Question 1:

Which of the following is an example of a contra revenue account?

sales discounts

accounts payable

sales

merchandise inventory

Question 2

What accounts are used to recognize a retailer's purchase from a manufacturer on credit?

accounts payable, merchandise inventory

accounts receivable, merchandise inventory

sales, accounts receivable

accounts payable, cash

Question 3

Which of the following numbers represents the discount percentage applied if a customer pays within a discount window and credit terms are 3/15, n/60?

3 and 15

60

15

3

Question 4

If a customer purchases merchandise on credit and returns the defective merchandise before payment, what accounts would recognize this transactions.

accounts receivable, sales discount

accounts receivable, sales returns and allowances

sales returns and allowances, cash

sales discount, cash

Question 5

Which of the following is a disadvantage of the perpetual inventory system?

Inventory information is in real-time.

It allows managers to make current decisions about purchases, stock, and sales.

It is cost-prohibitive.

Inventory is automatically updated.

Question 6

Which of the following is an advantage of the periodic inventory system?

cost prohibitive

time consuming

real-time information for managers

frequent physical inventory counts

Question 7

Which of the following is not a reason for the physical inventory count to differ from what is recognized on the company's books?

shrinkage

damage

mismanagement

sale of services to customers

Question 8

Which of the following is not included when computing Net Purchases?

purchase returns

purchase allowances

beginning inventory

purchase discounts

Question 9

Which of the following accounts are used when recording a purchase?

cash, accounts payable

cash, mercantile inventory

cash, merchandise inventory or accounts payable, merchandise inventory

accounts receivable, merchandise inventory

Question 10

A retailer pays on credit for $650 worth of inventory, terms 3/10, n/40. If the merchandiser pays within the discount window, how much will the retailer remit in cash to the manufacturer?

$650

$195

$19.50

$630.50

Question 11

A retailer returns $400 worth of inventory to a manufacturer and receives a full refund. What accounts recognize this return before the retailer remits payment to the manufacturer?

accounts payable, merchandise inventory

cash, merchandise inventory

merchandise inventory, cost of goods sold

accounts payable, cash

Question 12

A customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer?

sales discounts, cost of goods sold

sales returns and allowances, purchases

accounts receivable, cash

accounts receivable, sales returns and allowances

Question 13

Which of the following accounts are used when recording the sales entry of a sale on credit?

accounts receivable, sales

accounts receivable, merchandise inventory

merchandise inventory, cash

sales, cost of goods sold

Question 14

A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays within the discount window, how much will they remit in cash to the retailer?

$50

$500

$1,250

$1,200

Question 15

A customer returns $870 worth of merchandise and receives a full refund. What accounts recognize this sales return (disregarding the merchandise condition entry) if the return occurs before the customer remits payment to the retailer?

sales returns and allowances, merchandise inventory

accounts receivable, cash

accounts receivable, sales returns and allowances

accounts receivable, cost of goods sold

Question 16

Which of the following accounts are used when recording a purchase using a periodic inventory system?

cash, merchandise inventory

cash, purchases

accounts payable, sales

accounts payable, accounts receivable

Question 17

Which of the following is not a characteristic of FOB Destination?

The point of transfer is when the goods arrive at the buyer's place of business.

The seller pays for shipping.

The point of transfer is when the goods leave the seller's place of business.

The seller owns goods in transit.

Question 18

Which two accounts are used to recognize shipping charges for a buyer, assuming the buyer purchases with cash and the terms are FOB Shipping Point?

The buyer does not record anything for shipping since it is FOB Shipping Point.

merchandise inventory, accounts payable

merchandise inventory, cash

delivery expense, cash

Question 19

Which of the following is not a characteristic of FOB Shipping Point?

The buyer owns goods in transit.

The buyer pays for shipping.

The point of transfer is when the goods arrive at the buyer's place of business.

The point of transfer is when the goods leave the seller's place of business.

Question 20

A multi-step income statement ________.

combines cost of goods sold and operating expenses

separates cost of goods sold from operating expenses

considers interest revenue an operating activity

is another name for a simple income statement

Question 21

Which of the following accounts would be reported under operating expenses on a multi-step income statement?

sales returns and allowances

advertising expense

interest expense

sales

Question 22

A simple income statement ________.

does not combine all expenses into one category

combines all revenues into one category

separates cost of goods sold from operating expenses

separates revenues into several categories

Question 23

Which of the following accounts would not be reported under revenue on a simple income statement?

operating expenses

net sales

interest revenue

rent revenue