Question 1

Financial information is presented below:  The gross profit rate would be

Accepted Answer

A)  .13.
B)  .40.
C)  .60.
D)  .73.E) None of the above
F) A) and C)

Question 2

Which of the following is a true statement about inventory systems?

Accepted Answer

A)  Periodic inventory systems require more detailed inventory records.
B)  Perpetual inventory systems require more detailed inventory records.
C)  A periodic system requires cost of goods sold be determined after each sale.
D)  A perpetual system determines cost of goods sold only at the end of the accounting period.E) A) and D)
F) C) and D)

Question 3

Charlie Company uses a perpetual inventory system.During May, the following transactions and events occurred.  Instructions
Journalize the May transactions for Charlie Company (seller) assuming that Charlie uses a perpetual inventory system.You may omit explanations.Round amounts to nearest dollar.

Accepted Answer

The answer of Charlie Company uses a perpetual inventory system.During...

Question 4

The use of IFRS results in the number of transactions affecting inventory to be

Accepted Answer

A)  more than under GAAP.
B)  the same as under GAAP.
C)  less than under GAAP.
D)  to be zero.IFRS.E) A) and B)
F) None of the above

Question 5

The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

Accepted Answer

A) True 
 B)False

Question 6

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 7

If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the

Accepted Answer

A)  Inventory account will be increased.
B)  Inventory account will not be affected.
C)  seller will bear the freight cost.
D)  carrier will bear the freight cost.E) B) and D)
F) A) and B)

Question 8

The income statement for Pepe Serna Company for the year ended December 31, 2022 is as follows:  Prepare the entries to close the revenue and expense accounts at December 31, 2022.You may omit explanations for the transactions.

Accepted Answer

The answer of The income statement for Pepe Serna Company...

Question 9

Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

Accepted Answer

A) True 
 B)False

Question 10

Under IFRS, companies must classify income statement items by

Accepted Answer

A)  function.
B)  nature.
C)  nature or function
D)  date incurred.IFRS.E) B) and D)
F) B) and C)

Question 11

The collection of a $6,000 account within the 2 percent discount period will result in a

Accepted Answer

A)  debit to Sales Discounts for $120.
B)  debit to Accounts Receivable for $5,880.
C)  credit to Cash for $5,880.
D)  credit to Accounts Receivable for $5,880.E) B) and D)
F) All of the above

Question 12

Which of the following would not be considered a merchandising company?

Accepted Answer

A)  Retailer
B)  Wholesaler
C)  Service firm
D)  All of these are considered a merchandising company.E) B) and C)
F) B) and D)

Question 13

The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

Accepted Answer

A)  the customer must pay the bill within 10 days.
B)  the customer can deduct a 2% discount if the bill is paid between the 10th and 30th day from the invoice date.
C)  the customer can deduct a 2% discount if the bill is paid within 10 days of the invoice date.
D)  two sales returns can be made within 10 days of the invoice date and no returns thereafter.E) A) and C)
F) A) and D)

Question 14

In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

Accepted Answer

A)  Inventory.
B)  Purchase Discounts.
C)  Purchase Allowance.
D)  Sales Discounts.E) All of the above
F) A) and B)

Question 15

Dawson's Fashions sold merchandise for $40,000 cash during the month of July.Returns that month totaled $1,000.If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

Accepted Answer

A)  $39,000 and $23,400.
B)  $39,000 and $24,000.
C)  $40,000 and $23,400.
D)  $40,000 and $24,000.E) B) and D)
F) All of the above

Question 16

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) C) and D)
F) A) and B)

Question 17

Financial information is presented below:  The gross profit rate would be

Accepted Answer

A)  .36.
B)  .40.
C)  .46.
D)  .50.E) A) and B)
F) None of the above

Question 18

Which of the following accounts is not closed to Income Summary?

Accepted Answer

A)  Cost of Goods Sold
B)  Inventory
C)  Sales Revenue
D)  Sales DiscountsE) B) and C)
F) A) and B)

Question 19

The following information is available for Dennehy Company:  Dennehy's cost of goods sold is

Accepted Answer

A)  $262,500.
B)  $285,000.
C)  $292,500.
D)  $345,000.E) A) and B)
F) None of the above

Question 20

Presented here are the components in Bradley Company's income statement.Determine the missing amounts.

Accepted Answer

The answer of Presented here are the components in Bradley...

Exam 5: Accounting for Merchandising Operations

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

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The collection of a $6,000 account within the 2 percent discount period will result in a

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Which of the following accounts is not closed to Income Summary?

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Dawson's Fashions sold merchandise for $40,000 cash during the month of July.Returns that month totaled $1,000.If the company's gross profit rate is 40%, Dawson's will report monthly net sales revenue and cost of goods sold of

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Which of the following would not be considered a merchandising company?

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Financial information is presented below: The gross profit rate would be

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The income statement for Pepe Serna Company for the year ended December 31, 2022 is as follows: Prepare the entries to close the revenue and expense accounts at December 31, 2022.You may omit explanations for the transactions.

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If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the

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In a perpetual inventory system, the amount of the discount allowed for paying for merchandise purchased within the discount period is credited to

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The following information is available for Dennehy Company: Dennehy's cost of goods sold is

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Under IFRS, companies must classify income statement items by

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The use of IFRS results in the number of transactions affecting inventory to be

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Which of the following is a true statement about inventory systems?

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The credit terms offered to a customer by a business firm are 2/10, n/30, which means that

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

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The terms 2/10, n/30 state that a 2% discount is available if the invoice is paid within the first 10 days of the next month.

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Presented here are the components in Bradley Company's income statement.Determine the missing amounts.

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Charlie Company uses a perpetual inventory system.During May, the following transactions and events occurred. Instructions Journalize the May transactions for Charlie Company (seller) assuming that Charlie uses a perpetual inventory system.You may omit explanations.Round amounts to nearest dollar.

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Financial information is presented below: The gross profit rate would be

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Merchandisers apply the revenue recognition principle by recognizing sales revenues when the performance obligation is satisfied.

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