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A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

A) True
B) False

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Fill in the blanks (a)through (g)for the Corman Company for each of the income statements for years 1 and 2 Fill in the blanks (a)through (g)for the Corman Company for each of the income statements for years 1 and 2

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blured image (a)Merchandise inventory,beginning + pu...

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When a company has no reportable non-operating activities,its income from operations is simply labeled net income.

A) True
B) False

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Explain the way in which costs flow through the merchandise inventory account to a merchandiser's income statement.

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Beginning inventory plus the net cost of...

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The net method records the invoice at its net amount (net of any cash discount).

A) True
B) False

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What is the acid-test ratio? How does it measure a company's liquidity?

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The acid-test ratio is a measure of a me...

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Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is:


A) Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is: A) B) C) D) E)
B) Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is: A) B) C) D) E)
C) Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is: A) B) C) D) E)
D) Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is: A) B) C) D) E)
E) Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is: A) B) C) D) E)

F) A) and C)
G) A) and B)

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Describe the difference(s)between the periodic and the perpetual inventory accounting systems.

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Under a perpetual system each purchase,p...

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The following information is for Barrel and its competitor Crate. The following information is for Barrel and its competitor Crate. Required: 1.Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent,for each company for both years. 2.Which company had the more favorable ratio for each year? 3.Which company had the more favorable change in the gross margin ratio over this 2-year period? Required: 1.Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent,for each company for both years. 2.Which company had the more favorable ratio for each year? 3.Which company had the more favorable change in the gross margin ratio over this 2-year period?

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blured image 2.Barrel had the more favorab...

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Serene Spa Sales uses the perpetual inventory system and the gross method of accounting for purchases and sales,and had the following transactions during August. Serene Spa Sales uses the perpetual inventory system and the gross method of accounting for purchases and sales,and had the following transactions during August. Required: Prepare the general journal entries to record these transactions. Required: Prepare the general journal entries to record these transactions.

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Harley's Antique Shop had net sales of $772,000.The gross profit was $415,000.Calculate Harley's cost of goods sold.

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Cost of Goods Sold =...

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The perpetual system requires that each sale of merchandise has two entries: the revenue side and the cost side.

A) True
B) False

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Match the following appropriate definition with the correct term.

Premises
The amount of time allowed before full payment is due.
The loss of inventory from theft and deterioration.
The time period in which reduced payment can be made by the buyer because of a cash discount offered by a seller of goods on credit.
Price reduction granted by the seller to a buyer of defective or unacceptable merchandise.
The description of the amounts and timing of payments from a buyer to a seller for a purchase.
The calculation of net sales minus cost of goods sold.
A cash discount granted from the view of the seller, indicated in the credit terms on the invoice.
An inventory accounting method that updates accounting records for each purchase and each sale of inventory.
An inventory accounting method that updates the accounting records for purchases and sales of inventory only at the end of a period.
A cash discount granted, from the view of the purchaser intended to encourage buyers to pay amounts owed earlier.
Responses
Purchases discounts
Discount period
Credit terms
Credit period
Gross profit
Periodic inventory system
Shrinkage
Purchase allowance
Sales discount
Perpetual inventory system

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The amount of time allowed before full payment is due.
The loss of inventory from theft and deterioration.
The time period in which reduced payment can be made by the buyer because of a cash discount offered by a seller of goods on credit.
Price reduction granted by the seller to a buyer of defective or unacceptable merchandise.
The description of the amounts and timing of payments from a buyer to a seller for a purchase.
The calculation of net sales minus cost of goods sold.
A cash discount granted from the view of the seller, indicated in the credit terms on the invoice.
An inventory accounting method that updates accounting records for each purchase and each sale of inventory.
An inventory accounting method that updates the accounting records for purchases and sales of inventory only at the end of a period.
A cash discount granted, from the view of the purchaser intended to encourage buyers to pay amounts owed earlier.

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

A) True
B) False

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Following is the year-end adjusted trial balance for Fred's Corner Grocery for the current year: Following is the year-end adjusted trial balance for Fred's Corner Grocery for the current year: Prepare the closing entries at December 31 for the current year.Prepare the closing entries at December 31 for the current year.

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Purchase allowances refer to a price reduction (allowance)granted to a buyer of defective or unacceptable merchandise.

A) True
B) False

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Reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price is referred to as________.

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A company purchases merchandise with a catalog price of $20,000.The company receives a 35% trade discount from the seller.The seller also offers credit terms of 2/10,n/30.Assuming no returns were made and that payment was made within the discount period,what is the net cost of the merchandise?


A) $13,720.
B) $19,600.
C) $6,860.
D) $13,000.
E) $12,740.

F) A) and E)
G) B) and C)

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The adjusting entry to reflect inventory shrinkage is a debit to Income Summary and a credit to Inventory Shrinkage Expense.

A) True
B) False

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


A) 0.94.
B) 1.07.
C) 1.48.
D) 1.57.
E) 2.40.

F) All of the above
G) A) and D)

Correct Answer

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