Question 1

Merchandising companies must account for:

Accepted Answer

A)   Sales.
B)   Sales discounts.
C)   Sales returns and allowances.
D)   Cost of goods sold.
E)   All of these answers are correct.F) B) and C)
G) None of the above

Question 2

A journal entry with a debit to cash of $980,a debit to Sales Discounts of $20,and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Accepted Answer

A) True 
 B)False

Question 3

In a periodic inventory system,Purchases is a temporary account.

Accepted Answer

A) True 
 B)False

Question 4

Merchandise inventory:

Accepted Answer

A)   Is a capital asset.
B)   Is a current asset.
C)   Can include supplies.
D)   Is a type of long term investment.
E)   Is an expense.F) B) and E)
G) A) and B)

Question 5

Shrinkage can be calculated by comparing _______________ of the inventory with recorded quantities.

Accepted Answer

The answer of Shrinkage can be calculated by comparing _______________...

Question 6

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 7

FOB shipping or FOB factory means ownership of goods transfers to the buyer at the buyer's place of business.

Accepted Answer

A) True 
 B)False

Question 8

The following is the trial balance for Roller Skate Store at their year end,December 31,2015:  Prepare the necessary closing entries at December 31,2015.

Accepted Answer

The answer of The following is the trial balance for...

Question 9

Merchandisers:

Accepted Answer

A)   Earn net income from buying and selling merchandise.
B)   Receive fees in exchange for services.
C)   Earn net income from commissions.
D)   Earn net income from fares.
E)   Do not report gross profit.F) C) and D)
G) B) and E)

Question 10

Z-Mart had a gross profit of $340,000 based on sales of $700,000.Its cost of goods sold was $350,000.

Accepted Answer

A) True 
 B)False

Question 11

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used,a debit balance in the account means the government owes money to the business.

Accepted Answer

A) True 
 B)False

Question 12

A perpetual inventory system gives a continuous record of the amount of inventory on hand.

Accepted Answer

A) True 
 B)False

Question 13

A periodic inventory system:

Accepted Answer

A)   Requires updating the inventory account every month.
B)   Records the cost of new merchandise purchased in a permanent account.
C)   Does not require a physical count of inventory.
D)   Records the cost of new merchandise purchased in a temporary account.
E)   All of these answers are correct.F) A) and D)
G) All of the above

Question 14

Gross profit is:

Accepted Answer

A)   The same as net income.
B)   Subtracted from operating income to get net income.
C)   Net sales less cost of goods sold.
D)   A special general ledger account.
E)   Only calculated when using the perpetual inventory system.F) All of the above
G) D) and E)

Question 15

For a merchandising company using the perpetual inventory system,the second closing entry closes debit balances in:

Accepted Answer

A)   Sales Discounts.
B)   Sales Returns and Allowances.
C)   Cost of Goods Sold.
D)   Operating Expenses.
E)   All of these answers are correct.F) A) and B)
G) A) and C)

Question 16

On December 5,Z-Mart purchased $1,800 worth of merchandise.On December 7,Z-Mart returned $400 worth of merchandise.On December 8,the company paid the balance in full,taking a 2% discount.The amount of the payment was:

Accepted Answer

A)   $200.
B)   $1,372.
C)   $1,568.
D)   $1,600.
E)   $1,800.F) B) and D)
G) D) and E)

Question 17

Businesses normally get a full credit for the provincial sales tax (PST)they have paid.

Accepted Answer

A) True 
 B)False

Question 18

A periodic inventory system:

Accepted Answer

A)   Gives more timely information.
B)   Is widely used in practice.
C)   Was historically used by companies that sold large quantities of low-value items.
D)   Provides point of sale data.
E)   Does not use a Purchases account.F) A) and D)
G) A) and E)

Question 19

The cash sales operating cycle moves from:

Accepted Answer

A)   Purchases to inventory for sale to cash sales.
B)   Purchases to inventory for sale to accounts receivable to cash sales.
C)   Inventory for sale to cash sales to purchases.
D)   Accounts receivable to purchases to inventory for sale to cash sales.
E)   Accounts receivable to inventory for sale to cash sales.F) A) and B)
G) B) and E)

Question 20

Sales returns and allowances:

Accepted Answer

A)   Provide information about dissatisfied customers and the possibility of lost future sales.
B)   Are usually recorded in separate contra-revenue accounts.
C)   Are omitted from published statements.
D)   Represent a reduction of the customer's account receivable.
E)   All of these answers are correct.F) A) and B)
G) All of the above

Exam 5: Accounting for Merchandising Activities

A journal entry with a debit to cash of $980,a debit to Sales Discounts of $20,and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

Correct AnswerverifiedShow Answer

Sales returns and allowances:

Correct AnswerverifiedShow Answer

Z-Mart had a gross profit of $340,000 based on sales of $700,000.Its cost of goods sold was $350,000.

Correct AnswerverifiedShow Answer

Merchandisers:

Correct AnswerverifiedShow Answer

For a merchandising company using the perpetual inventory system,the second closing entry closes debit balances in:

Correct AnswerverifiedShow Answer

Merchandising companies must account for:

Correct AnswerverifiedShow Answer

A periodic inventory system requires updating the inventory account at the beginning of an accounting period.

Correct AnswerverifiedShow Answer

Shrinkage can be calculated by comparing _______________ of the inventory with recorded quantities.

Correct AnswerverifiedShow Answer

A perpetual inventory system gives a continuous record of the amount of inventory on hand.

Correct AnswerverifiedShow Answer

In a periodic inventory system,Purchases is a temporary account.

Correct AnswerverifiedShow Answer

Merchandise inventory:

Correct AnswerverifiedShow Answer

The following is the trial balance for Roller Skate Store at their year end,December 31,2015: Prepare the necessary closing entries at December 31,2015.

Correct AnswerverifiedShow Answer

The cash sales operating cycle moves from:

Correct AnswerverifiedShow Answer

Businesses normally get a full credit for the provincial sales tax (PST)they have paid.

Correct AnswerverifiedShow Answer

FOB shipping or FOB factory means ownership of goods transfers to the buyer at the buyer's place of business.

Correct AnswerverifiedShow Answer

Gross profit is:

Correct AnswerverifiedShow Answer

A periodic inventory system:

Correct AnswerverifiedShow Answer

A periodic inventory system:

Correct AnswerverifiedShow Answer

When a single goods and services tax (GST)or Harmonized Sales Tax (HST)account is used,a debit balance in the account means the government owes money to the business.

Correct AnswerverifiedShow Answer

On December 5,Z-Mart purchased $1,800 worth of merchandise.On December 7,Z-Mart returned $400 worth of merchandise.On December 8,the company paid the balance in full,taking a 2% discount.The amount of the payment was:

Correct AnswerverifiedShow Answer

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