1. Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately a.20% b.2% c.24% d.36%
1. Taking advantage of a 2/10, n/30 purchases discount is equal to a yearly savings rate of approximately
a.20%
b.2%
c.24%
d.36%
2. A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB shipping point with prepaid freight of $900 added to the invoice. Assuming that a credit for merchandise returned of $500 (before discount) is granted prior to payment and the invoice is paid within the discount period, what amount of cash should be received by the seller?
a.$11,500
b.$12,285
c.$11,385
d.$10,480
3. Cumberland Co. sells $1,012 of merchandise to Hancock Co. for cash. Cumberland paid $730 for the merchandise. Under a perpetual inventory system, which of the following is the correct
a.debit Cash, $1,012; credit Merchandise Inventory, $730
b.debit Cash, $1,012; credit Sales, $1,012; and debit Cost of Merchandise Sold, $730; credit Merchandise Inventory, $730
c.debit
d.debit Cash, $730; credit Sales, $730
4. Which of the following is nota difference between a retail business and a service business?
a.the inclusion of merchandise inventory on the
b.what is sold by the business
c.elements of the
d.the inclusion of gross profit on the income statement
5. When the perpetual inventory system is used, the inventory sold is debited to
a.Sales
b.Merchandise Inventory
c.Supplies Expense
d.Cost of Merchandise Sold
6. Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as
a.sales on account
b.sales when the credit card company remits the cash
c.sales returns
d.cash sales
7. Inventory shrinkage is journalized when
a.there is a difference between the physical count of inventory and the perpetual inventory records
b.merchandise is returned to a seller
c.merchandise purchased from a seller is incomplete or short
d.merchandise is returned by a buyer
8. Where are selling and administrative expenses found on the multiple-step income statement?
a.after gross profit
b.after net income and before expenses
c.after sales and before gross profit
d.before gross profit
9. The inventory system employing accounting records that continuously disclose the amount of inventory is called
a.physical
b.periodic
c.perpetual
d.retail
10. When goods are shipped FOB destination and the seller pays the freight charges, the buyer
a.makes no journal entry for the freight
b.does not take a discount
c.journalizes a reduction for the cost of the merchandise
d.journalizes a reimbursement to the seller
11. Under a perpetual inventory system,
a.accounting records continuously disclose the amount of inventory
b.a physical count is required to determine cost of merchandise on hand
c.the purchases returns and allowances account is credited when goods are returned to vendors
d.increases in inventory resulting from purchases are debited to Purchases
12. Using a perpetual inventory system, the journal entry for the sale of merchandise on account includes a
a.credit to Accounts Receivable
b.credit to Merchandise Inventory
c.debit to Sales
d.debit to Merchandise Inventory
13. In a merchandising business, operating income plus operating expenses is equal to
a.cost of merchandise available for sale
b.gross profit
c.cost of merchandise sold
d.sales
14. Who is responsible for the freight costs when the terms are FOB shipping point?
a.either the seller or the buyer
b.the buyer
c.the ultimate customer
d.the seller
15. Which of the following items should notbe included in the cost of ending merchandise inventory?
a.sold units in transit, not invoiced, and shipped FOB destination
b.purchased units in transit, shipped FOB shipping point
c.purchased units in transit, shipped FOB destination
d.units on hand in the warehouse
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