Question 1

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

Accepted Answer

A)   cost of merchandise sold
B)   purchases
C)   purchases returns and allowances
D)   net purchasesE) B) and D)
F) C) and D)

Question 2

Which of the following items should not be included in the cost of ending merchandise inventory?

Accepted Answer

A)   purchased units in transit, shipped FOB shipping point
B)   purchased units in transit, shipped FOB destination
C)   units on hand in the warehouse
D)   sold units in transit, not invoiced, and shipped FOB destinationE) C) and D)
F) None of the above

Question 3

Freight-in is considered a cost of purchasing inventory.

Accepted Answer

A) True 
 B)False

Question 4

Match each of the following terms a-h)  with the correct definition below.
-Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

Accepted Answer

A)  Credit terms
B)  FOB destination
C)  FOB shipping point
D)  Periodic inventory system
E)  Perpetual inventory systemF) Inventory shrinkageG) Single-step income statementH) Multiple-step income statementI) D) and H)
J) A) and D)

Question 5

The seller may prepay the freight costs even though the terms are FOB shipping point.

Accepted Answer

A) True 
 B)False

Question 6

Using the following information, what is the amount of net income?

Accepted Answer

A)   $29,510
B)   $29,960
C)   $28,310
D)   $29,350E) A) and C)
F) A) and B)

Question 7

Calculate the gross profit for Jonas Company based on the following data: $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 764,000 \
\hline \text { Selling expenses } & 52,500 \
\hline \text { Cost of merchandise sold } & 538,000 \
\hline
\end{array}$$

Accepted Answer

Sales, $764,000 - Co...

Question 8

When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?

Accepted Answer

A)   debit Accounts Payable; credit Merchandise Inventory
B)   debit Merchandise Inventory; credit Accounts Payable
C)   debit Merchandise Inventory; credit Cash Discounts
D)   debit Merchandise Inventory; credit PurchasesE) A) and D)
F) B) and D)

Question 9

Where are selling and administrative expenses found on the multiple-step income statement?

Accepted Answer

A)   before gross profit
B)   after sales and before gross profit
C)   after net income and before expenses
D)   after gross profitE) B) and C)
F) A) and C)

Question 10

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight-In are found on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

Journalize the following transactions for the Evans Company. Assume the company uses a perpetual inventory system.
a) Sold merchandise for $645. The cost of merchandise sold was $375.
b) Sold merchandise for $432 and accepted VISA as the form of payment. The cost of merchandise sold was $195.
c) Sold merchandise on account for $670. The cost of merchandise sold was $438.
d) Paid credit card fees for the month of $85.

Accepted Answer

The answer of Journalize the following transactions for the Evans...

Question 12

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Accepted Answer

A) True 
 B)False

Question 13

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Businesses

When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?

Correct Answer
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Correct Answer
verified

The seller may prepay the freight costs even though the terms are FOB shipping point.

Correct Answer
verified

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Correct Answer
verified

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

Correct Answer
verified

Which of the following items should not be included in the cost of ending merchandise inventory?

Correct Answer
verified

Match each of the following terms a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

Correct Answer
verified

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Correct Answer
verified

Calculate the gross profit for Jonas Company based on the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 764,000 \\\hline \text { Selling expenses } & 52,500 \\\hline \text { Cost of merchandise sold } & 538,000 \\\hline\end{array}$

Correct Answer
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Sales, $764,000 - Co...
View Answer

Where are selling and administrative expenses found on the multiple-step income statement?

Correct Answer
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Freight-in is considered a cost of purchasing inventory.

Correct Answer
verified

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight-In are found on the balance sheet.

Correct Answer
verified

Using the following information, what is the amount of net income?

Correct Answer
verified

Exam 5: Accounting for Merchandising Businesses

When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The seller may prepay the freight costs even though the terms are FOB shipping point.

Correct AnswerverifiedShow Answer

If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger.

Correct AnswerverifiedShow Answer

When the perpetual inventory system is used, the inventory sold is shown on the income statement as

Correct AnswerverifiedShow Answer

Which of the following items should not be included in the cost of ending merchandise inventory?

Correct AnswerverifiedShow Answer

Match each of the following terms a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise.

Correct AnswerverifiedShow Answer

Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedSales, $764,000 - Co...View AnswerShow Answer

Where are selling and administrative expenses found on the multiple-step income statement?

Correct AnswerverifiedShow Answer

Freight-in is considered a cost of purchasing inventory.

Correct AnswerverifiedShow Answer

Under a periodic inventory system, the accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight-In are found on the balance sheet.

Correct AnswerverifiedShow Answer

Using the following information, what is the amount of net income?

Correct AnswerverifiedShow Answer

Correct Answer
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Sales, $764,000 - Co...
View Answer

Correct Answer
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Correct Answer
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