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Exam 5: Accounting for Retail Businesses

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Question 131

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Under a perpetual inventory system

A) accounting records continuously disclose the amount of inventory
B) increases in inventory resulting from purchases are debited to Purchases
C) there is no need for a year-end physical count
D) the purchases returns and allowances account is credited when goods are returned to vendors

E) A) and D)
F) A) and C)

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Question 132

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Prepare a single-step income statement from the following data for Burt Co., taken from the ledger after adjustments on December 31, the end of the fiscal year.

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Question 133

Multiple Choice

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Kaden Co. sells merchandise on credit to Jase Co. for $9,600. The invoice is dated July 15 with terms of 1/15, net 45. If Jase Co. chooses not to take the discount, by when should the payment be made?

Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a

The asset turnover ratio is the relationship between:

Under the perpetual inventory system, all purchases of merchandise are debited to the account

Journalize the entries to record the following selected transactions: (a)Sold $900 of merchandise on account, subject to 7% sales tax. The cost of the goods sold was $510.(b)Paid $436 to the state sales tax department for taxes collected.

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

If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/30.

Using the following information for a periodic inventory system, what is the amount of income from operations?

In a perpetual inventory system, when merchandise is returned to the supplier, Cost of Goods Sold is debited as part of the transaction.

Alt Tile Company uses a perpetual inventory system. Journalize the December 31 adjusting entries based on the following information: a. The inventory account has a balance of $133,150, while the physical inventory indicates that $130,900 of merchandise is on hand. Assume any shrinkage is a normal amount. b. Sales returns of $11,000 and merchandise returns of $8,000 are estimated for the current year's sales.

Journalize the following merchandise transactions. The company uses the perpetual inventory system.(a)Sold merchandise on account, $17,300, with terms 2/10, net 30. The cost of the goods sold was $12,600.(b)Received payment within the discount period.

On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues.

Match each of the following items (a-h) with the appropriate definition below. -The cost associated with delivery of merchandise to the customer. A)Freight B)Delivery Expense C)Inventory D)Sales discount E)Purchases Returns and Allowances F)Debit memo G)Purchases discount H)Trade discount

The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are not readily available.

When merchandise is sold for $600 plus 6% sales tax, the Sales account should be credited for $636.

The following entry was recorded in the books of Brighty Company.Jan. 12 Inventory 8,000 Accounts Payable-HST, Inc.8,000 Purchased inventory on account.What is the impact of this entry on the accounting equation?

What amount will be paid in full settlement of Invoice 22384, assuming that credit for returns and allowances was received prior to payment and that the invoice was paid within the discount period.

A seller may grant a buyer a reduction in selling price, and this is called a customer discount.