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Exam 5: Accounting for Merchandising Businesses

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Question 91

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Which of the following accounts should be closed to Income Summary at the end of the fiscal year?

A) Inventory
B) Accumulated Depreciation
C) Dividends
D) Cost of Goods Sold

E) A) and B)
F) A) and C)

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Question 92

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When a large quantity of merchandise is purchased,a reduction allowed on the sale price is called a trade discount.

A) True
B) False

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Question 93

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Under the periodic inventory system,the cost of goods sold is equal to the beginning inventory plus the cost of merchandise purchased plus the ending inventory.

President's salaries,depreciation of office furniture,and office supplies are

As we compare a merchandising business to a service business,the financial statement that changes the most is the balance sheet.

Using the list of accounts below,construct a chart of accounts for a merchandising business that rents out a portion of its building,and assign account numbers and arranging the accounts in balance sheet and income statement order ("1" for assets,and so on).Each account number should have three digits.Contra accounts should be designated with a decimal of the account (100.1 for contra of account 100).Assets and liabilities should be in order of liquidity,expenses should be in alphabetical order.

The cost of inventory is limited to the purchase price less any purchase discounts.

Merchandise is purchased for $6,000 on September 2 subject to terms of 2 / 10,n / 30,FOB destination.Freight costs paid by the seller totaled $200.What is the required payment if paid on September 12?

If merchandise sold on account is returned to the seller,the seller acknowledges the return by issuing a

If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment,the terms are stated as FOB destination.

Calculate the gross profit for Jonas Company based on the following data:

Kaden Co.sells merchandise on credit to Jase Co.for $9,600.The invoice is dated July 15 with terms of 1 / 15,net 45.If Jase Co.chooses not to take the discount,by when should the payment be made?

In a multiple-step income statement,the dollar amount for income from operations is always the same as net income.

The most important differences between a service business and a retail business are reflected in their operating cycles and financial statements.

Which of the following accounts has a normal debit balance?

Merchandise subject to terms 2 / 10,n / 30,FOB shipping point,is sold on account to a customer for $25,000.What is the amount of sales discount allowable?

What is the term applied to the excess of sales over the cost of goods sold?

Using the following information,what is the cost of goods sold?

In a periodic inventory system,the cost of merchandise purchased includes the cost of freight in.

Which of the following accounts usually has a debit balance?