FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Accounting for Merchandising Operations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 121

Multiple Choice

Review LaterAdd Note

Review Later

Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820,but a physical count reveals that only $90,450 of inventory exists.The adjusting entry to record this $1,370 of inventory shrinkage is:

A) $\begin{array} { | l | r | r | } \hline \text { Merchandise inventory } & 1,370 & \\\hline \text { Inventory shrinkage expense } & & 1,370 \\\hline\end{array}$
B) $\begin{array} { | l | r | r | } \hline \text { Purchases discounts } & 1,370 & \\\hline \text { Cost of poods sold } & & 1,370 \\\hline\end{array}$
C) $\begin{array} { | l | r | r | } \hline \text { Cost of goods sold } & 1,370 & \\\hline \text { Merchandise inventory } & & 1,370 \\\hline\end{array}$
D) $\begin{array} { | l | r | r | } \hline \text { Inventory shrinkage expense } & 1,370 & \\\hline \text { Cost of goods sold } & & 1,370 \\\hline\end{array}$
E) $\begin{array} { | l | r | l | } \hline \text { Cost of goods sold } & 90,450 & \\\hline \text { Merchandise inventory } & & 90,450 \\\hline\end{array}$

F) A) and C)
G) A) and D)

Correct Answer

verified

Show Answer

Question 122

Multiple Choice

Review LaterAdd Note

Review Later

Sales less sales discounts less sales returns and allowances equals:

A) Net purchases.
B) Cost of goods sold.
C) Net sales.
D) Gross profit.
E) Net income.

F) A) and C)
G) B) and C)

Correct Answer

verified

Show Answer

Question 123

True/False

Review LaterAdd Note

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

A common rule of thumb is that a company's acid-test ratio should have a value near or higher than 1 to conclude that a company is unlikely to face near-term liquidity problems.

Using the following year-end information for Calvin's Clothing,calculate the current ratio and acid-test ratio for the business: $\begin{array}{lr}\text { Cash } & \$ 52,000 \\\text { Short-term investments } & 12,000 \\\text { Accounts receivable } & 54,000\\\text { Inventory } & 325,000 \\\text { Prepaid expenses } & 17,500 \\\text { Accounts payable } & 106,500 \\\text { Other current payables } & 25,000\end{array}$

The ________ inventory system continually updates accounting records for merchandise transactions for the amounts of inventory available for sale and inventory sold.

Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

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

FOB shipping point means that the buyer accepts ownership when the goods arrive at the buyer's place of business.

When preparing an unadjusted trial balance using a periodic inventory system,the amount shown for Merchandise Inventory is:

An expense resulting from failing to take advantage of cash discounts when using the net method of recording purchases is called:

Merchandise inventory refers to products that a company owns and intends to sell to customers.

Describe the difference(s)between the periodic and the perpetual inventory accounting systems.

Distinguish between selling expenses and general and administrative expenses.

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

A company reported the following year-end information: $\begin{array} { | l | r | } \hline \text { Cash } & \$ 52,000 \\\hline \text { Short-term investments } & 12,000 \\\hline \text { Accounts receivable } & 54,000 \\\hline \text { Inventory } & 325,000 \\\hline \text { Prepaid expenses } & 17,500 \\\hline \text { Accounts payable } & 106,500 \\\hline \text { Other current payables } & 25,000 \\\hline\end{array}$ Required: 1.Explain the purpose of the acid-test ratio. 2.Calculate the acid-test ratio for this company. 3.What does the acid-test ratio reveal about this company?

The credit terms 2/10,n/30 are interpreted as:

A company has net sales of $752,000 and cost of goods sold of $543,000.Its net income is $17,530.The company's gross margin and operating expenses,respectively,are:

Austin's Pub Supply uses the periodic inventory system and the gross method of accounting for sales.The company had the following sales transactions during August: Prepare the journal entries that Austin's Pub Supply must make to record these transactions.

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 is referred to as ________.