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For a company that uses a perpetual inventory system,a physical count of the inventory can reveal the amount of inventory shrinkage the company has experienced.

A) True
B) False

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Net income percentage is equal to


A) Net Income divided by Net Sales.
B) Net Income divided by Total Assets.
C) Total Equity divided by Net Sales.
D) Net Sales divided by Retained Earnings.

E) B) and D)
F) A) and B)

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The credit terms,2/10,n/30 indicate that a:


A) ten percent discount can be deducted if the invoice is paid within two days following the date of sale.
B) two percent discount can be deducted for a period up to thirty days following the date of sale.
C) two percent discount can be deducted if the invoice is paid by the tenth day following the date of the sale.
D) two percent discount can be deducted if the invoice is paid after the tenth day following the sale,but before the thirtieth day.

E) B) and D)
F) C) and D)

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What was Baxter's Cost of Goods Sold for 2012?


A) $391,000
B) $306,000
C) $408,000
D) $289,000

E) All of the above
F) A) and C)

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The following are the income statements of the Franz Company for two consecutive years.Which expense(s) increased substantially as a percentage of sales and thus contributed to the net loss in 2012? The following are the income statements of the Franz Company for two consecutive years.Which expense(s) increased substantially as a percentage of sales and thus contributed to the net loss in 2012? A) administrative expenses B) selling expenses and administrative expenses C) cost of goods sold D) cost of goods sold and selling expenses


A) administrative expenses
B) selling expenses and administrative expenses
C) cost of goods sold
D) cost of goods sold and selling expenses

E) B) and C)
F) A) and C)

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Royal Company uses the periodic inventory method.The following balances were drawn from the accounts of Royal Company prior to the closing process: Royal Company uses the periodic inventory method.The following balances were drawn from the accounts of Royal Company prior to the closing process: The amount of gross margin appearing on the income statement should be: A) $900. B) $1,050. C) $1,950. D) $2,850. The amount of gross margin appearing on the income statement should be:


A) $900.
B) $1,050.
C) $1,950.
D) $2,850.

E) A) and C)
F) A) and B)

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Gain on Sale of Land is reported in the operating activities section of the statement of cash flows.

A) True
B) False

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Longoria Company purchased merchandise inventory on account with a list price of $5,000 and credit terms of 1/10,n/30.What was the net or cash cost for the merchandise?


A) $4,900
B) $4,970
C) $4,500
D) $4,950

E) A) and B)
F) All of the above

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On a multistep income statement,gains and losses are included in the calculation of operating income.

A) True
B) False

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Detroit Company is a merchandising business that started its operations in 2012.During the year,Detroit reported sales of $450,000; inventory purchases of $310,000; and an inventory balance of $50,000 at the end of the year. Required: a.What was Detroit's cost of goods available for sale for 2012? b.What was the cost of goods sold? c.Calculate the amount of Detroit's gross margin for 2012 and the gross margin percentage.

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a.Cost of goods available for sale = $31...

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The following data are from the income statement of Rathbun Company: The following data are from the income statement of Rathbun Company: The company's gross margin percentage is: A) 12.5%. B) 37.5%. C) 62.5%. D) 60.0%. The company's gross margin percentage is:


A) 12.5%.
B) 37.5%.
C) 62.5%.
D) 60.0%.

E) A) and C)
F) A) and D)

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The chief advantage of the periodic inventory system,compared to a perpetual system,is


A) better control over inventory.
B) immediate feedback at any time during the period.
C) timely discovery of losses due to theft.
D) efficiency and ease of recording.

E) All of the above
F) A) and D)

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A multistep income statement shows Sales,Cost of Goods Sold,and Gross Margin.

A) True
B) False

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Houston Co.paid a supplier the amount owed on account for a purchase of merchandise.The terms on the purchase had been n/30.Show how the transaction would affect Houston's financial statements. Houston Co.paid a supplier the amount owed on account for a purchase of merchandise.The terms on the purchase had been n/30.Show how the transaction would affect Houston's financial statements.

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Ransom Co.purchased $10,000 of merchandise inventory on account from a supplier.Show how the transaction would affect Ransom's financial statements. Ransom Co.purchased $10,000 of merchandise inventory on account from a supplier.Show how the transaction would affect Ransom's financial statements.

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Explain the computation of and the meaning of each of the following: a.Gross margin percentage b.Net income percentage (also known as return on sales)

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a.The gross margin percentage is compute...

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A loss results from a transaction that is likely to recur whereas an expense results from a transaction that is unlikely to recur.

A) True
B) False

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Under a periodic system,shipping costs paid for goods received from a supplier increases the amount of


A) Merchandise Inventory.
B) Cost of Goods Sold.
C) Transportation-in.
D) Transportation-out.

E) None of the above
F) B) and C)

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Barney Company uses the perpetual inventory system.The company purchased $4,000 of merchandise from Bittiker Company under the terms n/30.Barney also paid $150 freight to obtain the goods under terms FOB shipping point.All of the merchandise purchased was sold for $9,000 cash.The amount of gross margin for this merchandise is:


A) $3,850
B) $4,000
C) $4,070
D) $4,850

E) A) and B)
F) None of the above

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Merchandising businesses


A) generate revenue by selling goods.
B) include wholesale and retail companies.
C) manufacture the goods that they sell.
D) both A and B

E) All of the above
F) A) and D)

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Showing 41 - 60 of 143

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