Question 1

A credit sale of 1,600 is made on April 25 , terms  2/10,n/30 2 / 10, n / 30 2/10,n/30 , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Accepted Answer

A)    £1,470\begin{array}{ll}	ext {  } & £ 1,470 \\end{array} ​£1,470​ 
B)    £1,568\begin{array}{ll}	ext {  } & £ 1,568 \\end{array} ​£1,568​ 
C)    £1,600\begin{array}{ll}	ext { } & £ 1,600 \\end{array} ​£1,600​ 
D)    £1,500\begin{array}{ll}	ext {  } & £ 1,500\end{array} ​£1,500​

Question 2

Cost of goods sold is determined only at the end of the accounting period in

Accepted Answer

A)  a perpetual inventory system.
B)  a periodic inventory system.
C)  both a perpetual and a periodic inventory system.
D)  neither a perpetual nor a periodic inventory system.

Question 3

International Financial Reporting Standards allow different presentation formats for operating expenditures including by magnitude.

Accepted Answer

A) True 
 B)False

Question 4

A merchandising company using a perpetual system will make

Accepted Answer

A)  the same number of adjusting entries as a service company does.
B)  one more adjusting entry than a service company does.
C)  one less adjusting entry than a service company does.
D)  different types of adjusting entries compared to a service company.

Question 5

Two categories of expenses for merchandising companies are

Accepted Answer

A)  cost of goods sold and financing expenses.
B)  operating expenses and financing expenses.
C)  cost of goods sold and operating expenses.
D)  sales and cost of goods sold.

Question 6

Gross profit represents the merchandising profit of a company.

Accepted Answer

A) True 
 B)False

Question 7

Operating expenses are different for merchandising and service companies.

Accepted Answer

A) True 
 B)False

Question 8

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Financial information is presented below.
  Operating Expenses €90,000 Sales Returns and Allowances 26,000 Sales Discounts 12,000 Sales 320,000 Cost of Goods Sold 154,000\begin{array} { l r } 	ext { Operating Expenses } & € 90,000 \ 	ext { Sales Returns and Allowances } & 26,000 \ 	ext { Sales Discounts } & 12,000 \ 	ext { Sales } & 320,000 \ 	ext { Cost of Goods Sold } & 154,000 \end{array} Operating Expenses  Sales Returns and Allowances  Sales Discounts  Sales  Cost of Goods Sold ​€90,00026,00012,000320,000154,000​ 
The amount of net sales on the income statement would be

Accepted Answer

A)    €308,000€ 308,000€308,000 
B)    €282,000€ 282,000€282,000 .
C)    €320,000€ 320,000€320,000 .
D)    €332,000€ 332,000€332,000

Question 10

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Accepted Answer

A) True 
 B)False

Question 11

Merchandise inventory is classified as a current asset in a classified statement of financial position.

Accepted Answer

A) True 
 B)False

Question 12

Merchandise inventory is reported as a long-term asset on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 13

Accepted Answer

Touch Tronix, Inc. Sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2011, Touch Tronix, Inc. sold €680,000 of goods to Advanced Communications, Inc. on account for  €880,000 € 880,000 €880,000 . Terms of the sale were 2/10, net 30. Advanced Communications, Inc. paid  €13,000 € 13,000 €13,000  in freight charges. On December 13,2011, Advanced Communications, Inc. returned  5% 5 \% 5%  of the goods due to inferior quality. On December 18, 2011. Advanced Communications, Inc. paid the account in full. Advanced Communications, Inc. uses a perpetual inventory system. If Advanced Communications, Inc. has not yet sold any of the se goods, what is the ending balance in the inventory account after the payment is made? 
A)   €0
B)   €646,080.
C)   €832,280.
D)   €865,720.\begin{array}{ll}
A)  	ext { } & € 0 \
B)  	ext {  } & € 646,080 . \
C)  	ext { } & € 832,280 . \
D)  	ext {  } & € 865,720 .\end{array}
A)   
B)   
C)   
D)   ​€0€646,080.€832,280.€865,720.​

Question 14

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Accepted Answer

A)  Magnitude.
B)  Nature.
C)  Position.
D)  Classification.

Question 15

Maxwell Company's financial information is presented below.
  Sales €???? Cost of Goods Sold €360,000 Sales Returns and Allowances 40,000 Gross Profit ???? Net Sales 600,000\begin{array}{lrlr}	ext { Sales } & € ? ? ? ? & 	ext { Cost of Goods Sold } & € 360,000 \	ext { Sales Returns and Allowances } & 40,000 & 	ext { Gross Profit } & ? ? ? ? \	ext { Net Sales } & 600,000 & &\end{array} Sales  Sales Returns and Allowances  Net Sales ​€????40,000600,000​ Cost of Goods Sold  Gross Profit ​€360,000????​ 
The missing amounts above are: 
  Sales  Gross Profit \begin{array}{lll}&	ext { \quad Sales }&	ext { Gross Profit }\\end{array}​ Sales ​ Gross Profit ​

Accepted Answer

A)    €640,000€240,000\begin{array}{lll}	ext { } & € 640,000 & € 240,000 \\end{array} ​€640,000​€240,000​ 
B)    €560,000€240,000\begin{array}{lll}	ext {  } & € 560,000 & € 240,000 \\end{array} ​€560,000​€240,000​ 
C)    €640,000€280,000\begin{array}{lll}	ext {  } & € 640,000 & € 280,000 \\end{array} ​€640,000​€280,000​ 
D)    €560,000€280,000\begin{array}{lll}	ext {  } & € 560,000 & € 280,000\end{array} ​€560,000​€280,000​

Question 16

Gross profit rate is computed by dividing cost of goods sold by net sales.

Accepted Answer

A) True 
 B)False

Question 17

Financial information is presented below.
  Operating Expenses €90,000 Sales Returns and Allowances 26,000 Sales Discounts 12,000 Sales 320,000 Cost of Goods Sold 154,000\begin{array} { l r } 	ext { Operating Expenses } & € 90,000 \ 	ext { Sales Returns and Allowances } & 26,000 \ 	ext { Sales Discounts } & 12,000 \ 	ext { Sales } & 320,000 \ 	ext { Cost of Goods Sold } & 154,000 \end{array} Operating Expenses  Sales Returns and Allowances  Sales Discounts  Sales  Cost of Goods Sold ​€90,00026,00012,000320,000154,000​

The gross profit rate would be

Accepted Answer

A)  .454
B)  .546 .
C)   .500
D)  .538

Question 18

Income from operations will always result if

Accepted Answer

A)  the cost of goods sold exceeds operating expenses.
B)  revenues exceed cost of goods sold.
C)  revenues exceed operating expenses.
D)  gross profit exceeds operating expenses.

Question 19

The steps in the accounting cycle are different for a merchandising company than for a service company.

Accepted Answer

A) True 
 B)False

Question 20

When goods are returned that relate to a prior cash sale,

Accepted Answer

A)  the Sales Returns and Allowances account should not be used.
B)  the cash account will be credited.
C)  Sales Returns and Allowances will be credited.
D)  Accounts Receivable will be credited.

Exam 5: Accounting for Merchandising Operations

Operating expenses are different for merchandising and service companies.

Correct Answer
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Income from operations will always result if

Correct Answer
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Two categories of expenses for merchandising companies are

Correct Answer
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Gross profit rate is computed by dividing cost of goods sold by net sales.

Correct Answer
verified

International Financial Reporting Standards allow different presentation formats for operating expenditures including by magnitude.

Correct Answer
verified

When goods are returned that relate to a prior cash sale,

Correct Answer
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A merchandising company using a perpetual system will make

Correct Answer
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Correct Answer
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Cost of goods sold is determined only at the end of the accounting period in

Correct Answer
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Correct Answer
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Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

Correct Answer
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The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Correct Answer
verified

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Correct Answer
verified

The steps in the accounting cycle are different for a merchandising company than for a service company.

Correct Answer
verified

Correct Answer
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Merchandise inventory is reported as a long-term asset on the statement of financial position.

Correct Answer
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Gross profit represents the merchandising profit of a company.

Correct Answer
verified

A credit sale of 1,600 is made on April 25 , terms $2 / 10, n / 30$ , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Correct Answer
verified

Correct Answer
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Merchandise inventory is classified as a current asset in a classified statement of financial position.

Correct Answer
verified

Exam 5: Accounting for Merchandising Operations

Operating expenses are different for merchandising and service companies.

Correct AnswerverifiedShow Answer

Income from operations will always result if

Correct AnswerverifiedShow Answer

Two categories of expenses for merchandising companies are

Correct AnswerverifiedShow Answer

Gross profit rate is computed by dividing cost of goods sold by net sales.

Correct AnswerverifiedShow Answer

International Financial Reporting Standards allow different presentation formats for operating expenditures including by magnitude.

Correct AnswerverifiedShow Answer

When goods are returned that relate to a prior cash sale,

Correct AnswerverifiedShow Answer

A merchandising company using a perpetual system will make

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cost of goods sold is determined only at the end of the accounting period in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sales returns and allowances and sales discounts are subtracted from sales in reporting net sales in the income statement.

Correct AnswerverifiedShow Answer

The Sales Returns and Allowances account and the Sales Discount account are both classified as expense accounts.

Correct AnswerverifiedShow Answer

Operating expenses include salaries, utilities, advertising, and depreciation.International Financial Reporting Standards allow different presentation formats including by.

Correct AnswerverifiedShow Answer

The steps in the accounting cycle are different for a merchandising company than for a service company.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Merchandise inventory is reported as a long-term asset on the statement of financial position.

Correct AnswerverifiedShow Answer

Gross profit represents the merchandising profit of a company.

Correct AnswerverifiedShow Answer

A credit sale of 1,600 is made on April 25 , terms 2/10,n/30 2 / 10, n / 30 2/10,n/30 , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Merchandise inventory is classified as a current asset in a classified statement of financial position.

Correct AnswerverifiedShow Answer

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A credit sale of 1,600 is made on April 25 , terms $2 / 10, n / 30$ , on which a return of 100 is granted on April 28. What amount is received as payment in full on May 4 ?

Correct Answer
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