WorksheetsAccounting Chapter 5 Review
Total questions: 39
Worksheet time: 20mins
The operating cycle of a merchandising company is ordinarily shorter than that of a service company
True
False
Which of the following is a merchandiser that sells directly to consumers?
Retailer
Wholesaler
Customer
Service enterprise
What is true about a wholesaler?
It is a company that sells to customers at a discount
It conducts large sales for consumers on a recurring bias
It sells to another business, which will sell to a consuming customer
It sells to only manufacturing companies
Which of the following statements about a periodic inventory system is true?
Companies determine cost of goods sold only at the end of the accounting period
Companies continuously maintain detailed records of the cost of each inventory purchase and sale
The periodic system provides better control over inventories than a perpetual system
The increased use of computerized systems has increased the use of the periodic system
The operating cycle of a merchandising company is ordinarily ____________ that of a service firm
the same as
shorter than
longer than
has fewer steps than
Which of the following statements is correct?
A periodic inventory system provides better control over inventories than does a perpetual inventory system
A perpetual inventory system provides better control over inventories than does a periodic inventory system
A periodic inventory system computes cost of goods sold each time a sale occurs
A perpetual inventory system computes cost of goods sold only at the end of the accounting period
Which inventory system will likely be used by a company with merchandise that has a high unit value?
Perpetual inventory system
Double entry inventory system
Periodic inventory system
Single entry inventory system
The operating cycle of a merchandising company is ordinarily shorter than that of a service company
True
False
Jax Company uses a perpetual inventory system and on November 30 purchased merchandise for which it must pay the shipping charges. Which of the following is one part of the required journal entry when Jax pays the shipping charges of $200?
A debt to Delivery Expense for $200
A debit to Cash for $200
A debit to Freight-out for $200
A debit to Inventory for $200
Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold?
$60,000
$40,000
$35,000
$15,000
Which of the following will result in gross profit?
Operating expenses - net income
Sales revenue - operating expenses
Sales revenue - cost of goods sold
Operating expenses - cost of goods sold
Net income is $15,000, operating expenses are $20,000, net sales total $75,000, and sales revenue total $95,000. How much is the profit margin?
20%
16%
75%
70%
In a periodic inventory system, when is the cost of merchandise sold determined?
At the time of the sale
At the end of the period
Periodically during the period
Either at time of sale, end of period or periodically during the period
Discount term of 2/10, n/30 means that a 10% discount is available if payment is made within 30 days.
True
False
Cosmos corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21?
Debit to Accounts Payable to $200
Credit to Accounts Payable for $1,600
Credit to Cash for $1,600
Debit to Cash for $1,600
When credit terms of 1/15, n/60 are offered, how long is the discount period?
1 day
15 days
45 days
60 days
Martin Company purchases $4,200 of merchandise on March 1, with credit terms of 3/10, n/30. If Martin pays on March 1, what is the cost of this purchase?
$4,200
$3,780
$4,074
$3,864
Which of the following items does not result in an entry to the Inventory account under a perpetual system?
A purchase of merchandise
A return of Inventory to the supplier
Payment of freight costs for goods shipped to a customer
Payment of freight costs for goods received from a supplier
Marsh, Inc. paid for freight costs on merchandise it shipped to a customer. In what account will Marsh record this cost in a perpetual inventory system?
Inventory
Cost of goods sold account
Freight-in account
Freight-out account
Sales Returns and Allowances is a contra-revenue account.
True
False
Sales Discounts is a contra asset account.
True
False
On what account is a sales discount biased?
Invoice price plus freight-in
Invoice less discount
Invoice price plus freight-out
Invoice price less returns and allowances
Myers and Company sold $1,800 of merchandise on account to Oscar, Inc. on March 1 with credit terms of 2/10, n/30. Oscar returned $500 of the merchandise due to poor quality on March 3. If Oscar pays for the purchase on March 11, what entry does Myers make to record receipt of the payment?
Cash: $1,764
Accounts Receivable: $1,764
Cash: $1,800
Sales Returns and Allowances: $500
Accounts Receivable: $1,300
Cash: $1,274
Sales Discount: $26
Accounts Receivable: $1,300
Cash: $1,800
Sales Discount: $36
Accounts Receivable: $1,764
In a perpetual inventory system, which accounts will the seller credit when merchandise is returned by a customer?
Sales Returns and Allowances and Accounts Receivable
Accounts Receivable and Cost of Goods Sold
Inventory and Cost of Goods Sold
Sales Returns and Allowances and Inventory
Which statement is true for the seller?
The Sales Discounts account is credited for defective merchandise returned by a customer
The Sales Discounts account is debited for defective merchandise returned by a customer
The Sales Returns and allowances is credited for defective merchandise returned by a customer
The Sales Returns and allowances is debited for defective merchandise returned by a customer
A retailer makes a $100 sale with terms of 2/10, n/30 on the first of the month. The customer returns $20 of merchandise for credit on account. What journal entry will the retailer record when payment is received within the discount period under a perpetual inventory system?
Cash: $78.40
Sales Discounts: $1.60
Accounts Receivable: $80
Accounts Payable: $80
Cash: $78.40
Purchase Discounts: $1.60
Cash: $98
Purchase Discounts: $2
Accounts Receivable: $100
Cash: $78.40
Purchase Discounts: $1.60
Accounts Payable: $80
Which of these accounts normally have a debit balance?
Sales Discounts only
Sales Returns and Allowances only
Both Sales Discounts and Sales Returns and Allowances
Neither Sales Discount nor Sales Returns and Allowances
A credit sale of $750 is made on June 13, terms 2/10, n/30, on which a return of $50 is granted on June 16. What amount is received as payment in full time on June 23?
$700
$686
$735
$650
Which statement is true when recording the sale of goods for cash in a perpetual inventory system?
Only one journal entry is necessary. It will record cost of goods sold and reduce of inventory.
Only one journal entry is necessary. It will record the receipt of cash and sales revenue.
2 journal entries are necessary: one to record the receipt of cash and sales revenue, and one to record the cost of goods sold and to reduce inventory
2 journal entries are necessary: one to record the receipt of cash and reduction of inventory, and one to record the cost of goods sold and sales revenue
Which of the following statements is correct?
A company which uses a perpetual inventory system needs only one journal entry when it sells merchandise.
A company which uses a perpetual inventory system needs 2 journal entries when it sells merchandise.
A company which uses a perpetual inventory system debits inventory and credits cost of goods sold when it sells merchandise,
None of these answer choices are correct
Which type of accounts are Sales Returns and Allowances and Sales Discounts?
Contra asset accounts
Expense accounts
Contra revenue accounts
Contra expense accounts
Gross profit is the difference between net sales and cost of goods sold
True
False
Sales revenue total to $10,000. Sales return and allowances are $500 and sales discounts are $1,000. How much is net sales?
$11,500
$10,500
$10,000
$8,500
Which of the following is classified in an income statement as a nonoperating activity?
Advertising expense
Interest expense
Freight-out
Cost of goods sold
Which of the following is classified in an income statement as a nonoperating activity?
Receiving dividend revenue from an investment
Returning merchandise
Receiving an allowance for merchandise damaged in shipment
Paying for a purchase of inventory
Assume that sales revenue are $450,000, sales discounts are $10,000, net income is $35,000, and cost of goods sold is $320,000. How much are gross profit and operating expenses, respectively?
$130,000 and $95,000
$120,000 and $95,000
$130,000 and $85,000
$120,000 and $85,000
Which of the following would appear on both a single-step and a multiple-step income statement?
Gross profit
Income from operations
Cost of goods sold
Other expenses and losses
If net sales revenue totals $400,000, cost of goods sold is $310,000, and operating expenses are $60,000, how much is the gross profit?
$30,000
$90,000
$340,000
$400,000
Which of the following will be shown on the income statement for a merchandising company?
Gross profit
Cost of goods sold
A sales revenue section
All of the answer choices are correct
