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    Review Materials For Deptl

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    Steff
    This document contains 141 true-false questions testing accounting concepts related to merchandising companies. The questions cover topics such as calculating gross profit, identifying accounts that affect income determination, recognizing revenues and expenses, and computing cost of goods sold using perpetual and periodic inventory systems.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Review Materials For Deptl

    Uploaded by

    Steff
    448 views4 pages
    This document contains 141 true-false questions testing accounting concepts related to merchandising companies. The questions cover topics such as calculating gross profit, identifying accounts that affect income determination, recognizing revenues and expenses, and computing cost of goods sold using perpetual and periodic inventory systems.

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    Basic Accounting

    Original Title

    Review Materials for Deptl

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    This document contains 141 true-false questions testing accounting concepts related to merchandising companies. The questions cover topics such as calculating gross profit, identifying accounts that affect income determination, recognizing revenues and expenses, and computing cost of goods sold using perpetual and periodic inventory systems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    448 views4 pages

    Review Materials For Deptl

    Uploaded by

    Steff
    This document contains 141 true-false questions testing accounting concepts related to merchandising companies. The questions cover topics such as calculating gross profit, identifying accounts that affect income determination, recognizing revenues and expenses, and computing cost of goods sold using perpetual and periodic inventory systems.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Test I

    TRUE-FALSE STATEMENTS
    1. T- Retailers and wholesalers are both considered merchandisers.
    2. F- The steps in the accounting cycle are different for a merchandising company than for a service company.
    3. F- Sales minus operating expenses equals gross profit.
    4. T- Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.
    5. F- A periodic inventory system requires a detailed inventory record of inventory items.
    6. T- Freight terms of FOB Destination means that the seller pays the freight costs.
    7. T- Freight costs incurred by the seller on outgoing merchandise are an operating expense to the seller.
    8. F- Sales revenues are earned during the period cash is collected from the buyer.
    9. F- The Sales Returns and Allowances account and the Sales Discount account are both classified as expense
    accounts
    10. T- The revenue recognition principle applies to merchandisers by recognizing sales revenues when they are
    earned.
    11. F- Sales Allowances and Sales Discounts are both designed to encourage customers to pay their accounts
    promptly.
    12. F- To grant a customer a sales return, the seller credits Sales Returns and Allowances.
    13. T- A company's unadjusted balance in Merchandise Inventory will usually not agree with the actual amount of
    inventory on hand at year-end.
    14. T- For a merchandising company, all accounts that affect the determination of income are closed to the Income
    Summary account.
    15. F- A merchandising company has different types of adjusting entries than a service company.
    16. F- Nonoperating activities exclude revenues and expenses that result from secondary or auxiliary operations.
    17. F- Selling expenses relate to general operating activities such as personnel management.
    18. T- Net sales appears on both the multiple-step and single-step forms of an income statement.
    19. T- A multiple-step income statement provides users with more information about a company’s income
    performance.
    20. F- The multiple-step form of income statement is easier to read than the single-step form.

    TEST II
    Use the following information for questions 123–125.
    During 2008, Salon Enterprises generated revenues of $60,000. The company’s expenses were as follows: cost of goods
    sold of $30,000, operating expenses of $12,000 and a loss on the sale of equipment of $2,000.
    123. Salon’s gross profit is
    a. $60,000.
    b. $30,000.
    c. $18,000.
    d. $16,000
    124. Salon’s income from operations is
    a. $60,000.
    b. $30,000.
    c. $18,000.
    d. $12,000.
    125. Salon’s net income is
    a. $60,000.
    b. $30,000.
    c. $18,000.
    d. $16,000.
    Use the following information for questions 126–127.
    Financial information is presented below:
    Operating Expenses $ 45,000
    Sales 150,000
    Cost of Goods Sold 77,000
    126. Gross profit would be
    a. $105,000.
    b. $28,000.
    c. $73,000.
    d. $150,000.
    127. The gross profit rate would be
    a. .700.
    b. .187.
    c. .300.
    d. .487.
    Use the following information for questions 128–129.

    Financial information is presented below:


    Operating Expenses $ 45,000
    Sales Returns and Allowances 13,000
    Sales Discounts 6,000
    Sales 150,000
    Cost of Goods Sold 67,000
    128. Gross profit would be
    a. $77,000.
    b. $64,000.
    c. $70,000.
    d. $83,000.
    129. The gross profit rate would be
    a. .535.
    b. .489.
    c. .511.
    d. .553.
    Use the following information for questions 130–132.
    Financial information is presented below:
    Operating Expenses $ 45,000
    Sales Returns and Allowances 13,000
    Sales Discounts 6,000
    Sales 160,000
    Cost of Goods Sold 77,000
    130. The amount of net sales on the income statement would be
    a. $154,000.
    b. $141,000.
    c. $160,000.
    d. $166,000.
    131. Gross profit would be
    a. $77,000.
    b. $70,000.
    c. $64,000.
    d. $83,000.
    132. The gross profit rate would be
    a. .454.
    b. .546.
    c. .500.
    d. .538.
    133. If a company has sales of $420,000, net sales of $400,000, and cost of goods sold of $260,000, the gross profit
    rate is
    a. 67%.
    b. 65%
    c. 35%.
    d. 33%.
    134. Ingrid’s Fashions sold merchandise for $38,000 cash during the month of July. Returns that month totaled
    $800. If the company’s gross profit rate is 40%, Ingrid’s will report monthly net sales revenue and cost of goods
    sold of
    a. $38,000 and $22,800.
    b. $37,200 and $14,880.
    c. $37,200 and $22,320.
    d. $38,000 and $22,320.
    Use the following information for questions 135–138.
    During August, 2008, Sal’s Supply Store generated revenues of $30,000. The company’s expenses were as follows: cost
    of goods sold of $12,000 and operating expenses of $2,000. The company also had rent revenue of $500 and a gain on
    the sale of a delivery truck of $1,000.
    135. Sal’s gross profit for August, 2008 is
    a. $30,000.
    b. $19,000.
    c. $18,000.
    d. $16,000.
    136. Sal’s nonoperating income (loss) for the month of August, 2008 is
    a. $0.
    b. $500.
    c. $1,000.
    d. $1,500.
    137. Sal’s operating income for the month of August, 2008 is
    a. $30,000.
    b. $19,500.
    c. $18,500.
    d. $16,000.
    138. Sal’s net income for August, 2008 is
    a. $18,000.
    b. $17,500.
    c. $16,500.
    d. $16,000.
    139. At the beginning of September, 2008, RFI Company reported Merchandise Inventory of $4,000. During the
    month, the company made purchases of $7,800. At September 31, 2008, a physical count of inventory reported
    $3,200 on hand. Cost of goods sold for the month is
    a. $600.
    b. $7,800.
    c. $8,600.
    d. $11,800.
    140. At the beginning of the year, Midtown Athletic had an inventory of $400,000. During the year, the company
    purchased goods costing $1,600,000. If Midtown Athletic reported ending inventory of $600,000 and sales of
    $2,000,000, the company’s cost of goods sold and gross profit rate must be
    a. $1,000,000 and 50%.
    b. $1,400,000 and 30%.
    c. $1,000,000 and 30%.
    d. $1,400,000 and 70%.
    141. During the year, Darla’s Pet Shop’s merchandise inventory decreased by $20,000. If the company’s cost of
    goods sold for the year was $300,000, purchases must have been
    a. $320,000.
    b. $280,000.
    c. $260,000.
    d. Unable to determine.

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