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Exam 4: Accounting for Merchandising Businesses

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Question 51

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Selected data from the ledger of Jones Co.after adjustment at June 30,the end of the fiscal year,are listed as follows:

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Jones Co. Income Statement For the Year ...

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Question 52

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For a merchandising firm,the inventory sold is shown on the income statement as:

A) cost of merchandise sold.
B) purchases.
C) purchases returns and allowances.
D) net purchases.

E) A) and B)
F) A) and C)

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Question 53

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Merchandise is sold for $2,500,terms FOB destination,2/10,n/30,with transportation costs of $150.If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period,the amount of the sales discount is $40.

Freight in is the amount paid by the seller to deliver merchandise sold to a customer.

Which expenses are subtracted from gross profit to arrive at income from operations?

Merchandise is ordered on November 12; the merchandise is shipped by the seller and the invoice is prepared,dated,and mailed by the seller on November 15; the merchandise is received by the buyer on November 17; the transaction is recorded in the seller's accounts on November 15.If the credit terms are 1/10,n/30,the discount period begins with what date?

What is one criticism of the single-step income statement?

Merchandise inventory shrinkage will decrease Retained Earnings.

When the terms of sale are FOB shipping point,the buyer should pay the transportation charges.

Cash paid to purchase long-term investments would be reported in the statement of cash flows in:

In a multiple-step income statement,sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales.

Net income or loss may appear on the income statement of both a service business and a merchandising business.

Under the indirect method for preparing the statement of cash flows,decreases in current assets are net income in the cash flows from operating activities section.

Using a perpetual inventory system,the purchase of $30,000 of merchandise on account would include a(n) :

Inventory shortage is recorded when:

A payment of dividends decreases which section on the statement of cash flows?

On the income statement in the single-step form,the total of all expenses is deducted from the total of all revenues.

Which of the following businesses is a merchandising business?

Gross profit percent is calculated by dividing gross profit by net sales.

The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.