Financial Accounting Chapter 6

A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays within the discount window, how much will they remit in cash to the retailer? a. $1,200 b. $1,250 c. $50 d. $500

a. $1,200

Which of the following numbers represents the discount percentage applied if a customer pays within a discount window and credit terms are 3/15, n/60? a. 3 b. 15 c. 60 d. 3 and 15

a. 3

Which of the following accounts are used when recording a purchase? a. A or B b. cash, merchandise inventory c. accounts payable, merchandise inventory d. cash, accounts payable

a. A or B

Which of the following is a disadvantage of the perpetual inventory system? a. It is cost-prohibitive. b. Inventory information is in real-time. c. Inventory is automatically updated. d. It allows managers to make current decisions about purchases, stock, and sales.

a. It is cost-prohibitive.

Which of the following is nota characteristic of FOB Shipping Point? a. The point of transfer is when the goods arrive at the buyer's place of business. b. The buyer pays for shipping. c. The buyer owns goods in transit. d. The point of transfer is when the goods leave the seller's place of business.

a. The point of transfer is when the goods arrive at the buyer's place of business.

A retailer returns $400 worth of inventory to a manufacturer and receives a full refund. What accounts recognize this return before the retailer remits payment to the manufacturer? a. accounts payable, merchandise inventory b. accounts payable, cash c. cash, merchandise inventory d. merchandise inventory, cost of goods sold

a. accounts payable, merchandise inventory

What accounts are used to recognize a retailer's purchase from a manufacturer on credit? a. accounts payable, merchandise inventory b. accounts receivable, merchandise inventory c. accounts payable, cash d. sales, accounts receivable

a. accounts payable, merchandise inventory

If a customer purchases merchandise on credit and returns the defective merchandise before payment, what accounts would recognize this transaction? a. accounts receivable, b. sales returns and allowances sales discount, cash c. sales returns and allowances, cash d. accounts receivable, sales discount

a. accounts receivable, b. sales returns and allowances

Which of the following accounts are used when recording the sales entry of a sale on credit? a. accounts receivable, sales b. merchandise inventory, cash c. accounts receivable, merchandise inventory d. sales, cost of goods sold

a. accounts receivable, sales

A customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer? a. accounts receivable, sales returns and allowances b. accounts receivable, cash c. sales returns and allowances, purchases d. sales discounts, cost of goods sold

a. accounts receivable, sales returns and allowances

A customer returns $870 worth of merchandise and receives a full refund. What accounts recognize this sales return (disregarding the merchandise condition entry) if the return occurs before the customer remits payment to the retailer? a. accounts receivable, sales returns and allowances b. accounts receivable, cash c. sales returns and allowances, merchandise inventory d. accounts receivable, cost of goods sold

a. accounts receivable, sales returns and allowances

Which of the following accounts would be reported under operating expenses on a multi-step income statement? a. advertising expense b. sales c. sales returns and allowances d. interest expense

a. advertising expense

Which of the following is not included when computing Net Purchases? a. beginning inventory b. purchase discounts c. purchase returns d. purchase allowances

a. beginning inventory

Which of the following accounts are used when recording a purchase using a periodic inventory system? a. cash, purchases b. accounts payable, sales c. accounts payable, accounts receivable d. cash, merchandise inventory

a. cash, purchases

A simple income statement ________. a. combines all revenues into one category b. does not combine all expenses into one category c. separates cost of goods sold from operating expenses d. separates revenues into several categories

a. combines all revenues into one category

Which of the following is an advantage of the periodic inventory system? a. frequent physical inventory counts b. cost prohibitive c. time consuming d. real-time information for managers

a. frequent physical inventory counts

Which two accounts are used to recognize shipping charges for a buyer, assuming the buyer purchases with cash and the terms are FOB Shipping Point? a. merchandise inventory, cash b. delivery expense, cash c. merchandise inventory, accounts payable d. The buyer does not record anything for shipping since it is FOB Shipping Point.

a. merchandise inventory, cash

Which of the following accounts would not be reported under revenue on a simple income statement? a. operating expenses b. interest revenue c. net sales d. rent revenue

a. operating expenses

Which of the following is an example of a contra revenue account? a. sales discounts b. sales c. merchandise inventory d. accounts payable

a. sales discounts

A multi-step income statement ________. a. separates cost of goods sold from operating expenses b. considers interest revenue an operating activity c. is another name for a simple income statement d. combines cost of goods sold and operating expenses

a. separates cost of goods sold from operating expenses