Question 1

A company uses the perpetual inventory system and recorded the following entry This entry reflects a:

Accepted Answer

A)   Purchase of merchandise on credit.
B)   Return of merchandise.
C)   Sale of merchandise on credit.
D)   Payment of the account payable and recognition of a 2% cash discount taken.
E)   Payment of the account payable and recognition of a 1% cash discount taken.F) A) and D)
G) C) and D) D

Question 2

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

Accepted Answer

The answer of Neutron uses a periodic inventory system. Prepare...

Question 3

Gross profit is also called gross margin.

Accepted Answer

A) True 
 B)False

Question 4

In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 5

The following information is for Trico and its competitor Unico.
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?

Accepted Answer

1.
2. Trico had the more favorable ratio for each year.
3. Unico's gross margin ratio is increasing, while Trico's is decreasing. Moreover, these changes appear significant and warrant further analysis.
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Question 6

A merchandising company:

Accepted Answer

A)   Earns net income by buying and selling merchandise.
B)   Receives fees only in exchange for services.
C)   Earns profit from commissions only.
D)   Earns profit from fares only.
E)   Buys products from consumers.F) A) and E)
G) D) and E)

Question 7

The acid-test ratio:

Accepted Answer

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

Question 8

The quick assets are defined as:

Accepted Answer

A)   Cash, short-term investments, and inventory.
B)   Cash, short-term investments, and current receivables.
C)   Cash, inventory, and current receivables.
D)   Cash, noncurrent receivables, and prepaid expenses.
E)   Accounts receivable, inventory, and prepaid expenses.F) A) and E)
G) A) and C)

Question 9

Merchandise inventory consists of products that a company acquires to resell to customers.

Accepted Answer

A) True 
 B)False

Question 10

The following statements are regarding the operating cycle of a merchandising company except:

Accepted Answer

A)   The operating cycle begins with the purchase of merchandise.
B)   The operating cycle is shortened by credit sales.
C)   The operating cycle ends with the collection of cash from the sale of merchandise.
D)   The operating cycle can vary in length among different merchandising companies.
E)   The operating cycle sometimes involves accounts receivable.F) B) and D)
G) B) and E)

Question 11

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

Sales are recorded at list price less an...

Question 12

The credit terms 2/10, n/30 are interpreted as:

Accepted Answer

A)   2% cash discount if the amount is paid within 10 days, or the balance due in 30 days.
B)   10% cash discount if the amount is paid within 2 days, or the balance due in 30 days.
C)   30% discount if paid within 2 days.
D)   30% discount if paid within 10 days.
E)   2% discount if paid within 30 days.F) A) and B)
G) C) and D)

Question 13

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Accepted Answer

A) True 
 B)False

Question 14

The year-end adjusted trial balance of ABC Supply for the current year, is shown below:
Prepare Closing entries at December 31 for the current year.

Accepted Answer

The answer of The year-end adjusted trial balance of ABC...

Question 15

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Selling expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

Accepted Answer

A) True 
 B)False

Question 17

From the adjusted trial balance for Worker Products Company given below, prepare the necessary closing entries.

Accepted Answer

The answer of From the adjusted trial balance for Worker...

Question 18

A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000.

Accepted Answer

A) True 
 B)False

Question 19

________________________ refers to products that a company owns and intends to sell.

Accepted Answer

Merchandis...

Question 20

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:

Accepted Answer

The answer of Following is the year-end adjusted trial balance...

Exam 5: Accounting for Merchandising Operations

A company uses the perpetual inventory system and recorded the following entry This entry reflects a:

Correct Answer
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D

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

Correct Answer
verified

Gross profit is also called gross margin.

Correct Answer
verified

In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period.

Correct Answer
verified

Correct Answer
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1. 2. Trico had the more favorable ratio for each year. 3. Unico's gross margin ratio is increasing, while Trico's is decreasing. Moreover, these changes appear significant and warrant further analysis. 11eaaaf8_6e34_6464_812b_2f204058469c_TB6309_00 C:\U

A merchandising company:

Correct Answer
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The acid-test ratio:

Correct Answer
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A

The quick assets are defined as:

Correct Answer
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Merchandise inventory consists of products that a company acquires to resell to customers.

Correct Answer
verified

The following statements are regarding the operating cycle of a merchandising company except:

Correct Answer
verified

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Correct Answer
verified
Sales are recorded at list price less an...
View Answer

The credit terms 2/10, n/30 are interpreted as:

Correct Answer
verified

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Correct Answer
verified

The year-end adjusted trial balance of ABC Supply for the current year, is shown below: Prepare Closing entries at December 31 for the current year.

Correct Answer
verified

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Correct Answer
verified

Selling expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

Correct Answer
verified

From the adjusted trial balance for Worker Products Company given below, prepare the necessary closing entries.

Correct Answer
verified

A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000.

Correct Answer
verified

________________________ refers to products that a company owns and intends to sell.

Correct Answer
verified
Merchandis...
View Answer

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:

Correct Answer
verified

Exam 5: Accounting for Merchandising Operations

A company uses the perpetual inventory system and recorded the following entry This entry reflects a:

Correct AnswerverifiedD

Neutron uses a periodic inventory system. Prepare general journal entries to record the following transactions for Neutron:

Correct AnswerverifiedShow Answer

Gross profit is also called gross margin.

Correct AnswerverifiedShow Answer

In a perpetual inventory system, the merchandise inventory account must be closed at the end of the accounting period.

Correct AnswerverifiedShow Answer

Correct Answerverified1. 2. Trico had the more favorable ratio for each year. 3. Unico's gross margin ratio is increasing, while Trico's is decreasing. Moreover, these changes appear significant and warrant further analysis. 11eaaaf8_6e34_6464_812b_2f204058469c_TB6309_00 C:\U

A merchandising company:

Correct AnswerverifiedShow Answer

The acid-test ratio:

Correct AnswerverifiedA

The quick assets are defined as:

Correct AnswerverifiedShow Answer

Merchandise inventory consists of products that a company acquires to resell to customers.

Correct AnswerverifiedShow Answer

The following statements are regarding the operating cycle of a merchandising company except:

Correct AnswerverifiedShow Answer

Describe the recording process (including costs) for sales of merchandise inventory using a perpetual inventory system.

Correct AnswerverifiedSales are recorded at list price less an...View AnswerShow Answer

The credit terms 2/10, n/30 are interpreted as:

Correct AnswerverifiedShow Answer

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

Correct AnswerverifiedShow Answer

The year-end adjusted trial balance of ABC Supply for the current year, is shown below: Prepare Closing entries at December 31 for the current year.

Correct AnswerverifiedShow Answer

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Correct AnswerverifiedShow Answer

Selling expenses support a company's overall operations and include expenses related to accounting, human resource management, and financial management.

Correct AnswerverifiedShow Answer

From the adjusted trial balance for Worker Products Company given below, prepare the necessary closing entries.

Correct AnswerverifiedShow Answer

A company had sales and cost of goods sold of $350,000 and $200,000, respectively. Its gross profit equals $150,000.

Correct AnswerverifiedShow Answer

________________________ refers to products that a company owns and intends to sell.

Correct AnswerverifiedMerchandis...View AnswerShow Answer

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year:

Correct AnswerverifiedShow Answer

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D

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1. 2. Trico had the more favorable ratio for each year. 3. Unico's gross margin ratio is increasing, while Trico's is decreasing. Moreover, these changes appear significant and warrant further analysis. 11eaaaf8_6e34_6464_812b_2f204058469c_TB6309_00 C:\U

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A

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Sales are recorded at list price less an...
View Answer

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Merchandis...
View Answer

Correct Answer
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