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Exam 5: Accounting for Merchandising Operations

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Question 51

True/False

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Cost of goods sold is also called cost of sales.

A) True
B) False

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Question 52

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An account used in the periodic inventory system that is not used in the perpetual inventory system is

A) Merchandise Inventory
B) Sales
C) Sales Returns and Allowances
D) Accounts Payable
E) Purchases

F) None of the above
G) A) and E)

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Question 53

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A journal entry with a debit to cash of $980,a debit to Sales Discounts of $20,and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.

On October 1,Courtland Company sold merchandise in the amount of $5,800 to Carter Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Courtland uses the periodic inventory system.Carter pays the invoice on October 8,and takes the appropriate discount.The journal entry that Courtland makes on October 8 is:

The current period's ending inventory is:

The acid-test ratio is defined as current assets divided by current liabilities.

When a credit customer returns merchandise to the seller,under a perpetual inventory system,the seller would debit Sales Returns and Allowances and credit Accounts Receivable and also debit Merchandise Inventory and credit Cost of Goods Sold.

A company reported the following information for the month of November: Sales…………………………………. $50,475 Sales discounts………………………. 235 Sales returns and allowances………… 2,840 Cost of goods sold…………………… 33,975 Required: Calculate this company's gross margin ratio.

What is gross margin ratio? How is it used as an indicator of profitability?

___________________ refer to reductions in the selling price of merchandise sold to customers,often involving damaged or defective merchandise that a customer is willing to purchase with a decrease in the selling price.

Selling expenses support a company's overall operations and include expenses related to accounting,human resource management,and financial management.

A company records the following journal entry: debit Cash $1,470,debit Sales Discounts $30,and credit Accounts Receivable $1,500.This means that a customer has taken a ___ cash discount for early payment.

A service company earns net income by buying and selling merchandise.

When a company has no reportable nonoperating activities,its income from operations is reported as ___________________ .

All of the following statements regarding sales returns and allowances are true except:

All of the following statements related to U.S.GAAP and IFRS are true except:

If a company sells merchandise with credit terms 2/10 n/60,the credit period is 10 days and the discount period is 60 days.

Herald Company had sales of $135,000,sales discounts of $2,000,and sales returns of $3,200.Herald Company's net sales equals:

Following is the year-end adjusted trial balance for Yakima's Sporting Goods for the current year: Prepare the closing entries at December 31 for the current year.

The gross margin ratio: