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Exam 5: Accounting for Retail Businesses

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Question 141

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Using the following data taken from Hsu's Imports Inc. which uses a periodic inventory system, prepare the cost of goods sold section of the income statement for the year ended March 31.​

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Question 142

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Under a periodic inventory system, the cost of inventory on hand at the end of the accounting period is determined by a physical count of the inventory.

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Question 143

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If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as

When a buyer returns merchandise purchased for cash, the buyer will record the transaction as a

Why does the gross method of recording sales discounts require an adjusting entry at the end of the fiscal period?

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered. A)Credit terms B)FOB destination C)FOB shipping point D)Periodic inventory system E)Perpetual inventory system F)Inventory shrinkage G)Single-step income statement H)Multiple-step income statement

On April 3, Villa Corp. returned merchandise that had a selling price of $1,200 for a cash refund. The merchandise originally cost $720. What is the effect on the accounting equation of the following entries for this return?

Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise. A)Freight B)Delivery Expense C)Inventory D)Sales discount E)Purchases Returns and Allowances F)Debit memo G)Purchases discount H)Trade discount

A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom; FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?

Closing entries for a merchandising business are not similar to those for a service business.

The primary difference between the periodic and perpetual inventory systems is that a

Under the periodic inventory system, the journal entry to record the purchase of inventory will include a debit to

Which of the following accounts would be included in the chart of accounts of a merchandising company using the (a) periodic inventory system, (b) perpetual inventory system, or (c) both systems? (1) Purchases (2) Inventory (3) Sales (4) Purchases Discounts (5) Cost of Goods Sold (6) Freight In (7) Delivery Expense