Accounting Cycle (Merchandising Business) I

A form of discount granted by a retailer to encourage a customer to buy the goods is called:

• Purchase discount

• Trade discount

• Cash discount

• Sales discount

Which of the following is NOT part of the cost of inventory purchased?

• Taxes and customer duties paid on the goods purchased

• Freight in

• Freight out

• Insurance that is shouldered by the buyer

If the term of the sale is F.O.B destination. goods that are in transit by the end of the year belongs to the

• Buyer

• Seller

• Carrier

• No Correct Answer

Which of the following is NOT part of the inventory of the business?

• Goods in transit from the supplier. Term: F.O.B shipping point.

• Goods in transit to the customer. Term: F.O.B destination.

• Goods that are ready for shipment to the customer.

• Goods held for sale on behalf of Monte Company, a consignor.

A customer purchased product that has a catalog price of P20,000. The term of the purchase was: 10%, 15%, 1/10, n/15. How much would be the invoice price of the purchase?

• P20,000 x 75%?

• P20,000 x 90% x 85% x 99%

• P20,000 x 90% x 85%

• P20,000 x 75% x 99%

A merchandising company:

• Earns profit from commissions only.

• Earns net income by buying and selling merchandise.

• Receives fees in exchange for services

• Earns profit from fares only.

If an item has an invoice price of P12,500 and the seller had a gross profit of 25% of cost, what was the cost of dales?

• P16,666.67

• P15,625

• P9,375

• P10,000

The credit terms 2/10, n/30 are interpreted as:

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

• 30% discount if paid within 10 days.

• 30% discount if paid within 2 days.

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

A supporting document prepared by a seller that is used as an evidence of a downward adjustment in the amount that is due from a customer is known as:

• Credit memorandum

• Debit memorandum

• Receiving report

• Purchase order

If a retailer buys item at an acquisition cost of P200 and later sells it at a 25% mark-up, the selling price of the item is:

• P275

• P250

• P225

• P266.67