Question 1

Brig Company had $800,000 in net sales,$350,000 in gross profit,and $200,000 in operating expenses.Cost of goods sold equals:

Accepted Answer

A)  $150,000.
B)  $450,000.
C)  $800,000.
D)  $350,000.
E)  $200,000.F) A) and D)
G) C) and D)

Question 2

A company's current ratio is 1.2 and its quick ratio is 0.25.This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Accepted Answer

A) True 
 B)False

Question 3

Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May:
  
Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.

Accepted Answer

The answer of Maia's Bike Shop uses the periodic inventory...

Question 4

A trade discount is:

Accepted Answer

A)  A term used by a purchaser to describe a cash discount given to customers for prompt payment.
B)  A reduction in price below the list price.
C)  A term used by a seller to describe a cash discount granted to customers for prompt payment.
D)  A reduction in price for prompt payment.
E)  Also called a rebate.F) A) and B)
G) D) and E)

Question 5

A buyer records the costs of shipping goods in a Delivery Expense,or transportation-out account when the buyer is responsible for these costs.

Accepted Answer

A) True 
 B)False

Question 6

The acid-test ratio differs from the current ratio in that:

Accepted Answer

A)  Liabilities are divided by current assets.
B)  Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio.
C)  The acid-test ratio measures profitability and the current ratio does not.
D)  The acid-test ratio excludes short-term investments from the calculation.
E)  The acid-test ratio is a measure of liquidity but the current ratio is not.F) A) and B)
G) B) and D)

Question 7

Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Accepted Answer

A) True 
 B)False

Question 8

A company has net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income is $17,530.The company's gross margin and operating expenses are ________ and ____________,respectively.

Accepted Answer

A)  $209,000; $191,470
B)  $191,470; $209,000
C)  $525,470; $227,000
D)  $227,000; $525,470
E)  $734,000; $191,470F) D) and E)
G) C) and E)

Question 9

Delivery expense is reported as part of general and administrative expense in the seller's income statement.

Accepted Answer

A) True 
 B)False

Question 10

From the adjusted trial balance for Worker Products Company given below,prepare the necessary closing entries.

Accepted Answer

The answer of From the adjusted trial balance for Worker...

Question 11

Fill in the blanks (a)through (g)for the Hendricks Company for each of the income statements for 2012,2013,and 2014.

Accepted Answer

(a)2,770 + 375 - 2400 = 745
(b)375,the ...

Question 12

Expenses that support the overall operations of a business and include the expenses relating to accounting,human resource management,and financial management are called:

Accepted Answer

A)  Cost of goods sold.
B)  Selling expenses.
C)  Purchasing expenses.
D)  General and administrative expenses.
E)  Non-operating activities.F) A) and E)
G) None of the above

Question 13

Quick assets include cash,inventory,and current receivables.

Accepted Answer

A) True 
 B)False

Question 14

A company's current assets were $17,980,its quick assets were $11,420 and its current liabilities were $12,190.Its quick ratio equals:

Accepted Answer

A)  0.94.
B)  1.07.
C)  1.48.
D)  1.57.
E)  2.40.F) C) and D)
G) D) and E)

Question 15

Harriet's Toy Shop had net sales of $852,000.The gross profit was $230,000.Calculate Harriet's cost of goods sold.

Accepted Answer

Cost of Goods Sold =...

Question 16

Purchase discounts are the same as trade discounts.

Accepted Answer

A) True 
 B)False

Question 17

A company had sales and cost of goods sold of $350,000 and $200,000,respectively.Its gross profit equals $150,000.

Accepted Answer

A) True 
 B)False

Question 18

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

What are the difference(s)between the periodic and the perpetual inventory systems?

Accepted Answer

Under a perpetual system each purchase,p...

Question 20

The Merchandise Inventory account balance at the end of the current period is equal to the amount of beginning merchandise inventory for the next period.

Accepted Answer

A) True 
 B)False

Exam 5: Accounting for Merchandising Operations

Delivery expense is reported as part of general and administrative expense in the seller's income statement.

Correct AnswerverifiedShow Answer

Harriet's Toy Shop had net sales of $852,000.The gross profit was $230,000.Calculate Harriet's cost of goods sold.

Correct AnswerverifiedCost of Goods Sold =...View AnswerShow Answer

Expenses that support the overall operations of a business and include the expenses relating to accounting,human resource management,and financial management are called:

Correct AnswerverifiedShow Answer

The acid-test ratio differs from the current ratio in that:

Correct AnswerverifiedShow Answer

A company's current ratio is 1.2 and its quick ratio is 0.25.This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Correct AnswerverifiedShow Answer

The Merchandise Inventory account balance at the end of the current period is equal to the amount of beginning merchandise inventory for the next period.

Correct AnswerverifiedShow Answer

Fill in the blanks (a)through (g)for the Hendricks Company for each of the income statements for 2012,2013,and 2014.

Correct Answerverified (a)2,770 + 375 - 2400 = 745(b)375,the ...View AnswerShow Answer

Sales discounts on credit sales can benefit a seller by decreasing the delay in receiving cash and reducing future collections efforts.

Correct AnswerverifiedShow Answer

A buyer records the costs of shipping goods in a Delivery Expense,or transportation-out account when the buyer is responsible for these costs.

Correct AnswerverifiedShow Answer

Brig Company had $800,000 in net sales,$350,000 in gross profit,and $200,000 in operating expenses.Cost of goods sold equals:

Correct AnswerverifiedShow Answer

A company had sales and cost of goods sold of $350,000 and $200,000,respectively.Its gross profit equals $150,000.

Correct AnswerverifiedShow Answer

What are the difference(s)between the periodic and the perpetual inventory systems?

Correct AnswerverifiedUnder a perpetual system each purchase,p...View AnswerShow Answer

A company has net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income is $17,530.The company's gross margin and operating expenses are ________ and ____________,respectively.

Correct AnswerverifiedShow Answer

Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May: Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.

Correct AnswerverifiedShow Answer

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Correct AnswerverifiedShow Answer

Purchase discounts are the same as trade discounts.

Correct AnswerverifiedShow Answer

A trade discount is:

Correct AnswerverifiedShow Answer

From the adjusted trial balance for Worker Products Company given below,prepare the necessary closing entries.

Correct AnswerverifiedShow Answer

A company's current assets were $17,980,its quick assets were $11,420 and its current liabilities were $12,190.Its quick ratio equals:

Correct AnswerverifiedShow Answer

Quick assets include cash,inventory,and current receivables.

Correct AnswerverifiedShow Answer

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Cost of Goods Sold =...
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(a)2,770 + 375 - 2400 = 745
(b)375,the ...
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Under a perpetual system each purchase,p...
View Answer

A company has net sales and cost of goods sold of $752,000 and $543,000,respectively.Its net income is $17,530.The company's gross margin and operating expenses are and ____,respectively.

Correct Answer
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