1.) 1. In a perpetual inventory system, transportation charges are recorded with a debit to the merchandise inventory account. 2. An income statement in which the details of the cost of goods sold are shown is called a single-step income statement.

1st statement is false

1st statement is true

both statements are false

both statements are true

2.) a merchandiser will earn an operating income exactly zero when

operating expenses equals net sales

gross margin equals operating expenses

net sales equals cost of goods sold

cost of goods sold equals gross margin

3.) 1. sales returns and allowances is described as a contra revenue account 2. for a merchandising entity, the difference between net sales and operating expenses is called gross margin.

2 points

both statements are true

both statements are false

1st statement is true

1st statement is false

4.) 1. there is no need for physical inventory count in the perpetual system 2. the perpetual inventory system requires recording the cost of each sale as it occurs

1st statement is true

1st statement is false

both statements are true

both statements are false

5.) Under the periodic inventory system, the Purchases account is used to record

only purchases of merchandise inventory on account

purchases of merchandise inventory for cash or on account

purchases of any asset on account or note payable

only cash purchases of merchandise inventory

6.) Which of the following is shown on both a multiple-step and a single-step income statement?

other expenses & losses

net sales

income from operations

gross profit

7.) after all the adjusting entries are posted, the balances of all asset, liability, income and expense accounts correspond exactly to the amounts in the

unadjusted trial balance

trial balance of balances

post closing trial balance

financial statements

8.) the basic differences between the FS of merchandising and service entity include COGS section of the Income statement and the

other income section of the income statement

inclusion of merchandise inventory on the BS as a current asset

equity section of the balance sheet

profit figure

9.) 1. The bill of lading is a document prepared by the seller detailing the terms of delivery 2. the sales invoice is the evidence for credit sales and purchases.

1st statement is true

1st statement is false

both statements are true

both statements are false

10.) 1. the balance of the merchandise inventory account at the beginning of the period represents the cost of the merchandise on hand at that time 2. the ending inventory of one period is the beginning inventory of the next period

both statements are true

1st statement is false

both statements are false

1st statement is true

11.) 1. discounts offered to the buyer to encourage early payment is trade discounts 2. cash discounts are called purchase discounts rom the buyers viewpoint

1st statement is true

both statements are false

both statements are true

1st statement is false

12.) 1. Merchandise is purchased FOB shipping point. The seller will pay the freight charges. 2. Operating expenses include general expenses, administrative expenses, and cost of goods sold.

both statements are false

both statements are true

1st statement is true

1st statement is false

13.) which of the following activities is not a component of the operating cycle

ordering of merchandise

purchase of merchandise

collection of cash from merchandise sales

sale of merchandise

14.) 1. A multiple-step income statement provides users with more information about a company's performance by distinguishing between operating and non-operating activities 2. Sales taxes are considered to be revenue to the company.

1st statement is true

both statements are true

1st statement is false

both statements are false

15.) 1. the business can shorten its operating cycle by increasing its percentage of cash sales and reducing its credit sales 2. merchandise inventory account could include goods that are in transit

1st statement is false

both statements are false

1st statement is true

both statements are true

16.) a physical count of inventory is usually taken

at the peak of the business season

at the middle of the fiscal year

at the end of the fiscal year

at the start of the fiscal year

17.) 1. under the periodic system, cost of goods sold is treated an an account 2. the periodic inventory system provides an up to date amount of inventory

1st statement is true

1st statement is false

both statements are true

both statements are false

18.) 1. Merchandise purchased on Feb 1 with credit terms of 2/10, n/30, must be paid sooner than with credit terms of n/10 EOM. 2. When merchandise inventory is purchased with credit terms of 1/15, n/60, the credit period is 60 days from date of the invoice.

both statements are true

1st statement is false

1st statement is true

both statements are false

19.) 1. The difference between revenues from sales and cost of sales is operating income 2. for cash sales, the operating cycle is from cash to inventory to accounts receivable and back to cash

1st statement is false

1st statement is true

both statements are true

both statements are false

20.) 1. A deduction allowed from the invoice price of goods if payment is made within a specified period of time is called a trade discount. 2. An inventory system in which the business has up-to-date data as to the quantity of goods on hand is called a periodic inventory system.

both statements are true

both statements are false

1st statement is false

1st statement is true