Ch 4 Quiz

A merchandiser:

• Earns net income by buying and selling merchandise.

• Receives fees only in exchange for services.

• Earns profit from commissions only.

• Earns profit from fares only.

• Buys products from consumers

A company has net sales of $749,400 and cost of goods sold of $300,400. Its gross profit equals:

• $269,000.

• $749,400.

• $300,400.

• $449,000.

• $1,049,800.

Merchandise inventory:

• Is a long-term asset.

• Is a current asset.

• Includes supplies the company will use in future periods.

• Is classified with investments on the balance sheet.

• Must be sold within one month.

The current period's ending inventory is:

• The next period's beginning inventory.

• The current period's cost of goods sold.

• The prior period's beginning inventory.

• The current period's net purchases.

• The current period's beginning inventory.

Blue Wing Corporation's quick assets are $6,023,000, its current assets are $12,675,000 and its current liabilities are $8,085,000. Its acid-test ratio equals:

• 0.47.

• 0.64.

• 0.74.

• 1.34.

• 2.31.

A company's gross profit (or gross margin) was $84,000 and its net sales were $350,000. Its gross margin ratio is:

• 4%.

• 24%.

• 75%.

• $83,750.

• $264,050.

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

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

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

• 30% discount if paid within 2 days.

• 30% discount if paid within 10 days.

• 2% discount if paid within 30 days.

A company uses the perpetual inventory system and recorded the following entry: Account Title Debit Credit Accounts Payable 2,500 Merchandise Inventory 50 Cash 2,450 This entry reflects a:

• Purchase of merchandise on credit.

• Return of merchandise.

• Sale of merchandise on credit.

• Payment of the account payable less a 2% cash discount taken.

• Payment of the account payable less a 1% cash discount taken.

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals:

• $200.

• $1,564.

• $1,568.

• $1,600.

• $1,800.

An income statement that includes cost of goods sold as an expense and shows only one subtotal for total expenses is a:

• Balanced income statement.

• Single-step income statement.

• Multiple-step income statement.

• Combined income statement.

• Simplified income statement.