Question 1

Which account is not classified as a selling expense?

Accepted Answer

A)   Sales Salaries
B)   Delivery Expense
C)   Cost of Goods Sold
D)   Advertising ExpenseE) A) and D)
F) A) and C)

Question 2

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows:
​  ​
Journalize the adjusting entry for estimated sales discounts.

Accepted Answer

The answer of Surplus Galore uses the gross method of...

Question 3

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

Accepted Answer

A)   $194, May 15
B)   $194, May 16
C)   $97, May 15
D)   $97, May 16E) A) and B)
F) All of the above

Question 4

The following entry was recorded in the books of Brighty Company.  What is the impact of this entry on the accounting equation? ​

Accepted Answer

A)   an increase in Assets and an increase in Equity
B)   an increase in Assets and an increase in Liabilities
C)   a decrease in Assets and a decrease in LiabilitiesD) None of the above
E) All of the above

Question 5

Match each of the following items (a-h)  with the appropriate definition below.
-Expense account for recording shipping costs paid by the seller.

Accepted Answer

A)  Freight
B)  Delivery Expense
C)  Inventory
D)  Sales discount
E)  Purchases Returns and AllowancesF) Debit memoG) Purchases discountH) Trade discountI) F) and G)
J) B) and C)

Question 6

What are the correct amounts missing from the condensed income statement of Batavia, Inc.  ?  ?

Accepted Answer

A)   Net income: $545,000; Gross profit: $740,000
B)   Net income: $545,000; Gross profit: $545,000
C)   Net income: $420,000; Gross profit: $740,000
D)   Net income: $420,000; Gross profit: $545,000E) None of the above
F) All of the above

Question 7

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Accepted Answer

A)   sales on account
B)   sales returns
C)   cash sales
D)   sales when the credit card company remits the cashE) A) and B)
F) B) and D)

Question 8

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Accepted Answer

A) True 
 B)False

Question 9

Under a periodic inventory system, closing entries will include

Accepted Answer

A)   debits to Sales, Purchases Returns and Allowances, and Purchases Discounts
B)   credits to the Allowance for Doubtful Accounts
C)   adjustments to the inventory account to match physical inventory
D)   all of theseE) B) and C)
F) A) and B)

Question 10

Buyers and sellers do not normally record the list prices of merchandise and the trade discounts in accounts.

Accepted Answer

A) True 
 B)False

Question 11

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Accepted Answer

A) True 
 B)False

Question 12

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory system. Journalize the following transactions:
​  ​
Journal

Accepted Answer

​ Journal ...

Question 13

Generally, the revenue account for a merchandising business is entitled

Accepted Answer

A)   Sales
B)   Fees Earned
C)   Gross Sales
D)   Gross ProfitE) B) and C)
F) None of the above

Question 14

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

Accepted Answer

A)   credit to Customer Refunds Payable
B)   debit to Inventory
C)   credit to Inventory
D)   debit to CashE) C) and D)
F) A) and B)

Question 15

Details of invoices for purchases of merchandise are as follows:  
 What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Accepted Answer

A)   $10,653
B)   $10,753
C)   $10,803
D)     $$10,863 E) B) and D)
F) B) and C)

Question 16

Match each of the following terms (a-h)  with the correct definition below.
-Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Accepted Answer

A)  Credit terms
B)  FOB destination
C)  FOB shipping point
D)  Periodic inventory system
E)  Perpetual inventory systemF) Inventory shrinkageG) Single-step income statementH) Multiple-step income statementI) B) and H)
J) A) and C)

Question 17

Emma Co. sold to Isabella Co. merchandise on account FOB shipping point, 2/10, net 30, for $15,000. Emma Co. prepaid the $750 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make to record the payment for the merchandise if Isabella Co. pays within the discount period?

Accepted Answer

A)   Accounts Payable-Emma Co., debit $15,000; Cash, credit $15,000
B)   Accounts Payable-Emma Co., debit $15,450; Cash, credit $15,450
C)   Accounts Payable-Emma Co., debit $15,000; Freight In, debit $750; Cash, credit $15,750
D)   Accounts Payable-Emma Co., debit $15,750; Inventory, debit $300; Cash, credit $16,050E) A) and B)
F) A) and C)

Question 18

When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to Purchases.

Accepted Answer

A) True 
 B)False

Question 19

A sales discount encourages customers to pay accounts more quickly than if a discount were not available.

Accepted Answer

A) True 
 B)False

Question 20

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Accepted Answer

The answer of Describe the major differences in preparing the...

Exam 5: Accounting for Retail Businesses

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows: Journalize the adjusting entry for estimated sales discounts.

Correct Answer
verified

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Correct Answer
verified

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory system. Journalize the following transactions: Journal

Correct Answer
verified
Journal ...
View Answer

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Correct Answer
verified

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Correct Answer
verified

What are the correct amounts missing from the condensed income statement of Batavia, Inc. ? ?

Correct Answer
verified

Under a periodic inventory system, closing entries will include

Correct Answer
verified

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

Correct Answer
verified

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Correct Answer
verified

A sales discount encourages customers to pay accounts more quickly than if a discount were not available.

Correct Answer
verified

Correct Answer
verified

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Correct Answer
verified

Details of invoices for purchases of merchandise are as follows: What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Correct Answer
verified

Buyers and sellers do not normally record the list prices of merchandise and the trade discounts in accounts.

Correct Answer
verified

The following entry was recorded in the books of Brighty Company. What is the impact of this entry on the accounting equation?

Correct Answer
verified

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

Correct Answer
verified

When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to Purchases.

Correct Answer
verified

Which account is not classified as a selling expense?

Correct Answer
verified

Match each of the following items (a-h) with the appropriate definition below. -Expense account for recording shipping costs paid by the seller.

Correct Answer
verified

Generally, the revenue account for a merchandising business is entitled

Correct Answer
verified

Exam 5: Accounting for Retail Businesses

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows: ​ ​ Journalize the adjusting entry for estimated sales discounts.

Correct AnswerverifiedShow Answer

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Correct AnswerverifiedShow Answer

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory system. Journalize the following transactions: ​ ​ Journal

Correct Answerverified​ Journal ...View AnswerShow Answer

If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

Correct AnswerverifiedShow Answer

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

Correct AnswerverifiedShow Answer

What are the correct amounts missing from the condensed income statement of Batavia, Inc. ? ?

Correct AnswerverifiedShow Answer

Under a periodic inventory system, closing entries will include

Correct AnswerverifiedShow Answer

Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a

Correct AnswerverifiedShow Answer

Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

Correct AnswerverifiedShow Answer

A sales discount encourages customers to pay accounts more quickly than if a discount were not available.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Correct AnswerverifiedShow Answer

Details of invoices for purchases of merchandise are as follows: What will be the total amount collected on all four invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.

Correct AnswerverifiedShow Answer

Buyers and sellers do not normally record the list prices of merchandise and the trade discounts in accounts.

Correct AnswerverifiedShow Answer

The following entry was recorded in the books of Brighty Company. What is the impact of this entry on the accounting equation? ​

Correct AnswerverifiedShow Answer

Jacob Co. sells merchandise on credit to Isaiah Co. for $9,700. The invoice is dated May 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?

Correct AnswerverifiedShow Answer

When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to Purchases.

Correct AnswerverifiedShow Answer

Which account is not classified as a selling expense?

Correct AnswerverifiedShow Answer

Match each of the following items (a-h) with the appropriate definition below. -Expense account for recording shipping costs paid by the seller.

Correct AnswerverifiedShow Answer

Generally, the revenue account for a merchandising business is entitled

Correct AnswerverifiedShow Answer

Surplus Galore uses the gross method of accounting for sales discounts. Selected data from its records for the year ended December 31 was as follows: Journalize the adjusting entry for estimated sales discounts.

Correct Answer
verified

Correct Answer
verified

Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses a perpetual inventory system. Journalize the following transactions: Journal

Correct Answer
verified
Journal ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The following entry was recorded in the books of Brighty Company. What is the impact of this entry on the accounting equation?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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