Accounting Cycle for Merchandising Business Quiz (PART II)

What is the account used to record return of merchandise purchased in a perpetual inventory system?

• Purchase Returns

• Purchase Discount

• Purchases

• Merchandise Inventory

What is the account used to record freight on purchases in a periodic inventory?

• Merchandise Inventory

• Freight Out

• Purchases

• Freight In

What is the account used to record discounts given to customer for early collection of payment?

• Purchases Discount

• Sales Returns

• Merchandise Inventory

• Sales Discount

Which of the following is a contra purchases account?

• Sales

• Accounts Payable

• Purchase Return

• Purchases

Which of the following is NOT a sales transaction?

• Cash sales

• Bought merchandise

• Sales on credit

• Freight on Sales

Which of the following is NOT a purchase transaction?

• Freight on purchases

• Cash payment of account

• Collection of receivables

• Bought merchandise

What is the effect on equation if there is merchandise bought on account?

• Increase in assets, increase in equity

• Increase in assets, decrease in equity

• Increase in assets, decrease in liability

• Increase in assets, increase in liabilities

Adul Company which uses the gross price method of recording purchases, and the periodic inventory system, bought merchandise for P8,000, terms 2/10, n/30. If Garcia returns P 2,000 of goods to the vendor, what includes the entry to record returns?

• Debit to accounts payable P 2,000

• Debit to purchase discount P 40

• Credit to purchase returns and allowances of P 1,960

• Debit to purchase returns and allowances of P1,960

In April the transactions of Bugarin Trading included the following: Sold merchandise on account 145,000 credit terms of 2/10, n/30; Sales returns amounting to 1,200. What included the entry to record collection of full payment within the discounted period?

• Credit to Sales Discount of P 2,876

• Debit to cash of P140,924

• Credit to Accounts Receivable of P 145,000

• Debit to accounts receivable of 143,000

What is the nature of transactions in a merchandising business?

• Manufacturing goods

• Buying and selling of merchandise

• Buying and selling of services

• Providing consulting services