INTRO TO ACCOUNTING- MERCHANDISING

LETTER ONLY OK. CAPS LOCK.

Which term represents the deduction from the invoice price of purchased goods granted by suppliers for early payment?

A. Sales discount

B. Purchase discount

C. Trade discount

D. Purchase return and allowance answer

(a)  

Revenue from an artistic performance is recognized once

A. The audience register for the event online.

B. The tickets for the concert are sold.

C. Cash has been received from the ticket sales.

D. The event takes place.

(a)  

A discount given to a customer for purchasing a large volume of merchandise is typically referred to as

A. Trade discount

B. Quantity discount

C. Size discount

D. Cash discount

(a)  

A company receives an invoice that indicates that, as a buyer, they must pay the transportation costs of delivering the merchandise. Which of the following will most likely be noted as the delivery terms?

A. FOB Destination

B. FOB Shipping Point

C. FOB 2/10, n/30

(a)  

In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results?

A. Notes to the financial statements

B. Management discussion and analysis section

C. Balance sheet

D. Auditor’s report

(a)  

Which of the following is a characteristic of a perpetual inventory system?

A. Inventory purchases are debited to a purchases account.

B. Inventory records are not kept for every item.

C. Cost of goods sold is recorded with each sale.

D. Cost of goods sold is determined as the amount of purchases less the change in inventory

(a)  

The balance in a deferred revenue account represents an amount that is

Earned Collected

A. Yes Yes

B. Yes No

C. No Yes

D. No No

(a)  

In a perpetual inventory system, transportation charges are recorded with a debit to the Merchandise Inventory account.

A. The statement is always false

B. The statement is never false

C. The statement is true, but not always

D. The statement is neither true nor false

(a)  

Which method may be used to record cash discounts received for paying suppliers promptly?

A. Net method

B. Gross method

C. Average method

D. Net method and gross method

(a)  

Why is inventory included in the computation of net income?

a. To determine cost of goods sold

b. To determine sales revenue

c. To determine merchandise returns

d. Inventory is not included in the computation of net income

(a)