Review for Merchandising

In merchandising operations, the Sales account will be recorded if the seller sells

• assets that the company owns

• goods or merchandise only

• goods or merchandise on cash basis

• goods or merchandise with discount

Which of the following discounts has no account of its own and requires no special accounting entry?

• cash discount

• trade discount

• sales discount

• purchase discount

A sale on May 21 with terms of 2/10; n/30 is due to be collected by

• May 23

• May 31

• June 20

• June 1

Under the perpetual inventory system, the entry to record a sales return would include a debit to

• Accounts receivable

• Sales discount

• Cost of goods sold

• Merchandise inventory

Which of the following is not considered in computing net cost of purchases?

• Transportation cost paid on purchased goods

• Transportation cost paid on goods shipped to customers

• Purchase returns and allowances

• Purchases

If a customer returns goods to a merchandiser, what effect will the return have on the books of the merchandiser?

• a increase in sales account

• a decrease in the accounts payable and allowance accounts

• an increase in the purchase return and allowance account

• an increase in the sales returns and allowance account

Sales return and allowances is classified in the financial statements as:

• an expense account

• a revenue account

• a contra revenue account

• a cost of goods sold account

A physical inventory count is usually taken

• in the middle of the accounting period

• at the end of the accounting period

• at the start of the accounting period

• at the peak of the busy season

A purchase discount results from

• buying a large enough quantity of merchandise to get the discount

• returning goods to the seller

• receiving a purchase allowance from the seller

• paying within the discount

Revenue is normally entered in the accounting records when:

• goods are received

• goods are sold

• a customer pays for the goods

• a customer orders goods