Question 1

Which of the following characterizes Best Buy?

Accepted Answer

A)  Best Buy both purchases and sells products.
B)  Best Buy sells products but doesn't purchase products.
C)  Best Buy purchases products but doesn't sell products.
D)  Best Buy neither purchases nor sells products.E) All of the above
F) A) and B)

Question 2

Sales is a(n) ________ account.

Accepted Answer

A)  asset
B)  liability
C)  revenue
D)  contra-E) B) and D)
F) A) and B)

Question 3

Simmons,Inc.received an invoice from Wilson Company for $5,550 with terms of 3/10,n/45 on March 8.If Simmons pays the bill on March 15,they will credit inventory under a perpetual inventory system for:

Accepted Answer

A)  $0.00.
B)  $555.00.
C)  $166.50.
D)  $5550.00.E) B) and D)
F) B) and C)

Question 4

The general public most often buys products from:

Accepted Answer

A)  a wholesale business.
B)  a retail business.
C)  a manufacturer.
D)  all of the above.E) A) and B)
F) A) and D)

Question 5

In the perpetual inventory system,inventory is constantly updated through the inventory tracking system.

Accepted Answer

A) True 
 B)False

Question 6

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Accepted Answer

A) True 
 B)False

Question 7

If an invoice reads 2/10,n/30,the 10 refers to the percent that can be taken for the discount.

Accepted Answer

A) True 
 B)False

Question 8

The time period within which an invoice may be paid early to receive a discount is called the:

Accepted Answer

A)  credit period.
B)  payment period.
C)  discount period.
D)  cash period.E) A) and D)
F) B) and C)

Question 9

The amount of an invoice is $1000,with terms 2/10,n30.The amount to be paid within the discount period is:

Accepted Answer

A)  $1,000.
B)  $980.
C)  $900.
D)  $700.E) B) and C)
F) B) and D)

Question 10

If a company has net sales of $134,000,gross profit of $48,000,and $14,000 net income.The gross profit percentage would be approximately 36%.

Accepted Answer

A) True 
 B)False

Question 11

A company's gross profit percentage decreases from 58% to 51%.What does this mean?

Accepted Answer

A)  This means that net income will be higher.
B)  This means that net income will be lower.
C)  This means that there will be a net loss.
D)  We cannot determine anything definite from the information given.E) B) and C)
F) B) and D)

Question 12

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account.

Accepted Answer

A) True 
 B)False

Question 13

Archer Manufacturing had sales for the week of $3,569,of which $2,900 was on credit and $659 in cash sales.The cost of the merchandise sold was $1,888.The journal entries would include a:

Accepted Answer

A)  debit to Cost of Goods Sold for $1,888;credit to Inventory for $1,888.
B)  debit to Cash for $3569,credit to Sales for $3,569.
C)  debit to Cash for $3,569 and a credit to Cost of Goods Sold for $3,569.
D)  debit to Cost of Goods Sold for $1,888;credit to Sales of $1,888.E) A) and B)
F) A) and C)

Question 14

Kramer and Associates has the following account balances listed in alphabetical order: Accumulated Depreciation,$23,000;Accounts Payable,$8,500,Accounts Receivable,$12,000;Cash,$3,500;Equipment,$44,000,Land,$21,000,Mortgage Payable,$45,000;Prepaid Insurance,$7,500;Supplies,$2,000;Unearned Revenue,$6,000;Wages payable,$4,500.Kramer and Associates' long-term assets are:

Accepted Answer

A)  $90,000.
B)  $25,000.
C)  $42,000.
D)  $65,000.E) A) and C)
F) A) and D)

Question 15

Cost of Goods Sold is the account that is matched with the Sales account to record the company's cost of the inventory that was sold under a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 16

A company pays an invoice early and takes 4% off of the original invoice price.The account to be credited for this amount under a perpetual inventory system is:

Accepted Answer

A)  Inventory.
B)  Accounts Payable.
C)  Discount.
D)  Cash.E) None of the above
F) A) and B)

Question 17

If there is a difference between the physical count and the perpetual record,the account in which the difference is recorded is:

Accepted Answer

A)  Sales.
B)  Cost of Goods Sold.
C)  Inventory Expense.
D)  Revenue.E) A) and B)
F) B) and D)

Question 18

Net Sales minus Cost of Goods Sold equals Gross Profit.

Accepted Answer

A) True 
 B)False

Question 19

Under the perpetual inventory system,the account to which purchased goods are recorded is:

Accepted Answer

A)  Purchases as a credit.
B)  Inventory as a debit.
C)  Cost of Goods Sold as a debit.
D)  Purchases as a debit.E) A) and C)
F) A) and B)

Question 20

Under the perpetual inventory system,purchases are entered into the asset account,Inventory,at the:

Accepted Answer

A)  time of purchase.
B)  time of sale to consumers.
C)  time of the inventory count.
D)  end of the accounting period.E) None of the above
F) C) and D)

Exam 4: Accounting for a Merchandising Business

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Correct Answer
verified

The time period within which an invoice may be paid early to receive a discount is called the:

Correct Answer
verified

If a company has net sales of $134,000,gross profit of $48,000,and $14,000 net income.The gross profit percentage would be approximately 36%.

Correct Answer
verified

Correct Answer
verified

A company's gross profit percentage decreases from 58% to 51%.What does this mean?

Correct Answer
verified

If an invoice reads 2/10,n/30,the 10 refers to the percent that can be taken for the discount.

Correct Answer
verified

Cost of Goods Sold is the account that is matched with the Sales account to record the company's cost of the inventory that was sold under a perpetual inventory system.

Correct Answer
verified

Sales is a(n) ________ account.

Correct Answer
verified

In the perpetual inventory system,inventory is constantly updated through the inventory tracking system.

Correct Answer
verified

The amount of an invoice is $1000,with terms 2/10,n30.The amount to be paid within the discount period is:

Correct Answer
verified

Which of the following characterizes Best Buy?

Correct Answer
verified

Under the perpetual inventory system,the account to which purchased goods are recorded is:

Correct Answer
verified

Simmons,Inc.received an invoice from Wilson Company for $5,550 with terms of 3/10,n/45 on March 8.If Simmons pays the bill on March 15,they will credit inventory under a perpetual inventory system for:

Correct Answer
verified

A company pays an invoice early and takes 4% off of the original invoice price.The account to be credited for this amount under a perpetual inventory system is:

Correct Answer
verified

Archer Manufacturing had sales for the week of $3,569,of which $2,900 was on credit and $659 in cash sales.The cost of the merchandise sold was $1,888.The journal entries would include a:

Correct Answer
verified

The general public most often buys products from:

Correct Answer
verified

Under the perpetual inventory system,purchases are entered into the asset account,Inventory,at the:

Correct Answer
verified

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account.

Correct Answer
verified

If there is a difference between the physical count and the perpetual record,the account in which the difference is recorded is:

Correct Answer
verified

Net Sales minus Cost of Goods Sold equals Gross Profit.

Correct Answer
verified

Exam 4: Accounting for a Merchandising Business

The purchase of inventory affects both an asset and the Stockholders' Equity account.

Correct AnswerverifiedShow Answer

The time period within which an invoice may be paid early to receive a discount is called the:

Correct AnswerverifiedShow Answer

If a company has net sales of $134,000,gross profit of $48,000,and $14,000 net income.The gross profit percentage would be approximately 36%.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A company's gross profit percentage decreases from 58% to 51%.What does this mean?

Correct AnswerverifiedShow Answer

If an invoice reads 2/10,n/30,the 10 refers to the percent that can be taken for the discount.

Correct AnswerverifiedShow Answer

Cost of Goods Sold is the account that is matched with the Sales account to record the company's cost of the inventory that was sold under a perpetual inventory system.

Correct AnswerverifiedShow Answer

Sales is a(n) ________ account.

Correct AnswerverifiedShow Answer

In the perpetual inventory system,inventory is constantly updated through the inventory tracking system.

Correct AnswerverifiedShow Answer

The amount of an invoice is $1000,with terms 2/10,n30.The amount to be paid within the discount period is:

Correct AnswerverifiedShow Answer

Which of the following characterizes Best Buy?

Correct AnswerverifiedShow Answer

Under the perpetual inventory system,the account to which purchased goods are recorded is:

Correct AnswerverifiedShow Answer

Simmons,Inc.received an invoice from Wilson Company for $5,550 with terms of 3/10,n/45 on March 8.If Simmons pays the bill on March 15,they will credit inventory under a perpetual inventory system for:

Correct AnswerverifiedShow Answer

A company pays an invoice early and takes 4% off of the original invoice price.The account to be credited for this amount under a perpetual inventory system is:

Correct AnswerverifiedShow Answer

Archer Manufacturing had sales for the week of $3,569,of which $2,900 was on credit and $659 in cash sales.The cost of the merchandise sold was $1,888.The journal entries would include a:

Correct AnswerverifiedShow Answer

The general public most often buys products from:

Correct AnswerverifiedShow Answer

Under the perpetual inventory system,purchases are entered into the asset account,Inventory,at the:

Correct AnswerverifiedShow Answer

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account.

Correct AnswerverifiedShow Answer

If there is a difference between the physical count and the perpetual record,the account in which the difference is recorded is:

Correct AnswerverifiedShow Answer

Net Sales minus Cost of Goods Sold equals Gross Profit.

Correct AnswerverifiedShow Answer

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