Question 1

A company had the following partial list of account balances at year-end:

Gales Returns and Allowarices Accourt Receivable  Bales Discouts Bales Reverue Bellirg ard Adrniristrative Expenses $5009,00070057,200300\begin{array}{c}\begin{array}{|l}  \hline	ext {Gales Returns and Allowarices  }\  \hline	ext {Accourt Receivable  }\ \hline 	ext {  Bales Discouts}\ \hline 	ext {  Bales Reverue}\ \hline 	ext { Bellirg ard Adrniristrative Expenses }\ \hline\end{array}\begin{array}{|r|} \hline\$500\ \hline9,000\ \hline700\ \hline57,200\ \hline300\ \hline\end{array}\end{array}Gales Returns and Allowarices Accourt Receivable  Bales Discouts Bales Reverue Bellirg ard Adrniristrative Expenses ​​$5009,00070057,200300​​​ 
 The amount of net sales reported on the income statement would be:

Accepted Answer

A)  $57,200.
B)  $64,200.
C)  $56,000.
D)  $55,700.  E) None of the above
F) A) and B)

Question 2

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Accepted Answer

A) True 
 B)False

Question 3

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Accepted Answer

A)  $1,500
B)  $1,960
C)  $1,470
D)  $1,970 E) A) and B)
F) A) and D)

Question 4

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Accepted Answer

A)  While PepsiCo generated more revenues than Coca-Cola,PepsiCo generated a lower gross profit percentage.
B)  Coca-Cola generated a lower gross profit percentage because their sales revenue was lower.
C)  PepsiCo did a better job of controlling product costs as a percentage of sales than did Coca-Cola as shown by their $13.0 billion gross profit.
D)  None of the answers are acceptable. E) All of the above
F) A) and D)

Question 5

Which of the following is not an advantage of perpetual inventory system?

Accepted Answer

A)  It helps reduce expenses and costs.
B)  It helps increase productivity of the economy.
C)  It is simple and less costly to maintain.
D)  It provides up to date information on inventory and cost of goods sold instantly.E) A) and B)
F) C) and D)

Question 6

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Accepted Answer

A)  receive a 15% discount if they pay within 2 days.
B)  receive a 2% discount if they pay 15% of the amount due within 30 days.
C)  receive a 15% discount if they pay within 30 days.
D)  receive a 2% discount if they pay within 15 days. E) A) and D)
F) A) and C)

Question 7

Which of the following is a true statement for a company using a perpetual inventory system?

Accepted Answer

A)  Sales discounts is a contra-account to revenue.
B)  Purchase discounts is a contra-account to revenue.
C)  Purchase discounts is a contra-account to accounts receivable
D)  Sales discounts is a contra-account to inventory.E) A) and B)
F) All of the above

Question 8

The cost of goods sold equation is:

Accepted Answer

A)  Beginning inventory + Purchases + Purchase discounts + Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold.
B)  Beginning inventory - Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold.
C)  Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances - Counted ending inventory = Cost of Goods Sold.
D)  Beginning inventory + Purchases - Purchase discounts - Purchase returns and allowances + Counted ending inventory = Cost of Goods Sold.E) B) and C)
F) B) and D)

Question 9

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

Accepted Answer

A)  Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected within the discount period.
B)  Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected within the discount period.
C)  Debit Cash,$3,000,and credit Accounts Receivable,$2,970,and Sales Discount,$30,if collected after the discount period.
D)  Debit Cash,$3,000,and credit Accounts Receivable,$3,000,if collected after the discount period. E) C) and D)
F) A) and D)

Question 10

A rising gross profit percentage indicates management's inability to control production and inventory costs.

Accepted Answer

A) True 
 B)False

Question 11

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

Accepted Answer

A) True 
 B)False

Question 12

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

Accepted Answer

A)  Business to Business (B2
B)  
B)  Business to consumers
C)  To retail customers
D)  To long and frequent customersE) A) and D)
F) C) and D)

Question 13

The company does a physical count and finds three items missing due to shrinkage.

Accepted Answer

A)  debited (Dr) 
B)  Bedited (Cr) 
C)  Ceither (N) D) A) and B)
E) All of the above

Question 14

Gross profit percentage can be used to

Accepted Answer

A)  analyze changes in the company's operations over time.
B)  compare one company to another.
C)  determine whether a company is earning enough on each sale to cover its operating expenses.
D)  All of the choices are correct.E) All of the above
F) A) and C)

Question 15

The receipt of cash is one of the operating activities of:

Accepted Answer

A)  companies that sell goods but not companies that sell services.
B)  companies that sell to consumers but not companies that sell to other companies.
C)  merchandising,manufacturing,and service companies.
D)  companies that sell goods they bought from others but not companies that make the goods they sell.E) None of the above
F) All of the above

Question 16

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

Accepted Answer

A) True 
 B)False

Question 17

In order to calculate shrinkage:

Accepted Answer

A)  both periodic and perpetual inventory systems are needed.
B)  a periodic inventory system is most effective.
C)  a perpetual inventory system requires an occasional count of actual inventory.
D)  it does not matter which system one uses.E) C) and D)
F) None of the above

Question 18

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Accepted Answer

A)  72%.
B)  3.57%.
C)  0.389%.
D)  28%. E) A) and B)
F) A) and C)

Question 19

OakHart,Inc.,the maker of widgets and whatnots,made merchandise costing $145,500 and sold it on credit to MapleHeart for $405,000 with terms 2/10,n/30.Some of the merchandise differed from what MapleHeart had ordered,so OakHart agreed to give an allowance of $10,000.MapleHeart satisfied the remaining balance by paying within the discount period.What is OakHart's gross profit percentage?

Accepted Answer

37.6%
Net Sales = 405,000 - 10...

Question 20

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Accepted Answer

A) True 
 B)False

Exam 6: Merchandising Operations and the Multi-Step Income Statement

The receipt of cash is one of the operating activities of:

Correct Answer
verified

A rising gross profit percentage indicates management's inability to control production and inventory costs.

Correct Answer
verified

The company does a physical count and finds three items missing due to shrinkage.

Correct Answer
verified

Correct Answer
verified

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

Correct Answer
verified

Which of the following is a true statement for a company using a perpetual inventory system?

Correct Answer
verified

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

Correct Answer
verified

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

Correct Answer
verified

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Correct Answer
verified

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Correct Answer
verified

Gross profit percentage can be used to

Correct Answer
verified

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Correct Answer
verified

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Correct Answer
verified

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

Correct Answer
verified

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Correct Answer
verified

The cost of goods sold equation is:

Correct Answer
verified

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Correct Answer
verified

Which of the following is not an advantage of perpetual inventory system?

Correct Answer
verified

In order to calculate shrinkage:

Correct Answer
verified

Correct Answer
verified
37.6%
Net Sales = 405,000 - 10...
View Answer

Exam 6: Merchandising Operations and the Multi-Step Income Statement

The receipt of cash is one of the operating activities of:

Correct AnswerverifiedShow Answer

A rising gross profit percentage indicates management's inability to control production and inventory costs.

Correct AnswerverifiedShow Answer

The company does a physical count and finds three items missing due to shrinkage.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Only companies that use a periodic inventory system need to perform a physical count of their inventory.

Correct AnswerverifiedShow Answer

Which of the following is a true statement for a company using a perpetual inventory system?

Correct AnswerverifiedShow Answer

Sales discounts where a company offers to give a discount on price if the customer pays earlier are usually given in following types of transactions:

Correct AnswerverifiedShow Answer

Merchandise was sold on credit for $3,000,terms 1/10,n/30.The correct entry to record the cash collection should be:

Correct AnswerverifiedShow Answer

Although gross profit percentages vary greatly across industries,they are fairly consistent across firms in the same industry.

Correct AnswerverifiedShow Answer

On July 1,a retailer purchases merchandise on account from a supplier for $2,000 terms 2/10,n/30.On July 5,the retailer returns merchandise purchased for $500 for a reduction in the amount owing.On July 8,the retailer pays their account.What is the amount of cash paid by the retailer?

Correct AnswerverifiedShow Answer

Gross profit percentage can be used to

Correct AnswerverifiedShow Answer

If the terms of an inventory purchase is FOB destination,ownership transfers to the buyer at the shipping point so the buyer pays for the transportation cost.

Correct AnswerverifiedShow Answer

A company has net sales of $612,850 and cost of goods sold of $441,252.The company's gross profit percentage is:

Correct AnswerverifiedShow Answer

A periodic inventory system does not require a physical count to determine inventory levels during the accounting period.

Correct AnswerverifiedShow Answer

When goods are sold to a customer with credit terms of 2/15,n/30,the customer will:

Correct AnswerverifiedShow Answer

The cost of goods sold equation is:

Correct AnswerverifiedShow Answer

Coca-Cola reported net sales revenues of $18.8 billion and cost of goods sold of $5.6 billion while PepsiCo reported revenues of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of perpetual inventory system?

Correct AnswerverifiedShow Answer

In order to calculate shrinkage:

Correct AnswerverifiedShow Answer

Correct Answerverified37.6%Net Sales = 405,000 - 10...View AnswerShow 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

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

Correct Answer
verified

Correct Answer
verified
37.6%
Net Sales = 405,000 - 10...
View Answer