Accounting 1 - Final Exam

Merchandisers

• Earn profit from buying and selling merchandise

• Receive fees in exchange for services

• Earn profit from commissions

• Earn profit from fare

• Do not report gross profit

Wholesalers

• Buy products from manufacturers and sell to retailer

• Buy products from other wholesalers and sell to consumers

• Buy products from manufacturers and sell to consumers

• Buy products from retailers and sell to consumers

• All of the above

Retailers

• Buy products from manufacturers and sell to wholesalers

• Buy products from wholesalers and sell to other wholesalers

• Buy products from manufacturers and wholesalers and sell to consumers

• Buy only from wholesalers

• All of the above

Gross profit is

• The same as profit

• Subtracted from operating income to get profit

• Net sales less cost of goods sold

• A special general ledger account

• Only calculated when using the perpetual inventory system

Z-Mart had sales of $500,100. Cost of goods sold was $143,400. What is the gross profit?

• $216,600

• $217,100

• $356,700

• $503,900

• $213,300

Z-Mart had sales of $572,300. Gross profit was $239,106. What is the cost of goods sold?

• $279,194

• $333,194

• $360,194

• $811,406

• $40,088

Merchandise inventory is

• Reported on the balance sheet under plant and equipment

• Products a company owns for resale to customers

• Reported on the income statement as an expense

• Includes supplies

• Included on a service company's balance sheet

Merchandise inventory

• Is a capital asset

• Is a current asset

• Can include supplies

• Is a type of long-term investment

• Is an expense

A perpetual inventory system

• Gives a continuous record of the amount of inventory on hand

• Uses a Purchases account for the cost of new merchandise purchased

• Was historically used by companies that sold large quantities of low-value items

• Is not widely used in practice

• All of the above

2/10, n/30 is interpreted as

• 2% cash discount if the whole amount is paid within 10 days, the balance is due in 30 days

• 10% cash discount if the whole amount is paid within 2 days, the balance is due in 30 days

• 30% discount if paid within 2 days

• 30% discount if paid within 10 days

• 2% discount if paid within 30 days