Chapter 6 Accounting – Flashcards
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Using the following information, what is the amount of cost of merchandise sold?
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a. 25,780
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Using a perpetual inventory system, the entry to record the sale of merchandise on account includes a
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c. credit to Merchandise Inventory
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Using the following information, what is the amount of net sales?
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d. 56,250
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Merchandise Inventory is classified on the balance sheet as a
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b. Current Asset
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Merchandise is sold for cash. The selling price of the merchandise is $2,000 and the sale is subject to a 5% state sales tax. The journal entry to record the sale would include
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c. A credit to Sales Tax Payable for $100.
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If the merchandise costs $4,000, insurance in transit costs $200, tariff costs $50, processing the purchase order by the purchasing department costs $25, and the company receiving dock personnel cost $15, what is the total cost charged to the merchandise?
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a. $4,250
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Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly rate of approximately
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d. 36%
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A chart of accounts for a merchandising business usually
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b. requires more accounts than does the chart of accounts for a service business
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In recording the cost of merchandise sold for cash, based on data available from perpetual inventory records, the journal entry is
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b. debit Cost of Merchandise Sold, credit Merchandise Inventory
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When a buyer returns merchandise purchased for cash, the buyer may record the transaction using the following entry
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b. debit Cash; credit Merchandise Inventory
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When purchases of merchandise are made for cash, the transaction may be recorded with the following entry
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b. debit Merchandise Inventory; credit Cash
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Who pays the freight cost when the terms are FOB destination?
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a. the seller
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Apple Co sells merchandise on credit to Zea Co in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. If Zea Co. chooses not to take the discount, by when should the payment be made?
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b. October 30
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If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are
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b. FOB shipping point
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Generally, the revenue account for a merchandising business is entitled
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a. Sales
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Using the following information, what is the amount of merchandise available for sale?
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a. 33,580
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A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $4,000 Transportation-In, $450 Purchases, $12,000 Purchases Returns and Allowances, $2,800 Purchases Discounts, $220 The Cost of the merchandise purchased is equal to
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b. $9,930
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Apple Co sells merchandise on credit to Zea Co in the amount of $8,000. The invoice is dated on September 15 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?
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c. $80, September 30
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Which of the following items would affect the cost of merchandise inventory acquired during the period?
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d. all of the above- quantity discounts, cash discounts, and transportation in
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Which of the following accounts usually has a debit balance?
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d. Transportation in
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Which of the following accounts has a normal debit balance?
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b. Sales Returns and Allowances
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Orange Co. sold Red Co. merchandise on account FOB shipping point, 2/10, net 30, for $10,000. Orange Co. prepaid the $200 shipping charge. Using the perpetual inventory method, which of the following entries will Red Co. make if Red Co. pays within the discount period.
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b. Accounts Payable-Orange Co., debit $10,200; Merchandise Inventory, credit $200; Cash, credit $10,000
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When comparing a retail business to a service business, the financial statement that changes the least is the
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c. Statement of Owner's Equity
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Where are selling and administrative expenses found on the multi-step income statement?
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d. After gross profit
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If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are
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d. FOB destination
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Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a
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b. debit to Merchandise Inventory
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The entry to record the return of merchandise from a customer would include
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c. debit to Sales Returns and Allowances
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The statement of owner's equity shows
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d. All the changes in the owner's capital as a result of net income, net loss, additional investments, and withdrawals.
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Merchandise with a sales price of $500 is sold on account with term 2/10, n/20. The journal entry to record the sale would include a
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c. Credit to Sales for $500
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When the three sections of a balance sheet are presented on a page in a downward sequence, it is called the
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d. report form
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When the perpetual inventory is used, the inventory sold is shown on the income statement as
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a. cost of merchandise sold
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What is the term applied to the excess of net revenue from sales over the cost of merchandise sold?
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a. gross profit
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Black Company sold Red Company merchandise on account FOB shipping point, 2/10, net 30, for $10,000. Black prepaid the $200 shipping charge. Which of the following entries does Black make to record this sale?
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b. Accounts Receivable- Red, debit $10,000; Sales, credit $10,000, and Accounts Receivable-Red, debit $200; Cash, credit $200
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Based on the following information, what would be recorded as purchases discount if the invoice is paid within the discount period?
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b. $30
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The primary difference between a periodic and perpetual inventory system is that a
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a. periodic system determines the inventory on hand only at the end of the accounting period.
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When merchandise is returned under the perpetual inventory system, the buyer would credit
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a. Merchandise Inventory
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When comparing a retail business to a service business, the financial statement that changes the most is the
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b. Income Statement
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Which of the following accounts has a normal credit balance?
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b. Sales
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In credit terms of 1/10, n/30, the "1" represents the
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d. percent of the cash discount
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Based on the following information, what would be the cash payment if the company decides to payment the invoice on April 30, 2007?
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a. $1,650
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A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?
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a. $7,500
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Who pays the freight costs when the terms are FOB shipping point?
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b. the buyer
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Net income plus operating expenses is equal to
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d. gross profit
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When goods are shipped FOB destination and the seller pays the transportation charges, the buyer
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d. makes no journal entry for the transportation.
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A company, using the periodic inventory system, has merchandise inventory costing $140 on hand at the beginning of the period. During the period, merchandise costing $400 is purchased. At year-end, merchandise inventory costing $180 is on hand. The cost of merchandise sold for the year
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c. $360
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Office salaries, depreciation of office equipment, and office supplies are examples of what type of expense?
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c. administrative expense
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The arrangements between buyer and seller as to when payments for merchandise are to made are called
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a. credit terms
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Merchandise subject to terms 1/10, n/30, FOB shipping point, is sold on account to a customer for $15,000. The seller paid transportation casts of $1,000 and issued a credit memorandum for $5,000 prior to payment. What is the amount of the cash discount allowable?
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d. $100
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A sales invoice included the following information: Merchandise price, $4,000; Transportation, $300; Terms, 1/10, n/eom, FOB shipping point Assuming that a credit for merchandise returned of $600 is granted prior to payment, that the transportation is prepaid by the seller, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?
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c. $3,666
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The term "inventory" indicates
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d. both (a) merchandise held for sale in the normal course of business and (b) materials in the process of production or held for production
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Using the following information, what is the amount of gross profit?
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b. $30,470
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The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a
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d. single-step statemtent
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Multiple-step income statements show
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c. both gross profit and income from operations
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Based on the following information, what would be recorded as net purchases amount after all of the transactions have been recorded?
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c. $1, 620
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Under the perpetual inventory system, all purchases of merchandise are debited to the account entitled
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a. Merchandise Inventory
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Silver Co. sold merchandise to Bronze Co. on account $23,000, terms 2/15, net 45. The cost of the merchandise sold is $18,500. Silver Co. issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900. The Bronze Co. paid the invoice within the discount period. What is the amount of net sales from the above transaction?
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a. $20,090
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If the buyer is to pay the transportation costs of delivering merchandise, delivery terms are stated as
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a. FOB shipping point
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Discounts taken by a buyer because of early payment are recorded on the seller's accounting records as
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b. Sales discount
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Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a
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c. credit to Merchandise Inventory
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If merchandise sold on account is returned to the seller, the seller may inform the customer of the details by issuing a
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c. credit memorandum
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Using a perpetual inventory system, the entry to record the return from a customer of merchandise sold on account includes a
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b. debit to Merchandise Inventory
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Based on the following information, by what date does the invoice need to be paid in order to take the advantage of the discount?
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d. April 14, 2007
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Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as
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a. selling expenses
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Which one of the following is not a difference between a retail business and a service business?
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c. accounting equation
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Which account is not classified as a selling expense?
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c. Sales discounts
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Gross profit is equal to
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d. sales less (sales discounts and sales returns and allowances less cost of goods sold
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Robles Co. sells $1,000 of inventory to Salas Co. for cash. Robles paid $650 for the merchandise. Under a perpetual inventory system, the following journal entry(ies) would be recorded
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b. Cash 1,000 Dr, Sales 1,000 Cr, Cost of Merchandise Sold 650 Dr, Merchandise Inventory 650 Cr.
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If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms are
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b. FOB shipping point
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Based on the following information, what would be recorded as the cash payment if the invoice is paid within the discount period?
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d. $1,620
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Merchandise with an invoice price of $4,000 is purchased on June 2 subject to terms of 2/10, n/30, FOB destination. Transportation costs paid by the seller totaled $150. What is the cost of the merchandise if paid on June 12, assuming the discount is taken?
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d. $3,920
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The amount of the total cash paid to the seller for merchandise purchased would normally include
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c. the list price plus the sales tax
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If the seller is to pay the transportation costs of delivering merchandise, the delivery terms are stated as
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b. FOB destination
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Based on the following information, the entry for April 10, 2007 would include?
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c. Credit to Merchandise Inventory $500
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The inventory system employing accounting records that continuously disclose the amount of inventory is called
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d. perpetual
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A retailer purchases merchandise with a catalog list price of $10,000. The retailer receives a 25% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?
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d. $7,350
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Which of the following accounts, will only be found in the chart of accounts of a merchandising company?
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c. Merchandise Inventory
