Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Takita's gross profit.

Correct Answer
verified
$500,000 -...
View Answer

A company's current assets were $17,980, its quick assets were $11,420, and its current liabilities were $12,190. Its quick ratio equals:

Correct Answer
verified

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Correct Answer
verified

If a company sells merchandise with credit terms 2/10, n/60, the credit period is 10 days and the discount period is 60 days.

Correct Answer
verified

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Correct Answer
verified

Beginning inventory plus net cost of purchases is:

Correct Answer
verified

A period's ___________________ becomes the next period's beginning inventory.

Correct Answer
verified

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Correct Answer
verified

J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million, and net income of $837 million. Its gross margin ratio equals 3.4%.

Correct Answer
verified

What is the difference between the periodic and perpetual inventory systems?

Correct Answer
verified
A periodic inventory system updates the ...
View Answer

Exam 4: Accounting for Merchandising Operations

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Correct AnswerverifiedSales are recorded at list price less an...View AnswerShow Answer

Explain the cost flows and operating activities of a merchandising company.

Correct AnswerverifiedBeginning inventory plus the net cost of...View AnswerShow Answer

Quick assets include cash, inventory, and current receivables.

Correct AnswerverifiedShow Answer

A company had expenses other than cost of goods sold of $250,000. Determine sales and gross profit given cost of goods sold was $100,000 and net income was $150,000.

Correct AnswerverifiedShow Answer

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Correct Answerverifiedshipping p...View AnswerShow Answer

Match the following definitions and terms

Total Company has current liabilities in the amount of $1,250,000 and an acid test ratio of 3 and a current ratio of 7. What amount of quick assets does Total Company have on the balance sheet?

Correct AnswerverifiedShow Answer

Describe the difference between wholesalers and retailers.

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

A company had expenses other than cost of goods sold of $51,000. Determine sales and gross profit given cost of goods sold was $25,000 and net income was $60,000.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Takita Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Takita's gross profit.

Correct Answerverified$500,000 -...View AnswerShow Answer

A company's current assets were $17,980, its quick assets were $11,420, and its current liabilities were $12,190. Its quick ratio equals:

Correct AnswerverifiedShow Answer

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Correct AnswerverifiedShow Answer

If a company sells merchandise with credit terms 2/10, n/60, the credit period is 10 days and the discount period is 60 days.

Correct AnswerverifiedShow Answer

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Correct AnswerverifiedShow Answer

Beginning inventory plus net cost of purchases is:

Correct AnswerverifiedShow Answer

A period's ___________________ becomes the next period's beginning inventory.

Correct AnswerverifiedShow Answer

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

Correct AnswerverifiedShow Answer

J.C. Penney had net sales of $24,750 million, cost of goods sold of $16,150 million, and net income of $837 million. Its gross margin ratio equals 3.4%.

Correct AnswerverifiedShow Answer

What is the difference between the periodic and perpetual inventory systems?

Correct AnswerverifiedA periodic inventory system updates the ...View AnswerShow Answer

Correct Answer
verified
Sales are recorded at list price less an...
View Answer

Correct Answer
verified
Beginning inventory plus the net cost of...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
shipping p...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$500,000 -...
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
A periodic inventory system updates the ...
View Answer