Retailers often add a financing charge to a customer's accounts receivable balance

a.if the customer fails to purchase additional merchandise.

b.if the account is not paid within five days.

c.if the account is not paid within a specified period of time.

d.if the customer pays more than the required amount.

Allowance for Doubtful Accounts on the balance sheet

a.increases the carrying amount of accounts receivable.

b.appears under the heading "Current Liabilities."

c.is offset against total current assets.

d.decreases gross accounts receivable.

Reversing entries are useful

a.whenever correcting entries are prepared.

b.whenever adjusting entries are prepared.

c.only when accruals are journalized in the current period.

d.only when accruals have been journalized in the previous period.

The final step in the accounting cycle is to prepare

a.closing entries.

b.adjusting entries.

c.A post-closing trial balance.

d.financial statements.

For a merchandising company, the net realizable value of its inventory is the

a.original cost of the inventory.

b.current selling price.

c.original cost of the inventory less any costs required to make the goods ready for sale.

d.current selling price less any costs required to make the goods ready for sale.

A company just starting in business purchased three merchandise inventory items at the following prices: first purchase, $100; second purchase, $120; third purchase, $125. If the company sold two units for a total of $400 and used FIFO, the gross profit for the period would be

A.$180.

B.$155.

C.$220.

D.$245.

In terms of segregation of duties, related buying activities include

a.ordering, selling, paying.

b.ordering, receiving, paying.

c.selling, shipping, paying.

d.ordering, shipping, billing.

The internal audit function is only effective when

a.independent checks of performance are carried out on a regular basis.

b.reports are filed with the CICA.

c.control tasks are properly performed.

d.the results of an internal audit are reported to senior management and/or the company's owners.

The operating cycle of a merchandising company differs from that of a service company in all of the following EXCEPT that it

a.involves the sale of merchandise.

b.is usually longer in days.

c.involves the purchase of inventory.

d.is usually shorter in days.

Which of the following represents the function of the retailer?

a.Buy products from other retailers and sell to manufacturers.

b.Buy products from other retailers and sell to wholesalers.

c.Buy products from manufacturers and wholesalers and sell to consumers.

d.Buy products from manufacturers and sell to wholesalers.