Question 1

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 2

Describe the difference between wholesalers and retailers.

Accepted Answer

A wholesaler is an intermediary that buy...

Question 3

Identify and explain the key components of income for a merchandising company.

Accepted Answer

The basic components of income begin wit...

Question 4

Delivery expense is reported as part of general and administrative expense in the seller's income statement.

Accepted Answer

A) True 
 B)False

Question 5

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Accepted Answer

Shipping P...

Question 6

Under a periodic inventory system, purchases, purchases returns and allowances, purchase discounts, and transportation in transactions are recorded in separate temporary accounts

Accepted Answer

A) True 
 B)False

Question 7

Nichole Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Nichole's gross profit.

Accepted Answer

$500,000 -...

Question 8

A credit memorandum from a seller informs a buyer of the seller's credit to its Accounts Payable account arising from a sales return or allowance.

Accepted Answer

A) True 
 B)False

Question 9

The current period's ending inventory is:

Accepted Answer

A)   The next period's beginning inventory.
B)   The current period's cost of goods sold.
C)   The prior period's beginning inventory.
D)   The current period's net purchases.
E)   The current period's beginning inventory.F) B) and E)
G) C) and D)

Question 10

A company's current assets are $23,420, its quick assets were $13,890 and its current liabilities were $12,220. Its acid-test ratio equals:

Accepted Answer

A)   0.88.
B)   1.91.
C)   1.14.
D)   .52.
E)   1.41.F) B) and E)
G) D) and E)

Question 11

The amounts and timing of payment from a buyer to a seller are the ___________________.

Accepted Answer

The answer of The amounts and timing of payment from...

Question 12

Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in total other expenses. Net income equals:

Accepted Answer

A)   $770,000.
B)   $402,000.
C)   $390,000.
D)   $115,000.
E)   $408,000.F) C) and D)
G) A) and E)

Question 13

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

Accepted Answer

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

Question 14

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

Accepted Answer

The answer of A merchandising company's ___________ begins with the...

Question 15

Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in total other expenses. Gross profit equals:

Accepted Answer

A)   $770,000.
B)   $115,000.
C)   $390,000.
D)   $402,000.
E)   $408,000.F) B) and E)
G) D) and E)

Question 16

Steve's Skateboards uses the periodic inventory system and had the following sales transactions during April:
Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Accepted Answer

The answer of Steve's Skateboards uses the periodic inventory system...

Question 17

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

Accepted Answer

The answer of A company reported the following information for...

Question 18

A company had sales of $695,000 and cost of goods sold of $278,000. Its gross margin equals:

Accepted Answer

A)   $(417,000) .
B)   $695,000.
C)   $278,000.
D)   $417,000.
E)   $973,000.F) All of the above
G) C) and D)

Question 19

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Accepted Answer

A)   $8,924.
B)   $9,700.
C)   $10,000.
D)   $9,800.
E)   $8,724.F) C) and E)
G) A) and D)

Question 20

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Operations

Nichole Company had net sales of $500,000 and cost of goods sold of $350,000. Calculate Nichole's gross profit.

Correct Answerverified$500,000 -...View AnswerShow Answer

Delivery expense is reported as part of general and administrative expense in the seller's income statement.

Correct AnswerverifiedShow Answer

A merchandising company's ___________ begins with the purchase of merchandise and ends with the collection of cash from merchandise sales.

Correct AnswerverifiedShow Answer

A company's current assets are $23,420, its quick assets were $13,890 and its current liabilities were $12,220. Its acid-test ratio equals:

Correct AnswerverifiedShow Answer

A company had sales of $695,000 and cost of goods sold of $278,000. Its gross margin equals:

Correct AnswerverifiedShow Answer

The amounts and timing of payment from a buyer to a seller are the ___________________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A credit memorandum from a seller informs a buyer of the seller's credit to its Accounts Payable account arising from a sales return or allowance.

Correct AnswerverifiedShow Answer

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

Correct AnswerverifiedShow Answer

Operating expenses are classified into two categories: selling expenses and cost of goods sold.

Correct AnswerverifiedShow Answer

Under a periodic inventory system, purchases, purchases returns and allowances, purchase discounts, and transportation in transactions are recorded in separate temporary accounts

Correct AnswerverifiedShow Answer

Identify and explain the key components of income for a merchandising company.

Correct AnswerverifiedThe basic components of income begin wit...View AnswerShow Answer

Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in total other expenses. Net income equals:

Correct AnswerverifiedShow Answer

Brig Company had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in total other expenses. Gross profit equals:

Correct AnswerverifiedShow Answer

A company purchased $10,000 of merchandise on June 15 with terms of 3/10, n/45. On June 20, it returned $800 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Correct AnswerverifiedShow Answer

The current period's ending inventory is:

Correct AnswerverifiedShow Answer

FOB _________________ means the buyer accepts ownership when the goods depart the seller's place of business. The buyer is responsible for paying shipping costs and bears the risk of damage or loss when goods are in transit.

Correct AnswerverifiedShipping P...View AnswerShow Answer

Steve's Skateboards uses the periodic inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Describe the difference between wholesalers and retailers.

Correct AnswerverifiedA wholesaler is an intermediary that buy...View AnswerShow Answer

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

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The basic components of income begin wit...
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Shipping P...
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A wholesaler is an intermediary that buy...
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