What is the layman's term for merchandising?

• business

• buying

• selling

• buy and sell

To grant a customer a sales return, the seller credits Sales Returns and Allowances.

• True

• False

An enterprise which sells goods to customers is known as a

• proprietorship

• corporation

• retailer

• service firm

The collection of a ₱ 750 account within the 5 percent discount period will result in a

• debit to Sales Discounts for ₱ 37.50

• debit to Accounts Receivable for ₱ 712.50

• credit to Cash for ₱ 712.50

• credit to Accounts Receivable for ₱ 712.50

In a perpetual inventory system, as inventory is purchased, it is initially recorded as (1) _____________. When inventory is sold to customers, it is converted to (2) ___________.

• (1) an asset (2) an expense

• (1) an expense (2) revenue

• (1) an expense (2) cost of goods sold

• (1) an asset (2) revenue

What account is used to summarize reduction from selling prices of merchandise sold to customers on account due to early cash settlement of the account?

• Sales Return

• Sales Discount

• Freight out

• Sales

What are the accounts involved in this transaction?

BZ Water Refilling Station received payment for the account of Mr. Ef Ven. BZ WRSgranted Mr. Ven a discount of PHP. 12, 350.

1. Cash

2. Purchase Discounts

3. Sales Discounts

4. Accounts Receivable

5. Accounts Payable

• 1, 3 and 5

• 1 and 3

• 3 and 4

• 3 and 5

Which is not a merchandising accounts in buying?

• Purchases

• Freight-in

• Drayage in

• Freight-out

Why is Purchase Allowances a credit account?

• Because purchase allowances are additional assets.

• Because purchase allowances are added to the value of total merchandise.

• Because purchase allowances are deductions from the total value of the total purchases.

• Because purchase allowances are merchandise bought are assets until sold.

Which of the following best describes the Perpetual Inventory System?

1. It is used by merchandising firms selling a limited number of products of relatively high value, e.g. appliances, equipment, jewelry, and the likes.

2. It is normally used by a merchandising firm selling innumerable products, e.g., stocks in trade of trading stores, groceries, small department stores and etc.

3. It is a method of inventory management that records real-time transactions of received or sold stock through the use of technology – generally considered a more efficient method.

4. It is time-consuming and can produce stale numbers that are less useful to management.

• 1 and 2

• 1 and 3

• 2 and 3

• 3 and 4