Question 1

Quick assets include cash and cash equivalents, inventory, and current receivables.

Accepted Answer

A) True 
 B)False

Question 2

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Accepted Answer

A) True 
 B)False

Question 3

Cost of Goods Sold is debited to close the account during the closing process.

Accepted Answer

A) True 
 B)False

Question 4

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the merchandise return on July 7 is:

Accepted Answer

A)  Debit Merchandise Inventory $1,600; credit Cash $1,600.
B)  Debit Merchandise Inventory $200; credit Accounts Payable $200.
C)  Debit Merchandise Inventory $200; credit Sales Returns $200.
D)  Debit Accounts Payable $200; credit Merchandise Inventory $200.
E)  Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.F) A) and E)
G) A) and B)

Question 5

Beginning inventory plus net purchases equals merchandise available for sale.

Accepted Answer

A) True 
 B)False

Question 6

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

Accepted Answer

A)  12.2%
B)  16.2%
C)  18.9%
D)  24.3%
E)  24.5%F) C) and E)
G) A) and B)

Question 7

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 8

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Accepted Answer

A) True 
 B)False

Question 9

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Accepted Answer

A)  Debit Merchandise Inventory $8,250; credit Cash $8,250.
B)  Debit Cash $8,250; credit Accounts Payable $8,250.
C)  Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50.
D)  Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50.
E)  Debit Accounts Payable $8,167.50; credit Cash $8,167.50.F) None of the above
G) C) and D)

Question 10

Cost of goods sold is also called cost of sales.

Accepted Answer

A) True 
 B)False

Question 11

Distinguish between selling expenses and general and administrative expenses.

Accepted Answer

Selling expenses include the expenses of...

Question 12

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

Accepted Answer

A)  0.50.
B)  0.68.
C)  0.74.
D)  1.50.
E)  2.20.F) A) and B)
G) A) and C)

Question 13

On March 12, Klein Company, Inc. sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system. Babson pays the invoice on March 17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:

Accepted Answer

A)    Cash 7,800 Accounts receivable 7,800\begin{array} { | l | r | r | } \hline 	ext { Cash } & 7,800 & \\hline 	ext { Accounts receivable } & & 7,800 \\hline\end{array} Cash  Accounts receivable ​7,800​7,800​​ 
B)    Cash 4,500 Accounts receivable 4,500\begin{array} { | l | r | r | } \hline 	ext { Cash } & 4,500 & \\hline 	ext { Accounts receivable } & & 4,500 \\hline \end{array} Cash  Accounts receivable ​4,500​4,500​​ 
C)    Cash 7,644 Sales discounts 156 Accounts receivable 7,800\begin{array} { | l | r | r | } \hline  	ext { Cash } & 7,644 & \\hline 	ext { Sales discounts } & 156 & \\hline 	ext { Accounts receivable } & & 7,800 \\hline\end{array} Cash  Sales discounts  Accounts receivable ​7,644156​7,800​​ 
D)    Cash 7,644 Accounts receivable 7,644\begin{array} { | l | r | r | } \hline 	ext { Cash } & 7,644 & \\hline 	ext { Accounts receivable } & & 7,644 \\hline\end{array} Cash  Accounts receivable ​7,644​7,644​​ 
E)    Cash 4,410 Sales discounts 90 Accounts receivable 4,500\begin{array} { | l | r | r | } \hline \hline 	ext { Cash } & 4,410 & \\hline 	ext { Sales discounts } & 90 & \\hline 	ext { Accounts receivable } & & 4,500 \\hline\end{array} Cash  Sales discounts  Accounts receivable ​4,41090​4,500​​F) All of the above
G) C) and D)

Question 14

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Accepted Answer

A) True 
 B)False

Question 15

Beginning inventory plus net purchases is:

Accepted Answer

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

Question 16

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following accounts would be closed at the end of the accounting period with a debit?

Accepted Answer

A)  Sales Discounts.
B)  Sales Returns and Allowances.
C)  Cost of Goods Sold.
D)  Operating Expenses.
E)  Sales.F) All of the above
G) C) and E)

Question 18

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Accepted Answer

A)  Merchandise Inventory
B)  Sales
C)  Sales Returns and Allowances
D)  Accounts Payable
E)  PurchasesF) A) and D)
G) A) and C)

Question 19

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Accepted Answer

A) True 
 B)False

Question 20

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Accepted Answer

A) True 
 B)False

Exam 4: Accounting for Merchandising Operations

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Correct Answer
verified

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

Correct Answer
verified

Correct Answer
verified

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Correct Answer
verified

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Correct Answer
verified

Beginning inventory plus net purchases is:

Correct Answer
verified

Distinguish between selling expenses and general and administrative expenses.

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

Cost of Goods Sold is debited to close the account during the closing process.

Correct Answer
verified

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Correct Answer
verified

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the merchandise return on July 7 is:

Correct Answer
verified

Cost of goods sold is also called cost of sales.

Correct Answer
verified

Quick assets include cash and cash equivalents, inventory, and current receivables.

Correct Answer
verified

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Correct Answer
verified

Beginning inventory plus net purchases equals merchandise available for sale.

Correct Answer
verified

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

Correct Answer
verified

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Correct Answer
verified

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Correct Answer
verified

Which of the following accounts would be closed at the end of the accounting period with a debit?

Correct Answer
verified

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Correct Answer
verified

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Correct Answer
verified

Exam 4: Accounting for Merchandising Operations

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Correct AnswerverifiedShow Answer

A buyer failed to take advantage of the vendor's credit terms of 2/15, n/45, but instead paid the invoice in full at the end of 60 days. By not taking advantage of the cash discount, the equivalent annual interest lost on the amount of the purchase is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sellers always offer a discount to buyers for prompt payment toward purchases made on credit.

Correct AnswerverifiedShow Answer

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items.

Correct AnswerverifiedShow Answer

Beginning inventory plus net purchases is:

Correct AnswerverifiedShow Answer

Distinguish between selling expenses and general and administrative expenses.

Correct AnswerverifiedSelling expenses include the expenses of...View AnswerShow Answer

Cost of Goods Sold is debited to close the account during the closing process.

Correct AnswerverifiedShow Answer

A periodic inventory system requires updating of the inventory account only at the beginning of an accounting period.

Correct AnswerverifiedShow Answer

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the merchandise return on July 7 is:

Correct AnswerverifiedShow Answer

Cost of goods sold is also called cost of sales.

Correct AnswerverifiedShow Answer

Quick assets include cash and cash equivalents, inventory, and current receivables.

Correct AnswerverifiedShow Answer

Credit terms for a purchase include the amounts and timing of payments from a buyer to a seller.

Correct AnswerverifiedShow Answer

Beginning inventory plus net purchases equals merchandise available for sale.

Correct AnswerverifiedShow Answer

KLM Corporation's quick assets are $5,888,000, its current assets are $11,700,000 and its current liabilities are $8,000,000. Its acid-test ratio equals:

Correct AnswerverifiedShow Answer

Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Correct AnswerverifiedShow Answer

Which of the following accounts is used in the periodic inventory system but not used in the perpetual inventory system?

Correct AnswerverifiedShow Answer

Which of the following accounts would be closed at the end of the accounting period with a debit?

Correct AnswerverifiedShow Answer

A merchandiser's classified balance sheet reports merchandise inventory as a current asset.

Correct AnswerverifiedShow Answer

A retailer is an intermediary that buys products from manufacturers and sells them to wholesalers.

Correct AnswerverifiedShow Answer

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Selling expenses include the expenses of...
View Answer

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