Financial Accounting Quiz - Week 9

What is a merchandising company?

• A company that only sells services

• A company that only manufactures products

• A company that provides consulting

• A company that buys and sells goods

What is the main source of income for a merchandising company?

• Selling services

• Selling merchandise

• Investing in stocks

• Renting properties

What are the two types of inventory recording systems?

• Periodic and Continuous

• Perpetual and Periodic

• Cash and Credit

• Monthly and Yearly

What is the cost of goods sold?

• Total sales revenue

• Total expenses

• Net profit

• Cost of merchandise sold

What is a purchase return?

• Receiving a discount

• Selling items to customers

• Returning a defective item

• Buying more items

What does the term 'freight cost' refer to?

• Cost of buying items

• Cost of shipping items

• Cost of advertising

• Cost of selling items

What is a sales discount?

• A tax on sales

• A fee for late payment

• A discount on purchases

• A reduction in sales price

What is the purpose of adjusting entries?

• To correct errors

• To close the business

• To increase sales

• To update account balances

What is included in the income statement?

• Only assets

• Only liabilities

• Only expenses

• Sales and expenses

What is the role of inventory in a merchandising company?

• To track employee hours

• To manage cash flow

• To hold goods for sale

• To record sales transactions