Chapter 5

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

customers seller

On May 14, X-Mart purchased $500 of merchandise with terms of 3/15,n/40. If payment is made on May 28, calculate the purchase discount that may be taken by X-Mart. Multiple choice question. a)$70 b)$75 c)$20 d)$15

$15

On June 5, X-Mart purchased $400 of merchandise with terms of 2/10,n/30. If payment is made on June 11, calculate the purchase discount that may be taken by X-Mart. a) $0 b) $12 c) $40 d) $8

$8

Sales Discounts is a ______ account. Multiple choice question. contra revenue revenue asset contra asset expense

contra revenue

Explain how to determine gross profit on an income statement by selecting the correct statement below. Multiple choice question. -Cost of goods sold is subtracted from net sales. -Sales is subtracted from cost of goods sold. -Cost of goods sold is added to net sales. -Cost of goods sold is added to sales discounts.

cost of goods sold is subtracted from net sales

Explain how to determine gross profit on an income statement by selecting the correct statement below. Multiple choice question. a) Cost of goods sold is added to sales discounts. b)Sales is subtracted from cost of goods sold. c)Cost of goods sold is added to net sales. d) Cost of goods sold is subtracted from net sales.

cost of goods sold is subtracted from net sales

Which of the statements below are correct regarding cost of goods sold? Multiple choice question. a)Cost of goods sold is an asset account reported on the balance sheet. b)Cost of goods sold is the expense of buying and preparing merchandise. c)Cost of goods sold can be determined by subtracting the cost of a merchandise sold from its sales price. d) Cost of goods sold is the price received from selling a product.

cost of goods sold is the expense of buying and preparing merchandise

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: Multiple choice question. -debit Accounts Receivable $1,000; credit Sales $1,000; -debit Cost of Goods Sold $400; and credit Merchandise Inventory $400 -debit Accounts Receivable $600; credit Sales $600; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400 -debit Accounts Payable $1,000; and credit Sales $1,000 debit Accounts Receivable $1,000 and credit Sales 1,000

debit Accounts Receivable $1,000; credit Sales $1,000; -debit Cost of Goods Sold

Determine which of the following statements about merchandise is correct. Multiple choice question. a)Merchandise is sold by customers. b)Merchandise is acquired for resale to customers. c)Merchandise is considered an expense in the period it is purchased. d)Merchandise is acquired for use in the company, just like supplies.

merchandise is acquired for resale to customers

A multiple-step income statement will have all of the following main parts except: Multiple choice question. net sales gross profit net income income from operations

net sales

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below. (Check all that apply.) Multiple select question. -Debit Merchandise Inventory $500. -Credit Cost of Goods Sold $500. -Debit Cost of Goods Sold $500. -Credit Merchandise Inventory $500.

-Debit Cost of Goods Sold $500. -Credit Merchandise Inventory $500.

Determine which of the following statements below regarding a merchandiser are correct. (Check all that apply.) Multiple select question. -Merchandisers are also identified as wholesalers. -Wholesalers only sell services to customers. -Merchandisers are often identified as retailers. -A merchandiser earns net income by buying and selling merchandise.

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

Merchandise inventory can be described as: (Check all that apply.) Multiple select question. - an account appearing on a balance sheet of a service company. -an account increased with a debit. -products that a company owns and intends to sell. -an account appearing on a balance sheet of a merchandiser. -an expense account. -an asset account.

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

Describe good cash management practices involving inventory purchases. (Check all that apply.) Multiple select question. -Inventory should be purchased with cash whenever possible. -Invoices should be paid on the first day of the discount period. -Buyers should take advantage of early payment discounts. -Invoices should be paid on the last day of the discount period.

-buyers should take advantage of early payment discounts -invoices should be paid on the last day of the discount period

Sally Beauty Warehouse uses the perpetual inventory system to account for its merchandise. On Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the required journal entry to record the receipt of payment from the customer on Nov 13, by selecting all of the correct actions below. (Check all that apply.) Multiple select question. -Debit Cash $700. -Credit Sales Discounts $14. -Credit Accounts Receivable $700. -Debit Cash $686. -Debit Accounts Receivable $700. -Debit Sales Discounts $14.

-credit accounts receivable $700 - Debit Cash $686 -Debit Sales Discounts $14

Given the following information, calculate the acid-test ratio for XYZ Company: Year 2013 Cash $ 8,000 Short-term investments $10,000 Current receivables $12,000 Total current assets $40,000 Total current liabilities $22,000 Total liabilities $28,000 Multiple choice question. 1.36 .55 1.82

1.36

What is a sales return? Multiple choice question. A sales return refers to merchandise that customers return to the seller after a sale. A sales return is the cash discount given for early payment of an invoice. A sales return refers to merchandise a seller acquires, but then returns to the buyer. A sales return is designed to shorten the payment period between the buyer and the seller.

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

Wholesaler

Buys products from manufacturers and sells them to retailers

A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct entries below. (Check all that apply.) Multiple select question. Close expense accounts. Close asset accounts. Close the merchandise inventory account. Close the withdrawals account. Close revenue accounts. Close the income summary account.

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

X-Mart uses the perpetual inventory system to account for its merchandise. On June 1, it sold $7,000 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below. Multiple select question. -Credit Merchandise Inventory $500. -Debit Merchandise Inventory $500. -Debit Cost of Goods Sold $500. -Credit Cost of Goods Sold $500.

Credit Merchandise inventory- $500 Debit Cost of goods sold- $500

On Jan 5, a customer returned merchandise that had been purchased earlier on credit. The original sale was for $500, and the cost to the seller was $150. Demonstrate the required journal entry to record the return on the books of the seller, assuming the goods can be sold to another customer. Multiple choice question. -Debit Accounts Receivable $500; credit Sales Returns and Allowances $500; credit Merchandise inventory $150; and credit Cost of Goods Sold $150. -Debit Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold $150. -Debit Accounts Receivable $500 and credit Cash $500. -Debit Sales Returns and Allowances $150; credit Accounts Receivable $150.

Debit Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold $150.

Merchandiser

Earns net income by buying and selling merchandise

If the seller is responsible for the shipping costs of merchandise sold, the shipping terms will be specified as: Multiple choice question. a)FOB destination b)FOB start c)FOB factory d) FOB shipping point

FOB (Free on board) destination

If the seller is responsible for the shipping costs of merchandise sold, the shipping terms will be specified as: Multiple choice question. -FOB factory -FOB destination -FOB start -FOB shipping point

FOB Destination

A single-step income statement can be identified by which of the following formats? Multiple choice question. It shows only one total for all expenses. It shows subheadings for operating and non-operating items. It lists a figure for gross profit. It shows cost of goods sold as a subtraction from net sales to determine the subtotal cost of goods sold.

It shows only one total for all expenses.

Determine which of the following statements about merchandise is correct. Multiple choice question. a) Merchandise is sold by customers. b) Merchandise is considered an expense in the period it is purchased. c)Merchandise is acquired for use in the company, just like supplies. d) Merchandise is acquired for resale to customers.

Merchandise is acquired for resale to customers

Which of the following equations correctly identify the cost flow of a merchandising company? Multiple choice question. Beginning inventory plus cost of goods sold equals merchandise available for sale Net purchases plus beginning inventory equals merchandise available for sale Net purchases minus beginning inventory equals merchandise available for sale Net purchases plus cost of goods sold equals merchandise available for sale

Net purchases plus beginning inventory equals merchandise available for sale

Determine which of the definitions below describes gross profit. Multiple choice question. a) Net sales minus cost of the goods sold b) The amount of money received on the sale of goods c) The total money paid by the merchandiser to its supplier including freight costs d) The original cost of the merchandise when purchased from the supplier

Net sales minus cost of goods sold

Given the following information, analyze XYZ Company's gross margin ratio. (Check all that apply.) Current Year 1 Year Ago Gross margin $3,200 $3,210 Net sales $10,400 $11,200 Gross margin ratio 30.7% 28.7% Multiple select question. They are not making any profit on the sales of their merchandise. Their gross margin has decreased since last year. In the current year, they have approximately 30.7 cents of every dollar of sales to help cover the other expenses of running the business. Their gross margin ratio has improved since last year

Their gross margin has decreased since last year. In the current year, they have approximately 30.7 cents of every dollar of sales to help cover the other expenses of running the business. Their gross margin ratio has improved since last year.

.Given the following information, analyze XYZ Company's liquidity. (Check all that apply.) Current Year Total quick assets $30,000 Total current assets $40,000 Total current liabilities $22,000 Acid-test ratio 1.36 Current ratio 1.82 Industry acid-test ratio .70 Industry current ratio 1.65 Multiple select question. They are less liquid than others in their industry They don't have sufficient liquid assets to pay off short-term debt if needed. They have sufficient quick assets to pay off short-term debt if needed. They are more liquid than others in their industry

They have sufficient quick assets to pay off short-term debt if needed. They are more liquid than others in their industry.

A sales allowance can be described as: Multiple choice question. -a discount given by the seller of merchandise for early payment -the reduction in the sales price of an item because of the quantity purchased -a reduction in the selling price of defective or unacceptable merchandise sold to customers -the implied interest paid when not taking advantage of a sales discount

a reduction in the selling price of defective or unacceptable merchandise sold to customers

A cash discount can be summarized as a discount given to _____ (buyers/creditors/sellers) to encourage them to pay _______(earlier/later/less/more).

buyers earlier

Retailer

buys products from manufactures or wholesalers and sells them to consumers

X-Mart purchased $300 of merchandise and paid immediately. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used. a) Debit Merchandise Inventory $300; credit Sales $300. b) Debit Purchases $300; credit Cash $300. c) Debit Merchandise Inventory $300; credit Cash $300. d) Credit Merchandise Inventory $300; debit Cash $300.

c) Debit Merchandise Inventory $300; credit Cash $300.

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

cash

Show your understanding of what merchandise is by completing the following sentence. Merchandise consists of products that a company acquires to resell to ______(customers/sellers).

customers

Merchandise inventory that is available for sale is a(n) ________ (asset/expense/revenue) and reported on the ____________ (balance sheet/income statement) and merchandise that is sold during the period is a(n) _______ (asset/expense/liability) and reported on the ____________ (balance sheet/income statement). a) asset -> income statement -> expense -> balance sheet b) expense -> income statement -> asset -> balance sheet c) expense -> balance sheet -> asset -> income statement d) asset -> balance sheet -> expense -> income statement

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

Merchandise inventory is generally converted to cash more quickly than accounts receivable. True false question. True False

false

The discount period is the time between the invoice date and a specified date on which the payment amount owed can be _____ (increased/reduced) because of early payment.

reduced

Sales is a(n) ______ account. Multiple choice question. asset revenue liability expense

revenue

Sales Discounts is a contra (expense/revenue/asset) account and is increased with a (debit/credit).

revenue debit

Recall the formula for calculating a company's acid-test ratio. Multiple choice question. Merchandise inventory divided by Total assets Current assets divided by Total assets (Cash and cash equivalents plus Short-term investments plus Current receivables) divided by Current liabilities (Cash plus Short-term investments plus Current receivables plus Inventory) divided by Current liabilities

(Cash and cash equivalents plus Short-term investments plus Current receivables) divided by Current liabilities

Identify the statements below which summarize what cash discounts are. (Check all that apply.) Multiple select question. -Sellers can grant a cash discount to encourage buyers to pay earlier. -A reduced payment applies to the discount period. -A reduced payment applies to the credit period. -A buyer views a cash discount as a purchase discount. -Cash discounts are described in credit terms. -A seller views a cash discount as a purchase discount. -A seller views a cash discount as a sales discount.

- Cash discounts are described in credit terms - A seller views a cash discount as a sales discount -A buyer views a cash discount as a purchase discount -Sellers can grant a cash discount to encourage buyers to pay earlier - A reduced payment applies to the discount period

Cost of goods sold is characterized by which of the following statements? (Check all that apply.) Multiple select question. -Cost of goods sold is also called cost of sales. -Cost of goods sold is an asset reported on the balance sheet. -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 an expense reported on the income statement. -Cost of goods sold is the money received from selling merchandise.

- Cost of goods sold is an expense reported on the income statement. -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 used to figure gross profit.

Describe good cash management practices involving inventory purchases. (Check all that apply.) Multiple select question. -Invoices should be paid on the first day of the discount period. -Invoices should be paid on the last day of the discount period. Inventory should be purchased with cash whenever possible. -Buyers should take advantage of early payment discounts.

- Invoices should be paid on the last day of the discount period - buyers should take advantage of early payment discounts

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

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

Explain what the credit terms of 2/10, n/30 mean. (Check all that apply.) Multiple select question. a)The full payment is due within a 30-day credit period. b) The full payment is due within 10 days. c)The buyer can deduct 2% of the invoice amount if payment is made within 10 days of the invoice date. d) The buyer can take a discount of 10% if the invoice is paid with 30 days of the invoice date.

-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.) Multiple select question. -an asset account. -an account appearing on a balance sheet of a merchandiser. -an account appearing on a balance sheet of a service company. -an account increased with a debit. -products that a company owns and intends to sell. -an expense account.

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

Dogs R US uses the perpetual inventory system to account for its merchandise. On May 1, it returned $50 of merchandise due to a defect. Assuming that the purchase was originally bought on credit, demonstrate the required journal entry to record the return by selecting all of the correct actions below. (Check all that apply.) Multiple select question. -Debit Merchandise Inventory $50. -Debit Accounts Payable $50. -Credit Purchase Returns $50. -Debit Cash $50. -Credit Merchandise Inventory $50. -Credit Accounts Payable $50.

-debit accounts payable $50 -credit merchandise inventory $50

Which of the statements below summarize why a seller would give a sales allowance? (Check all that apply.) Multiple select question. -The buyer purchased a large amount of merchandise and was eligible for a reduced purchase price. -The buyer could not pay within the discount period. -Sold merchandise was defective or unacceptable. -In order to entice a customer to keep damaged or defective merchandise, the seller is willing to decrease the selling price. -The seller wants to keep a customer happy.

-sold merchandise was defective or unacceptable -in order to entice a customer to keep damaged or defective merchandise, the seller is willing to decrease the selling price -the seller wants to keep a customer happy

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. Multiple choice question. a) 3/15, n/45 b) 3/15,45 c) 3/10, n/45 d) 3/45, n/15

3/15, n/45

Why is it important for a business's success to have a high gross margin? Multiple choice question. A high gross margin helps creditors determine if debt can be repaid on time. A merchandiser must make a sufficient profit on the sale of its merchandise to cover the other expenses of its business. A high gross margin ratio measures the efficiency of capital spending. Without sufficient gross profit on the sale of its merchandise, a business's inventory level will be too low to maintain sales demands.

A merchandiser must make a sufficient profit on the sale of its merchandise to cover the other expenses of its business.

Select the statements below that correctly describe the flow of costs in a merchandiser's accounting cycle. Multiple select question. Beginning inventory + net purchases = Merchandise available for sale. Merchandise that is sold becomes an expense reported on the income statement. Merchandise that is purchased becomes an asset reported on the balance sheet. Ending inventory + Cost of goods sold = Total merchandise available for sale. Merchandise that is sold becomes an asset reported on the balance sheet. Merchandise purchased is an expense and is reported on the income statement.

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

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: (Check all that apply). Multiple select question. Credit to Cost of Goods Sold for $50 Credit to Merchandise Inventory for $50 Debit to Cost of Goods Sold for $50 Debit to Merchandise Inventory for $50

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

On June 5, Jo's Market sold $1,000 of goods on credit with terms of 2/10,n/30. How will Jo's Market record the customer's payment on June 8? Multiple choice question. -Debit Cash $1,000 and credit Accounts Receivable $1,000 -Credit Accounts Receivable $1,000; debit Cash $980; and credit Merchandise Inventory $20 -Debit Cash $980; debit Sales Discounts $20; and credit Accounts Receivable $1,000 -Debit Accounts Receivable $1,000; credit Merchandise Inventory $20; and credit Cash $980

Debit Cash $980; debit Sales Discounts $20; and credit Accounts Receivable $1,000

Dogs R US uses the perpetual inventory system to account for its merchandise. A customer returned merchandise. Assuming that the purchase was originally bought on credit for $400 with a cost to Dogs R US of $100, demonstrate required journal entry of Dogs R US to record the return by selecting all of the correct actions below. (Check all that apply.) Multiple select question. Credit Sales Returns and Allowances $400. Debit Accounts Payable $400. Debit Merchandise Inventory $100. Credit Cost of Goods Sold $100. Credit Cash $400. Debit Cost of Goods Sold $100. credit merchandise inventory $100 debit sales returns and allowances $400

Debit Merchandise Inventory $100. Credit Cost of Goods Sold $100. Credit Accounts Receivable $400. Debit Sales Returns and Allowances $400.

LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on December 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.) Multiple select question. -Credit Cash $980. -Debit Accounts Payable $1,000. -Credit Cash $1,000. -Credit Merchandise Inventory $20. -Credit Accounts Payable $1,000.

Debit accounts payable $1000 Credit Cash $1000

On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 30, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. Multiple choice question. Debit Accounts Payable $1,000; credit Cash $1,000. Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20. Debit Cash $1,000; Credit Accounts Payable $1,000.

Debit accounts payable $1000 Credit cash $1000

On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 30, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. Multiple choice question. -Debit Cash $1,000; Credit Accounts Payable $1,000. -Debit Accounts Payable $1,000; credit Cash $1,000. -Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20.

Debit accounts payable $1000, credit cash $1000

Identify the statements below that are correct regarding the closing entries for a merchandiser using the perpetual inventory system. (Check all that apply.) Multiple select question. Sales Discounts is closed with the expense accounts. Merchandise Inventory is closed with the expense accounts. The Withdrawals account is closed to Income Summary. Sales Returns and Allowances is closed with the expense accounts. Sales Discounts is closed with the revenue accounts. The Withdrawals account is closed to Owner, Capital. Cost of goods sold is closed with the expense accounts. Cost of goods sold is closed with the revenue accounts. sales is closed as a revenue account

Sales Discounts is closed with the expense accounts. Sales Returns and Allowances is closed with the expense accounts. The Withdrawals account is closed to Owner, Capital. Cost of goods sold is closed with the expense accounts. Sales is closed as a revenue account.

Identify the statement below that is the correct definition of "shrinkage". Multiple choice question. Shrinkage is the discount received against the purchase price of merchandise. Shrinkage is the term used to refer to the loss of inventory due to theft or deterioration. Shrinkage is the term used to describe the diminished floor space that an inventory item has in a store.

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

Which of the statements below summarizes what the acid-test ratio measures? Multiple choice question. The acid-test ratio measures the profitability of a company. The acid-test ratio measures the efficiency of capital spending. The acid-test ratio measures the marketability of a company's merchandise. The acid-test ratio measures a merchandiser's ability to pay its current liabilities.

The acid-test ratio measures a merchandiser's ability to pay its current liabilities.

What is a purchase return? Multiple choice question. a)A purchase return refers to merchandise a buyer purchases, but then returns to the seller. b)A purchase return is designed to shorten the payment period between the buyer and the seller. c)A purchase return is the cash discount given for early payment of an invoice. d)A purchase return refers to merchandise a seller acquires, but then returns to the buyer.

a) A purchase returns refers to merchandise a buyer purchases, but then returns to the seller

On Dec. 20, X-Mart received a $100 allowance because the merchandise it purchased on account, earlier in the month, was of poor quality. Demonstrate the required journal entry on X-Mart's books for the allowance assuming the perpetual inventory method. Multiple choice question. a)Debit Accounts Payable $100; credit Merchandise Inventory $100. b)Debit Merchandise Inventory $100; credit Accounts Payable $100. c)Debit Accounts Payable $100; credit Cash $100. d) Debit Accounts Payable $100; credit Purchase Returns $100.

a) debit accounts payable $100, credit merchandise inventory $100

Review the following statements and select the one that best describes a discount period. Multiple choice question. a)The discount period is the time period in which a discount may be taken by the buyer. b)The discount period is another name for the credit terms of a sale. c)The discount period is the time between a sale and when payment is due from the buyer.

a) the discount period is the time period in which a discount may be taken by the buyer

Merchandise inventory that is available for sale is a(n) ____(asset/expense/revenue) and reported on the _____(balance sheet/income statement). Merchandise that is sold during the period is 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

Which statement below correctly explains what merchandise inventory is? Multiple choice question. a)Merchandise inventory is subtracted from net sales on the income statement to determine gross profit for the period. b) Merchandise inventory is an expense account reported on the income statement and contains the cost of products purchased for sale. c) Merchandise inventory is an asset reported on the balance sheet and represents the cost of products purchased for sale. d) Merchandise inventory is increased when products are sold to customers.

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

Determine which statements below are correct regarding merchandise available for sale during a period. (Check all that apply.) Multiple select question a) Cost of goods sold + Beginning inventory = Merchandise available for sale b) Beginning inventory + Ending inventory = Merchandise available for sale c)Beginning inventory + Net purchases = Merchandise available for sale D) Ending inventory + Cost of goods sold = Merchandise available for sale

c)Beginning inventory + Net purchases = Merchandise available for sale D) Ending inventory + Cost of goods sold = Merch

LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on November 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.) Multiple select question. Credit Purchase Discounts $20. Credit Cash $980. Credit Accounts Payable $1,000. Debit Merchandise Inventory $20. Credit Merchandise Inventory $20. Credit Cash $1,000. Debit Accounts Payable $1,000.

credit cash $980 credit merchandise Inventory $20 Debit accounts payable $1000

The Merchandise Inventory account on a classified balance sheet is reported in the: Multiple choice question. current liabilities section current assets section plant assets section intangible assets section

current assets section

The formula for the acid-test ratio is computed as (cash + short-term investments + current receivables)/Blank______. Multiple choice question. cash current liabilities equity total liabilities

current liabilities

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: Multiple choice question. -debit Accounts Receivable $200; credit Sales $200; debit Cost of Goods Sold $300; and credit Merchandise Inventory $300 -debit Sales $300 and credit Cost of Goods Sold $300 -debit Accounts Receivable $300; credit Sales $300; debit Cost of Goods Sold $200; and credit Merchandise Inventory $200 -debit Accounts Payable $300; and credit Sales $300

debit Accounts receivable $300, credit sales $300, debit cost of goods sold $200, credit merchandise inventory $200

LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on December 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.) Multiple select question. Debit Accounts Payable $1,000. Credit Merchandise Inventory $20. Credit Cash $1,000. Credit Cash $980. Credit Accounts Payable $1,000.

debit accounts payable $1000 credit cash $1000

On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 30, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. Multiple choice question. a)Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20. b)Debit Cash $1,000; Credit Accounts Payable $1,000. c)Debit Accounts Payable $1,000; credit Cash $1,000.

debit accounts payable $1000, credit accounts payable $1000

On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 16, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. Multiple choice question. Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20. Debit Accounts Payable $1,000; credit Cash $1,000. Debit Accounts Payable $1,000; credit Cash $1,000; credit Purchase Discounts $20. Debit Merchandise Inventory $20; debit Cash $980; credit Accounts Payable $1,000.

debit accounts payable $1000, credit cash $980 credit merchandise inventory $20

On Jan 5, a customer returned merchandise that had been purchased earlier on credit. The original sale was for $500, and the cost to the seller was $150. Demonstrate the required journal entry to record the return on the books of the seller, assuming the goods can be sold to another customer. Multiple choice question. -Debit Sales Returns and Allowances $150; credit Accounts Receivable $150. -Debit Accounts Receivable $500 and credit Cash $500. -Debit Accounts Receivable $500; credit Sales Returns and Allowances $500; credit Merchandise inventory $150; and credit Cost of Goods Sold $150. -Debit Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit Accounts Receivable $500; and credit Cost of Goods Sold $150.

debit sales returns and allowances $500, debit merchandise inventory $159, credit accounts receivables $500 and credit cost of goods sold $150

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

inventory cash

Sales Discounts is a contra _____ (expense/revenue/asset) account and is increased with a ____(debit/credit).

revenue debit

Sales is a(n) ____(expense/revenue/asset) account and is reported on_____ the (income/balance) ______(statement/sheet).

revenue income statement

Gross profit is computed as net ____minus cost of goods sold.

sales

Gross profit is calculated by taking the net ____ (sales/costs) of a product and ______ (adding/subtracting) the cost of the goods sold.

sales subtracting

True or false: A single-step income statement shows only one subtotal for expenses. True false question. True False

true

X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below. (Check all that apply.) Multiple select question. Debit Cost of Goods Sold $500. Credit Merchandise Inventory $500. Debit Merchandise Inventory $500. Credit Cost of Goods Sold $500.

•Debit cost of goods sold $500•Credit Merchandise inventory $500