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Exam 5: Accounting for Merchandising Businesses

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Question 61

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Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a

A) debit to Sales
B) debit to Merchandise Inventory
C) credit to Merchandise Inventory
D) credit to Accounts Receivable

E) A) and B)
F) B) and C)

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Question 62

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The buyer will include the sales tax as part of the cost of items purchased for use.

A) True
B) False

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Question 63

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A business using the perpetual inventory system, with its detailed subsidiary records, does need to take a physical inventory.

Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?

Ramone Company had $600,000 in Net Sales for the year 2011. The total assets at the beginning of the year were $240,000 and total assets at the end of the year were $280,000. The ratio of net sales to total assets is (round answer to 2 decimal places) :

Merchandise Inventory normally has a debit balance.

Using the perpetual inventory system, journalize the entries for the following selected transactions:

Using the following data taken from Hsu's Imports Inc., determine the gross profit to be reported on the income statement for the year ended March 31, 2011.

A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts.

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

Journalize the following transactions assuming a perpetual inventory system: Journal

The following data were extracted from the accounting records of Meridian Designs for the year ended March 31, 2012. Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2011, using the periodic method. Also determine gross profit.

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

The inventory system employing accounting records that continuously disclose the amount of inventory is called

Most companies will take a purchases discount, because 1% or 2% discounts are insignificant.

On March 5th, Blowout Sales makes $22,500.00 in sales on the company's own credit cards. The cost of merchandise sold are $16,825.00. Journalize the sales and recognition of the cost of merchandise sold.

In a multiple-step income statement the dollar amount for income from operations is always the same as net income.

Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales.

Gross profit minus selling expenses equals net income.

The form of the balance sheet in which assets, liabilities, and stockholders' equity are presented in a downward sequence is called the report form.