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Describe the differences between FOB shipping point and FOB destination.

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If goods are shipped FOB shipping point,...

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Under the net method of recording purchases,the Discounts Lost account is used when the purchaser fails to take a discount offered by the seller.

A) True
B) False

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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 amount of the cash paid on July 28 equals:


A) $200.
B) $1,564.
C) $1,568.
D) $1,600.
E) $1,800.

F) D) and E)
G) B) and D)

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FOB shipping point means that the buyer accepts ownership when the goods arrive at the buyer's place of business.

A) True
B) False

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A company had net sales of $752,000 and cost of goods sold of $543,000.Its net income was $17,530.The company's gross margin ratio equals:


A) 18.9%
B) 24.5%
C) 27.8%
D) 34.7%
E) 35.2%

F) B) and D)
G) B) and E)

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Non-operating activities that include interest,dividends and rent revenues,and gains from asset disposals are called ________.

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other reve...

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A wholesaler buys products from manufacturers or other wholesalers and sells them to consumers.

A) True
B) False

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When a company has no reportable non-operating activities,its income from operations is reported as ________.

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Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.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 purchase on August 7 is:


A) Debit Merchandise Inventory $9,750; credit Cash $9,750.
B) Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
C) Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250.
D) Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.
E) Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750.

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

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Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases.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 26,it paid the full amount due.The amount of the cash paid on August 26 equals:


A) $8,167.50.
B) $9,652.50.
C) $9,750.00.
D) $8,250.00.
E) $8,152.50.

F) C) and D)
G) D) and E)

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A company reported the following information for the month of July: A company reported the following information for the month of July: Required: Calculate this company's gross margin ratio. Required: Calculate this company's gross margin ratio.

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Either the gross method or net method may be used to record sales with cash discounts,but the net method requires a period-end adjusting entry to estimate expected future sales discounts taken.

A) True
B) False

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A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:


A) $209,000 and $191,470.
B) $191,470 and $209,000.
C) $525,470 and $227,000.
D) $227,000 and $525,470.
E) $734,000 and $191,470.

F) B) and D)
G) C) and D)

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The acid-test ratio:


A) Is also called the quick ratio.
B) Measures profitability.
C) Measures inventory turnover.
D) Is generally greater than the current ratio.
E) Measures return on assets.

F) A) and B)
G) B) and D)

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Garza Company had sales of $135,000,sales discounts of $2,000,and sales returns of $3,200.Garza Company's net sales equals:


A) $5,200.
B) $129,800.
C) $133,000.
D) $135,000.
E) $140,200.

F) None of the above
G) A) and C)

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A buyer using a perpetual inventory system records the costs of shipping merchandise it purchases in a Delivery Expense account.

A) True
B) False

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A retailer buys products from manufacturers and sells them to wholesalers.

A) True
B) False

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The operating cycle for a merchandiser that sells only for cash moves from:


A) Purchases of merchandise to inventory to cash sales.
B) Purchases of merchandise to inventory to accounts receivable to cash sales.
C) Inventory to purchases of merchandise to cash sales.
D) Accounts receivable to purchases of merchandise to inventory to cash sales.
E) Accounts receivable to inventory to cash sales.

F) C) and D)
G) D) and E)

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In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) :


A) In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) : A) B) C) D) E)
B) In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) : A) B) C) D) E)
C) In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) : A) B) C) D) E)
D) In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) : A) B) C) D) E)
E) In its first year of business,Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000.Borden expects returns in the following year to equal 8% of sales.The adjusting entry or entries to record the expected sales returns is (are) : A) B) C) D) E)

F) B) and D)
G) C) and E)

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On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is:


A) On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is: A) B) C) D) E)
B) On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is: A) B) C) D) E)
C) On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is: A) B) C) D) E)
D) On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is: A) B) C) D) E)
E) On September 12,Ryan Company sold merchandise in the amount of $5,800 to Johnson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000. -Johnson uses the periodic inventory system and the net method of accounting for purchases.The journal entry that Johnson will make on September 12 is: A) B) C) D) E)

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

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