Question 1

During 2018, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000.
Parker's gross profit is

Accepted Answer

A)   $24,000.
B)   $27,000.
C)   $45,000.
D)   $90,000.E) A) and C)
F) None of the above

Question 2

Presented below is information for Annie Company for the month of March 2018.  
Instructions
(a) Prepare a multiple -step income statement.
(b) Compute the gross profit rate.

Accepted Answer

(a) <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> (b) Gross profi...

Question 3

The Income statement is

Accepted Answer

A)   required under GAAP but not under IFRS.
B)   required under IFRS in the same format as under GAAP.
C)   required under IFRS but not under GAAP.
D)   required under IFRS with some differences as compared to GAAP.IFRS.E) A) and C)
F) All of the above

Question 4

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

Accepted Answer

The answer of Every sales transaction should be supported by...

Question 5

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 24?

Accepted Answer

A)   $3,332
B)   $3,440
C)   $3,528 d $3,600D) All of the above
E) None of the above

Question 6

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Accepted Answer

A)   $630
B)   $720
C)   $810
D)   $882E) None of the above
F) B) and D)

Question 7

Detailed records of goods held for resale are not maintained under a

Accepted Answer

A)   perpetual inventory system.
B)   periodic inventory system.
C)   double entry accounting system.
D)   single entry accounting system.E) B) and C)
F) None of the above

Question 8

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

Accepted Answer

A) True 
 B)False

Question 9

Operating expenses are different for merchandising and service enterprises.

Accepted Answer

A) True 
 B)False

Question 10

The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are

Accepted Answer

A)   credit, credit, credit.
B)   debit, credit, debit.
C)   credit, debit, debit.
D)   credit, debit, credit.E) A) and B)
F) None of the above

Question 11

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.E) A) and B)
F) A) and C)

Question 12

The following information is available for Sheldon Leonard Company:  
Instructions
Compute each of the following:
(a) Net sales
(b) Gross profit
(c) Income from operations

Accepted Answer

(a) Net purchases = $282,000 (...

Question 13

Freight costs paid by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A)   in the selling expense of the buyer.
B)   in operating expenses for the seller.
C)   to the cost of goods sold of the seller.
D)   to a contra-revenue account of the seller.E) All of the above
F) B) and D)

Question 14

Under GAAP, companies generally classify income statement items by

Accepted Answer

A)   function.
B)   nature.
C)   nature or function
D)   date incurred.IFRS.E) None of the above
F) C) and D)

Question 15

Which one of the following is shown on a multiple-step but not on a single-step income statement?

Accepted Answer

A)   Net sales
B)   Net income
C)   Gross profit
D)   Cost of goods soldE) A) and D)
F) B) and D)

Question 16

Gross profit is obtained by subtracting ________________ from ________________.

Accepted Answer

cost of go...

Question 17

Under IFRS, companies can apply revaluation to

Accepted Answer

A)   land, buildings, and intangible assets.
B)   land, buildings, but not intangible assets.
C)   intangible assets, but not land or buildings.
D)   no assets.IFRS.E) A) and D)
F) A) and C)

Question 18

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 19

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Accepted Answer

A) True 
 B)False

Question 20

Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Operations Perpetual Approach

A merchandising company using a perpetual system will make

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Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.

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Operating expenses are different for merchandising and service enterprises.

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Gross profit is obtained by subtracting ________________ from ________________.

Correct Answerverifiedcost of go...View AnswerShow Answer

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

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Freight costs paid by a seller on merchandise sold to customers will cause an increase

Correct AnswerverifiedShow Answer

Under GAAP, companies generally classify income statement items by

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The following information is available for Sheldon Leonard Company: Instructions Compute each of the following: (a) Net sales (b) Gross profit (c) Income from operations

Correct Answerverified(a) Net purchases = $282,000 (...View AnswerShow Answer

During 2018, Parker Enterprises generated revenues of $90,000. The company's expenses were as follows: cost of goods sold of $45,000, operating expenses of $18,000 and a loss on the sale of equipment of $3,000. Parker's gross profit is

Correct AnswerverifiedShow Answer

A single-step income statement reports all revenues, both operating and other revenues and gains, at the top of the statement.

Correct AnswerverifiedShow Answer

A credit sale of $3,600 is made on July 15, terms 2/10, n/30, on which a return of $200 is granted on July 18. What amount is received as payment in full on July 24?

Correct AnswerverifiedShow Answer

If a merchandising company sells land at more than its cost, the gain should be reported in the sales revenue section of the income statement.

Correct AnswerverifiedShow Answer

The Income statement is

Correct AnswerverifiedShow Answer

Under IFRS, companies can apply revaluation to

Correct AnswerverifiedShow Answer

Detailed records of goods held for resale are not maintained under a

Correct AnswerverifiedShow Answer

Which one of the following is shown on a multiple-step but not on a single-step income statement?

Correct AnswerverifiedShow Answer

Every sales transaction should be supported by a ________________ that provides written evidence of the sale.

Correct AnswerverifiedShow Answer

Company X sells $900 of merchandise on account to Company Y with credit terms of 2/10, n/30. If Company Y remits a check taking advantage of the discount offered, what is the amount of Company Y's check?

Correct AnswerverifiedShow Answer

The respective normal account balances of Sales Revenue, Sales Returns and Allowances, and Sales Discounts are

Correct AnswerverifiedShow Answer

Presented below is information for Annie Company for the month of March 2018. Instructions (a) Prepare a multiple -step income statement. (b) Compute the gross profit rate.

Correct Answerverified(a) (b) Gross profi...View AnswerShow Answer

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Gross profit is obtained by subtracting from .

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cost of go...
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(a) Net purchases = $282,000 (...
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(a) (b) Gross profi...
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