Accounting for Merchandising Operations Quiz (PART I)

What is the main revenue-producing activity in merchandising operations?

• Service companies

• Purchasing inventory

• Sales revenue

• Accounts receivable transactions

What are the goods that a merchandising company sells to its customers called?

• Non-current assets

• Current assets

• Merchandise inventory

• Service inventory

In a sales transaction, when is the legal ownership of the goods transferred?

• It remains with the buyer

• From the buyer to the seller

• It remains with the seller

• From the seller to the buyer

What is the term used to specify the payment terms on an invoice for sales made on account?

• Sales allowance

• Cash discount

• Trade discount

• Credit term

What is the purpose of the account 'Sales Returns and Allowances'?

• To record purchase discounts

• To record cash discounts given to customers

• To record merchandise returned from the customer

• To record sales revenue

What account title is used in the periodic system of inventory to record purchases?

• Accounts Payable

• Purchases

• Sales Revenue

• Merchandise Inventory

What is the deadline for payment if the credit term is '2 over 10 n over 30'?

• 20 days

• 15 days

• 30 days

• 10 days

What is the purpose of the account 'Purchase Returns and Allowances'?

• To record sales revenue

• To record purchase discounts

• To record merchandise returned to the supplier

• To record cash discounts given by suppliers

What is the net sales amount if Gross Sales is $400,000, Sales Discounts are $10,000, and Sales Returns and Allowances are $12,000?

• $378,000

• $400,000

• $398,000

• $380,000

What is the net purchases amount if Gross Purchases is $200,000, Purchase Discounts are $8,000, and Purchase Returns and Allowances are $5,000?

• $187,000

• $190,000

• $200,000

• $195,000