1)ales revenue minus sales returns and allowances and sales discounts equals:

Question 1 options:

gross margin.

income from operations.

cost of goods sold.

net sales.

2) What is the difference between a sales return and a sales allowance?

Question 2 options:

A sales return reduces the amount receivable from the customer, but an allowance does not.

A sales return involves an adjustment to Inventory, but a sales allowance does not.

A sales return requires a debit to Sales returns and allowances, but a sales allowance does not.

A sales allowance is deducted from Sales revenue to calculate net sales, but a sales return is not.

3)Using a perpetual inventory system, the entry to record the purchase of merchandise on account involves a:

Question 3 options:

debit to Inventory.

debit to Accounts Payable.

credit to Inventory.

credit to Cash.

4) Which of the following credit terms allows for a cash discount?

Question 4 options:

n/30

n/eom

n/60

1/10 n/30

5) A purchase return or allowance under a perpetual inventory system is credited to:

Question 5 options:

Accounts Payable.

Purchase Returns and Allowances.

Inventory.

Purchases.

6) If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:

Question 6 options:

Inventory and credit to Cash for $200.

Accounts Payable and credit to Inventory for $200.

Inventory and credit to Purchases Discounts for $200.

Purchases Discounts and credit to Inventory for $200.

7) The seller is responsible for the shipping costs when the shipping terms are:

Question 7 options:

FOB destination.

COD destination.

FOB shipping point.

COD shipping point.

8) Under a perpetual inventory system, the entry to record the cost of goods sold would include a debit to:

Question 8 options:

Cost of Goods Sold and a credit to Inventory for the retail price of the inventory.

Inventory and a credit to Sales Revenue for the retail price of the inventory.

Cost of Goods Sold and a credit to Inventory for the cost of the inventory.

Inventory and a credit to Cost of Goods Sold for the cost of the inventory.

9) To update the inventory records for the sale of merchandise under a perpetual inventory system, the entry would include a:

Question 9 options:

credit to Inventory.

debit to Accounts Payable.

debit to Sales Revenue.

credit to Cost of Goods Sold.

10) Under a perpetual inventory system, the entry to record the return of inventory sold on account for $250 with a cost of $185 would be recorded by the seller as a:

Question 10 options:

debit to Accounts Receivable for $250.

debit to Sales Returns and Allowances for $185.

credit to Sales Revenue for $250.

credit to Cost of Goods Sold for $185.

11) Under a perpetual inventory system, the entry to record the return of inventory sold on account for $360 with a cost of $210 would be recorded by the seller as a:

Question 11 options:

credit to Accounts Receivable for $210.

credit to Sales Returns and Allowances for $210.

debit to Sales Revenue for $360.

debit to Inventory for $210.

12) Which of the following istrueabout freight in?

Question 12 options:

Freight in is added to the cost of merchandise inventory.

Freight in is a selling expense.

Freight in is an operating expense.

Freight in is deducted from Accounts payable.

13) Under a perpetual inventory system, the adjusting entry to account for inventory shrinkage would include a:

Question 13 options:

credit to Miscellaneous Expense.

credit to Cost of Goods Sold.

credit to Inventory.

debit to Miscellaneous Expense.

14) Which accounts are affected in the closing process under a perpetual inventory system?

Question 14 options:

Gross Margin and Cost of Goods Sold

Cost of Goods Sold, Sales Returns and Allowances, and Sales Discounts

Gross Margin, Sales Returns and Allowances, and Sales Discounts

Operating Expenses, Sales Revenue, and Purchases

15) Under a perpetual inventory system, which accounts would be closed to Income Summary with credits?

Question 15 options:

Sales Returns and Allowances, Sales Revenue, and Inventory

Sales Discounts, Sales Returns and Allowances, and Cost of Goods Sold

Sales Revenue and Cost of Goods Sold

Sales Returns and Allowances and Sales Revenue

16) The major revenue of a merchandiser is ________ while the major expense(s) is (are) ________.

Question 16 options:

sales revenue; cost of goods sold

gross margin; operating expenses

income from operations; cost of goods sold

sales revenue; operating expenses

17) Inventory held by a business is a(n) ________ and when sold becomes a(n) ________.

Question 17 options:

liability; withdrawal

asset; expense

liability; asset

asset; contra asset

18) Expenses other than cost of goods sold, that are incurred in the entity's major line of business are called:

Question 18 options:

merchandising expenses.

servicing expenses.

other expenses.

operating expenses.

19) The gross margin percentage is calculated as:

Question 19 options:

gross margin minus net sales revenue.

gross margin divided by net sales revenue.

gross margin plus net sales revenue.

gross margin times net sales revenue.

20) Inventory turnover indicates how:

Question 20 options:

quickly inventory is received from the supplier after the order is placed.

many days it takes the inventory to travel between the seller's warehouse and the buyer's warehouse.

rapidly inventory is sold.

many days it takes from the time an order is received to the day it is shipped.

21) Inventory turnover is calculated as:

Question 21 options:

cost of goods sold divided by average inventory.

cost of goods sold minus average inventory.

cost of goods sold times average inventory.

average inventory divided by cost of goods sold.

22) What are two key criteria that merchandisers who report under international financial reporting standards (IFRS) must follow?

Question 22 options:

Revenue-recognition criteria and time-allotment assumption

Revenue-recognition criteria and matching objective

Revenue-recognition criteria and economic-period assumption

Revenue-recognition criteria and time-concern assumption