ACCT 211

Review the following credit terms and identify the one that states that the buyer will receive a 3% discount if the payment is made within 15 days. Otherwise, full payment is expected within 45 days of the invoice date

3/15,n/45

The Merchandise Inventory account on a classified balance sheet is reported in the:

current assets section

The formula for the acid-test ratio is computed as (cash + short-term investments + current receivables)/__________.

current liabilities

A sales return refers to merchandise that customer customer , (customers/sellers/creditors) return to the(customer/seller/creditor) after a sale for a refund of the purchase price or reduction in the amount owed.

Customer/Seller

X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used.

Debit Merchandise Inventory $300; credit Cash $300.

Select the statements below that correctly describe the flow of costs in a merchandiser's accounting cycle. (Check all that apply.)

Ending inventory + Cost of goods sold = Total merchandise available for sale. Beginning inventory + net purchases = Merchandise available for sale. Merchandise that is purchased becomes an asset reported on the balance sheet. Merchandise that is sold becomes an expense reported on the income statement.

If the seller is responsible for the shipping costs of merchandise sold, the shipping terms will be specified as:

FOB destination

True or false: The formation elements of a UCC contract are more difficult to meet than the formation requirements of a common law contract.

False

Article 2 of the UCC acts to fill in only _____ or _____ , terms in a contract for the sale of goods between merchants.

missing, open

Missing provisions under a UCC contract are referred to as

open term

An _____ contract is where the buyer agrees to purchase all of the goods that a seller produces.

output

If a sale agreement includes missing or open terms, the UCC will find it enforceable if the terms that are included: (Check all that apply.)

provide a basis for remedy if there is a breach. indicate the intent of the parties.

Sales is a(n) _______(expense/revenue/asset) account and is reported on the _______ (income/balance) _______ (statement/sheet).

Blank 1: revenue Blank 2: income Blank 3: statement

Determine which statements below are correct regarding merchandise available for sale during a period.

- Beginning inventory + Net purchases = Merchandise available for sale - Ending inventory + Cost of goods sold = Merchandise available for sale

Cost of goods sold is characterized by which of the following statements? (Check all that apply.)

- Cost of goods sold is used to figure gross profit. - Cost of goods sold includes the expenses of buying and preparing an item for sale. - Cost of goods sold is also called cost of sales. - Cost of goods sold is an expense reported on the income statement.

Determine which of the following statements below regarding a merchandiser are correct. (Check all that apply.)

- Merchandisers are often identified as retailers. - A merchandiser earns net income by buying and selling merchandise. - Merchandisers are also identified as wholesalers.

Explain what the credit terms of 2/10,n/30 mean. (Check all that apply.)

- The full payment is due within a 30-day credit period. - The buyer can deduct 2% of the invoice amount if payment is made within 10 days of the invoice date.

Merchandise inventory can be described as: (Check all that apply.)

- products that a company owns and intends to sell. - an asset account. - an account increased with a debit. - an account appearing on a balance sheet of a merchandiser.

What is a purchase return?

A purchase return refers to merchandise a buyer acquires, but then returns to the seller.

What is a sales return?

A sales return refers to merchandise that customers return to the seller after a sale.

A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct entries below. (Check all that apply.)

Close expense accounts. Close revenue accounts. Close the dividends account. Close the income summary account.

Identify the statements below which are correct regarding a merchandiser's multi-step income statement.

Cost of goods sold is subtracted from net sales in order to determine gross profit. Expenses are subtracted from gross profit in order to calculate net income.

Explain how to determine gross profit on an income statement by selecting the correct statement below.

Cost of goods sold is subtracted from net sales.

Which of the statements below are correct regarding cost of goods sold?

Cost of goods sold is the expense of buying and preparing merchandise.

Q-mart uses the periodic inventory system. A physical count of inventory revealed it had $6,000 of inventory remaining at year end. Given the partial list of accounts below, the entry to close the temporary credit balance accounts and update the Merchandise Inventory account would include all of the following. (Check all that apply.)

Debit Merchandise Inventory (ending balance) $6,000. Debit Purchase Discounts $1,000. Debit Sales $20,000.

Assume that X-Men has an unadjusted Accounts Receivable balance of $10,000 and Allowance for Sales Discounts balance of $0. $1,000 of accounts receivable are within the 2% discount period and X-Men expects that buyers will take $20 in future-period discounts arising from this period's sales. The adjusting entry for sales discounts is:

Debit Sales Discounts and credit Allowance for Sales Discounts for $20

Sticky Company's merchandise inventory balance at year end is $15,050, but a physical count reveals that only $15,000 of inventory exists. The adjusting entry to record the shrinkage includes: (Select all that apply).

Debit to Cost of Goods Sold for $50 Credit to Merchandise Inventory for $50

A single-step income statement can be identified by which of the following formats?

It shows only one total for all expenses.

Toys R Fun purchased $4,000 of merchandise and paid immediately. To record this transaction, Toys R Fun's accountant would debit the Merchandise Inventory_______ (Merchandise Inventory/Accounts Payable/Cash) account and credit the (Cash/Merchandise Inventory/Accounts Payable) account.

Merchandise Inventory/Cash

Which statement below correctly explains what merchandise inventory is?

Merchandise inventory is an asset reported on the balance sheet and contains the cost of products purchased for sale.

Which of the following equations correctly identify the cost flow of a merchandising company?

Net purchases plus beginning inventory equals merchandise available for sale

Gross Profit is computed as _____ minus cost of goods sold

Sales

Identify the statements below that are correct regarding the closing entries for a merchandiser using the perpetual inventory system. (Check all that apply.)

Sales Discounts is closed with the expense accounts. Sales Returns and Allowances is closed with the expense accounts. Sales is closed as a revenue account. Cost of goods sold is closed with the expense accounts. The Dividends account is closed to Retained Earnings

Identify the statement below that is the correct definition of "shrinkage".

Shrinkage is the term used to refer to the loss of inventory due to theft, breakage or deterioration.

The buyer and seller of merchandise must agree on who is responsible for paying freight terms. Show your understanding of freight terms by selecting all of the correct statements below.

When the shipping costs are the responsibility of the buyer, then the Merchandise Inventory account is debited for the freight charges. Terms FOB shipping point means the buyer accepts ownership when the goods depart the seller's place of business. Revenue for the sale will be recorded after the goods reach their destination, if the goods are shipped FOB destination. Terms FOB destination means that the seller is responsible for shipping costs

Complete the following statement. Merchandise inventory that is still available for sale is considered a(n) ________ (asset/expense/revenue) and is reported on the ____________ (balance sheet/income statement) and merchandise that is sold during the period is considered a(n) _______ (asset/expense/liability) and reported on the ____________ (balance sheet/income statement).

asset -> balance sheet -> expense -> income statement

A purchase return refers to merchandise a ________ (buyer/seller/creditor) purchased, but then returns to the_______ (buyer/seller/creditor) for a refund of the purchase price or reduction in the amount owed.

buyer/seller

Jo's Market makes a credit sale for $1,000 with terms of 2/10,n/30. The cost of the merchandise is $400. The required journal entry to record the sale and cost of the sale is:

debit Accounts Receivable $1,000; credit Sales $1,000; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400

Jan's Jams makes a credit sale for $300 with terms of 2/10,n/30. The cost of the merchandise is $200. The required journal entry to record the sale and the cost of the sale is:

debit Accounts Receivable $300; credit Sales $300; debit Cost of Goods Sold $200; and credit Merchandise Inventory $200

When the parties have not expressly agreed otherwise, Article 2 of the Uniform Commercial Code acts to __________ missing or open terms in a contract for the sale of goods between merchants.

fill in

Money and information are not considered _____ under the UCC.

goods

A contract under the UCC can arise:

in any manner sufficient to show an agreement