Merchandise inventory is classified on the balance sheet as a
current liability
current asset
long-term asset
long-term liability
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
gross profit
income from operations
net income
gross sales
The inventory system employing accounting records that continuously disclose the amount of inventory is called
retail
periodic
physical
perpetual
Calculate the gross profit for Jefferson Company based on the following:
$495,500
$183,500
$721,500
$226,000
Calculate income from operations for Jonas Company based on the following data:
$485,500
$711,500
$173,500
Gross profit is equal to
sales plus cost of merchandise sold
sales plus selling expenses
sales less selling expenses
sales less cost of merchandise sold
Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. The Pound Co. paid the invoice within the discount period. What is the sales amount to be recorded in the above transactions?
$25,500
$26,010
$24,990
$16,000
The primary difference between the periodic and perpetual inventory systems is that a
periodic system determines the inventory on hand only at the end of the accounting period
periodic system keeps a record showing the inventory on hand at all times
periodic system provides an easy means to determine inventory shrinkage
periodic system records the cost of the sale on the date the sale is made
Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a
credit to Customer Refunds Payable
debit to Merchandise Inventory
credit to Merchandise Inventory
debit to Cash
In credit terms of 3/15, n/45, the "3" represents the
number of days in the discount period
full amount of the invoice
number of days when the entire amount is due
percent of the cash discount
Merchandise with a sales price of $5,000 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a
debit to Cash for $5,000
debit to Sales Discounts for $100
credit to Sales for $4,900
debit to Accounts Receivable for $4,880
Merchandise subject to terms 2/10, n/30, FOB shipping point, is sold on account to a customer for $25,000. What is the amount of the sales discount allowable?
260
500
460
150
Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a
debit to Bank Credit Card Sales, debit to Credit Card Expense, and a credit to Sales
debit to Cash and a credit to Sales
debit to Cash, credit to Credit Card Expense, and a credit to Sales
debit to Sales, debit to Credit Card Expense, and a credit to Cash
When purchases of merchandise are made on account with a perpetual inventory system, the transaction is recorded with which entry?
debit Accounts Payable; credit Merchandise Inventory
debit Merchandise Inventory; credit Accounts Payable
debit Merchandise Inventory; credit Cash Discounts
debit Merchandise Inventory; credit Purchases
Merchandise is sold for cash. The selling price of the merchandise is $6,000 and the sale is subject to a 7% state sales tax. The journal entry to record the sale would include a credit to
cash for $6,000
sales for $6,240
sales tax payable for $420
sales for $5,580
If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as
FOB shipping point
FOB destination
FOB n/30
FOB buyer
If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as
FOB seller
If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are
n/30
consigned
Who is responsible for the freight costs when the terms are FOB shipping point?
the ultimate customer
the buyer
the seller
either the seller or the buyer
Who is responsible for the freight cost when the terms are FOB destination?
the customer
either the buyer or the seller
If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are
If merchandise sells for $3,500, with terms of 3/15, n/45 and the cost of the inventory sold is $2,100, the amount charged to sales is
3395
3500
2037
2100
Under the perpetual inventory system, all purchases of merchandise are debited to the account
Merchandise Inventory
Cost of Merchandise Sold
Cost of Merchandise Available for Sale
Purchases
When the perpetual inventory system is used, the inventory sold is debited to
Supplies Expense
Sales
Under a perpetual inventory system
accounting records continuously disclose the amount of inventory
increases in inventory resulting from purchases are debited to Purchases
there is no need for a year-end physical count
the purchase returns and allowances account is credited when goods are returned to vendors
What is the major difference between a periodic and perpetual inventory system?
Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account
Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month.
All of the answers are correct.
President's salaries, depreciation of office furniture, and office supplies are
selling expenses
miscellaneous expenses
administrative expenses
inventory expenses
Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as
general expenses
other expenses
Multiple-step income statements show
gross profit but not income from operations
neither gross profit nor income from operations
both gross profit and income from operations
income from operations but not gross profit
Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
Accumulated Depreciation
Dividends
Inventory shrinkage is recorded when
merchandise is returned by a buyer
merchandise purchased from a seller is incomplete or short
merchandise is returned to a seller
there is a difference between a physical count of inventory and inventory records
Where are selling and administrative expenses found on the multiple-step income statement?
before gross profit
after sales and before gross profit
after net income and before expenses
after gross profit
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