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Exam 6: Accounting for Merchandising Businesses

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Question 51

Multiple Choice

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Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly rate of approximately

A) 2%
B) 24%
C) 20%
D) 36%

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

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Question 52

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Net sales is equal to sales minus cost of merchandise sold.

A) True
B) False

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Question 53

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Which of the following accounts will not be found on the Cost of Merchandise Sold section on the Income Statement?

The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

Merchandise is ordered on December 1; the merchandise is shipped by the seller and the invoice is prepared, dated, and mailed by the seller on December 3; the merchandise is received by the buyer on December 8; the entry is made in the buyer's accounts on December 10. The credit period begins with what date?

When comparing a retail business to a service business, the financial statement that changes the least is the

A chart of accounts for a merchandising business

A sale of $750 on account, subject to a sales tax of 6%, would be recorded as an account receivable of $750.

Using the following information, what is the amount of gross profit?

The buyer will include the sales tax as part of the cost of items purchased for use.

Match each of the following term with the correct definition below.

Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

Selected data from the ledger of Morrison Co. after adjustment at September 30, 2011 the end of the fiscal year, are listed as follows: Prepare an income statement, using the single-step form, and a statement of owner's equity.

Under a perpetual inventory system

Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order ("1" for assets, and so on). Each account number is three digits. Contra accounts should designated with a decimal of the account (100.1 for contra of account 100). Assets and liabilities should be in order of liquidity, expenses should be in alphabetical order.

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

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

A sales invoice included the following information: merchandise price, $10,000; freight, $900; terms 1/10, n/eom, FOB shipping point. 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?

Calculate the gross profit for Jonas Company based on the data given below:

Under the periodic inventory system, the cost of merchandise sold is equal to the beginning merchandise inventory plus the cost of merchandise purchased plus the ending merchandise inventory.