WorksheetsAccounting for Merchandise
Total questions: 10
Worksheet time: 5mins
1The most important differences between a service business and a retail business are reflected in their operating cycles and financial statements.
True
False
Merchandise inventory is classified on the balance sheet as a
current liability
current asset
long-term asset
long-term liability
What is the term applied to the excess of net revenue from sales over the cost of merchandise sold
gross profit
income from operations
net income
gross sales
1Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. The Pound Co. paid the invoice within the discount period. What is amount of net sales from the above transactions?
$25,500
$26,010
$24,990
$16,000
Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a
debit to Sales
debit to Merchandise Inventory
credit to Merchandise Inventory
credit to Accounts Receivable
If the seller is to pay the freight costs of delivering merchandise, the delivery terms are stated as
FOB shipping point
FOB destination
FOB n/30
FOB seller
When the perpetual inventory system is used, the inventory sold is debited to
Supplies Expense
Cost of Merchandise Sold
Merchandise Inventory
Sales
The journal entry to record the receipt of inventory purchased for cash in a perpetual inventory system would be
Jan. 1
D. Merchandise Inventory 1.500
K. Cash
1,500
Jan. 1
D. Office Supplies 1,500
K. Cash
1,500
Jan. 1
D. Purchases 1,500
K. Accounts Payable
1,500
Jan. 1
D. Cash 1,500
K. Accounts Receivable
1,500
What is the major difference between a periodic and perpetual inventory system?
Under the periodic inventory system, the purchase of inventory will be debited to the Purchases account.
Under the periodic inventory system, no journal entry is recorded at the time of the sale of inventory for the cost of the inventory.
Under the periodic inventory system, all adjustments such as purchases returns and allowances and discounts are reconciled at the end of the month
All of the answers are correct
The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a
multiple-step statement
revenue statement
report-form statement
single-step statement
