Question 1

The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income.

Accepted Answer

A) True 
 B)False

Question 2

Financial information is presented below:  Gross profit would be

Accepted Answer

A)   $90,000.
B)   $70,000.
C)   $60,000.
D)   $66,000. C

Question 3

Sales Discounts is a contra revenue account to Sales Revenue.

Accepted Answer

A) True 
 B)False

Question 4

The basic accounting entries for merchandising are

Accepted Answer

A)   the same under GAAP and under IFRS.
B)   required under GAAP but not under IFRS.
C)   required under IFRS but not under GAAP.
D)   required under IFRS with some differences as compared to GAAP.

Question 5

Cost of Goods Sold is considered an expense of a merchandising firm.

Accepted Answer

A) True 
 B)False

Question 6

Which statement is incorrect?

Accepted Answer

A)   Periodic inventory systems provide better control over inventories than perpetual inventory systems.
B)   Computers and electronic scanners allow more companies to use a perpetual inventory system.
C)   Freight-in is debited to Inventory when a perpetual inventory system is used.
D)   Regardless of the inventory system that is used, companies should take a physical inventory count.

Question 7

Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Accepted Answer

The answer of Lovett Company provides this information for the...

Question 8

Operating expenses would include

Accepted Answer

A)   interest expense.
B)   income tax expense.
C)   freight-out.
D)   freight-out and interest.

Question 9

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Accepted Answer

A) True 
 B)False

Question 10

Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct?

Accepted Answer

A)   Returns of merchandise by Adams Company to a manufacturer are credited to Inventory.
B)   Freight paid to get merchandise to Adams Company's store is debited to Freight Expense.
C)   A return of merchandise by one of Adams Company's customers is credited to Inventory.
D)   Discounts taken by Adams Company's customers are credited to Inventory.

Question 11

Financial information is presented below:  The amount of net sales on the income statement would be

Accepted Answer

A)   $128,000.
B)   $125,000.
C)   $140,000.
D)   $137,000.

Question 12

Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000, operating expenses of $35,000, other expenses of $10,000, net income of $9,000. Calculate the following values. 1. Profit margin. 2. Gross profit rate.

Accepted Answer

The answer of Horner Corporation reported net sales of $150,000,...

Question 13

Norman Company completed the following transactions in October: Norman uses a perpetual inventory system.  Instructions
(a) Indicate the cash received for each collection. Show your calculations.
(b) Prepare the journal entry for the
(1) Oct. 17 sale. The merchandise sold had a cost of $3,000.
(2) Oct. 23 sales return. The merchandise returned had a cost of $200.
(3) Oct. 28 collection.

Accepted Answer

The answer of Norman Company completed the following transactions in...

Question 14

The primary source of revenue for a wholesaler is

Accepted Answer

A)   investment income.
B)   service revenue.
C)   the sale of merchandise.
D)   the sale of plant assets the company owns.

Question 15

A credit sale of $700 is made on July 15, terms 2/10, net/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?

Accepted Answer

A)   $700
B)   $637
C)   $650 d $686

Question 16

What is an advantage of using the multiple-step income statement?

Accepted Answer

A)   It highlights the components of net income.
B)   Gross profit is not a separate item.
C)   It is easier to prepare than the single-step income statement.
D)   Net income will be higher than net income computed using the single-step income statement. A

Question 17

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

Accepted Answer

A)   in the selling expenses of the buyer.
B)   in operating expenses for the seller.
C)   to the cost of goods sold of the seller.
D)   to a contra-revenue account of the seller.

Question 18

Inventory becomes part of cost of goods sold when a company

Accepted Answer

A)   pays for the inventory.
B)   purchases the inventory.
C)   sells the inventory.
D)   receives payment from the customer.

Question 19

The computer has increased greatly the use of the periodic inventory system.

Accepted Answer

A) True 
 B)False  False

Question 20

Financial information is presented below:  The amount of net sales on the income statement would be

Accepted Answer

A)   $154,000.
B)   $150,000.
C)   $160,000.
D)   $156,000.

Exam 5: Merchandising Operations and the Multiple-Step Income Statement

The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income.

Correct Answer
verified

Financial information is presented below: Gross profit would be

Correct Answer
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C

Sales Discounts is a contra revenue account to Sales Revenue.

Correct Answer
verified

The basic accounting entries for merchandising are

Correct Answer
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Cost of Goods Sold is considered an expense of a merchandising firm.

Correct Answer
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Which statement is incorrect?

Correct Answer
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Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Correct Answer
verified

Operating expenses would include

Correct Answer
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Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Correct Answer
verified

Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct?

Correct Answer
verified

Financial information is presented below: The amount of net sales on the income statement would be

Correct Answer
verified

Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000, operating expenses of $35,000, other expenses of $10,000, net income of $9,000. Calculate the following values. 1. Profit margin. 2. Gross profit rate.

Correct Answer
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Correct Answer
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The primary source of revenue for a wholesaler is

Correct Answer
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A credit sale of $700 is made on July 15, terms 2/10, net/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?

Correct Answer
verified

What is an advantage of using the multiple-step income statement?

Correct Answer
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A

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

Correct Answer
verified

Inventory becomes part of cost of goods sold when a company

Correct Answer
verified

The computer has increased greatly the use of the periodic inventory system.

Correct Answer
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False

Financial information is presented below: The amount of net sales on the income statement would be

Correct Answer
verified

Exam 5: Merchandising Operations and the Multiple-Step Income Statement

The multiple-step income statement is considered more useful than the single-step income statement because it highlights the components of net income.

Correct AnswerverifiedShow Answer

Financial information is presented below: Gross profit would be

Correct AnswerverifiedC

Sales Discounts is a contra revenue account to Sales Revenue.

Correct AnswerverifiedShow Answer

The basic accounting entries for merchandising are

Correct AnswerverifiedShow Answer

Cost of Goods Sold is considered an expense of a merchandising firm.

Correct AnswerverifiedShow Answer

Which statement is incorrect?

Correct AnswerverifiedShow Answer

Lovett Company provides this information for the month of November, 2014: sales on credit $140,000; cash sales $50,000; sales discount $2,000; and sales returns and allowances $8,000. Prepare the sales revenues section of the income statement based on this information.

Correct AnswerverifiedShow Answer

Operating expenses would include

Correct AnswerverifiedShow Answer

Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.

Correct AnswerverifiedShow Answer

Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct?

Correct AnswerverifiedShow Answer

Financial information is presented below: The amount of net sales on the income statement would be

Correct AnswerverifiedShow Answer

Horner Corporation reported net sales of $150,000, cost of goods sold of $96,000, operating expenses of $35,000, other expenses of $10,000, net income of $9,000. Calculate the following values. 1. Profit margin. 2. Gross profit rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The primary source of revenue for a wholesaler is

Correct AnswerverifiedShow Answer

A credit sale of $700 is made on July 15, terms 2/10, net/30, on which a return of $50 is granted on July 18. What amount is received as payment in full on July 24?

Correct AnswerverifiedShow Answer

What is an advantage of using the multiple-step income statement?

Correct AnswerverifiedA

Freight costs incurred by a seller on merchandise sold to customers will cause an increase

Correct AnswerverifiedShow Answer

Inventory becomes part of cost of goods sold when a company

Correct AnswerverifiedShow Answer

The computer has increased greatly the use of the periodic inventory system.

Correct AnswerverifiedFalse

Financial information is presented below: The amount of net sales on the income statement would be

Correct AnswerverifiedShow Answer

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C

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A

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False

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