Accounting Chapter 5 Review – Flashcards

An entity that buys goods and sells them to customers at a markup is a ________. -merchandiser -service provider -manufacturer -producer

Which of the following line items will appear on the income statement of a merchandiser but not of a service company? -Salaries Expense -Depreciation Expense -Cost of Goods Sold -Supplies Inventory

Credit terms of 2/10, n/30 indicate that a discount of 2% will be given if payment is made within 10 days of the invoice date. Otherwise, the total invoice amount is due within 30 days of the invoice date. True False

An invoice of $800 for merchandise purchased is showing 2/15, n/30 as terms of credit. If the invoice is paid on or before the fifteenth day, the amount to be paid is ________.

If goods are sold on terms FOB shipping point, the ________ -seller normally pays the transportation costs -buyer normally pays the transportation costs -buyer and the seller split the transportation costs -shipping company bears the transportation cost

Under which of the following terms will the buyer be required to pay transportation costs? -FOB destination -FOB shipping point -freight out -freight in

FOB destination refers to a situation where title to goods while in transit belongs to the ________. -buyer -seller -transport agency -insurance agency

A company sold merchandise for $4,000 on account with terms of 4/15, n/30. The company uses a perpetual inventory system. Defective merchandise of $200 was returned two days later. If the payment was received after 30 days, the journal entry to record the cash receipt will include ________.

The Sales Discounts account is a contra account to the ________ account. -Purchases -Sales Revenue -Merchandise Inventory -Sales Returns and Allowance

Delivery expense is a(n) _______ -administrative expense -part of Cost of Goods Sold -operating expense -overhead expense

Which of the following is true of net sales revenue? -It is calculated by subtracting cost of goods sold from sales. -It is calculated by adding sales discounts to sales. -It is calculated by adding sales discounts and sales returns and allowances to sales. -It is calculated by deducting sales discounts and sales returns and allowances from sales.

Up-to-date Merchandisers has the following transactions for the month of July. Sales Revenue $420,000 Cost of Goods Sold 300,000 Operating Expenses 85,000 Sales Discounts 20,000 Sales Returns and Allowances 18,000 Interest Revenue 5,000 Calculate Gross Profit. -$44,000 -$82,000 -$100,000 -$120,000