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Exam 5: Accounting for Retail Businesses

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Question 71

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President's salaries, depreciation of office furniture, and office supplies are

A) selling expenses
B) miscellaneous expenses
C) administrative expenses
D) inventory expenses

E) None of the above
F) A) and B)

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Question 72

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Colma Company purchased merchandise on account from Bellville Company, $2,400, terms FOB destination. Analyze the transaction and determine its effect on the accounting equation.May 18 Inventory 2,400 Accounts Payable-Bellville Co.2,400

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Question 73

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The following entry was recorded in the books of Brighty Company.Oct. 31 Accounts Receivable-Digitec 12,000 Sales 12,000 Invoice No. 7112.​ What is the impact of this entry on the accounting equation?

A chart of accounts for a merchandising business

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows: Assume that Austin Maxwell pays his $400 receivable on January 3, taking the 2 percent discount to which he is entitled. Journalize the entry to record the transaction.

Net income plus operating expenses is equal to

In credit terms of 3/15, n/45, the "3" represents the

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

The following entry was recorded in the books of Brighty Company.Apr. 8 Accounts Payable-Marigold, Inc.3,000 Inventory 3,000 Debit Memo No. 25.What is the impact of this entry on the accounting equation?

In a multiple-step income statement, the dollar amount for income from operations is always the same as net income.

Details of a purchase invoice and related credit memo are summarized as follows: Invoice: Cost of merchandise listed on purchase invoice $6,500 Prepaid freight charge added to invoice 150 Terms, FOB shipping point, 1/10, n/eom Credit memo: Cost of merchandise returned $1,500 Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following: (a)Amount of the cash discount allowed.(b)Amount to be paid by the purchaser if the discount is taken.(c)Cost of the merchandise to the purchaser if the discount is not taken.

Using the following information for a periodic inventory system, what is the amount of gross profit?

Which of the following accounts usually has a debit balance?

Generally, the revenue account for a merchandising business is entitled

Argyle Corp. uses the gross method or recording sales discounts. Assume that Fitzgerald, Inc. made a $12,000 purchase with terms of 2/10, n/30. When it pays in the discount period, what is the correct journal entry?

Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Which of the following accounts will not be found in the Cost of Goods Sold section of the income statement for a company using the periodic inventory method?

The following expenses were incurred by a retail business during the year. Classify whether they should be reported on the income statement as a (1) selling expense, (2) administrative expense, or (3) other.​ (a) Advertising expense (b) Depreciation expense on office equipment (c) Rent expense on office building (d) Salary expense of sales manager (e) Commissions expense paid to sales staff (f) Interest expense on notes payable (g) Salary expense of office staff (h) Office supplies expense

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