Question 1

During the current year, merchandise is sold for $137,500 cash and $425,600 on account. The cost of the goods sold is $322,325. What is the amount of the gross profit?

Accepted Answer

The answer of During the current year, merchandise is sold...

Question 2

Match each of the following items (a-h) with the appropriate definition below.
-Early payment discount offered to customers by the seller.

Accepted Answer

Sales discount is the correct match as it refers to a reduction in the amount due from a customer if payment is made within a specified period.

Question 3

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

Accepted Answer

The answer of Complete the following data taken from the...

Question 4

Match each of the following items (a-h) with the appropriate definition below.
-Informs the seller of the reasons for the return of merchandise or the request for a price allowance.

Accepted Answer

The answer of Match each of the following items (a-h)...

Question 5

Match each of the following items (a-h) with the appropriate definition below.
-Account used to record inventory on hand under a perpetual inventory system.

Accepted Answer

Inventory under a perpetual inventory system is directly recorded in the Inventory account, which reflects the current inventory levels at all times.

Question 6

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Accepted Answer

The answer of Describe the major differences in preparing the...

Question 7

Match each of the following terms (a-h) with the correct definition below.
-Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Accepted Answer

Inventory shrinkage refers to the losses of inventory due to theft, damage, spoilage, and other factors that result in the actual inventory on hand being less than the recorded amount.

Question 8

Match each of the following items (a-h) with the appropriate definition below.
-Expense account for recording shipping costs paid by the seller.

Accepted Answer

Delivery Expense is the correct match for an expense account used to record shipping costs paid by the seller. This account is used to track the cost of delivering goods to customers.

Question 9

Match each of the following items (a-h) with the appropriate definition below.
-Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system.

Accepted Answer

Purchases Returns and Allowances is the account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system. This account is used to track the cost of inventory that is either returned to the supplier or for which the buyer receives a price reduction.

Question 10

Match each of the following items (a-h) with the appropriate definition below.
-The cost associated with delivery of merchandise to the customer.

Accepted Answer

The answer of Match each of the following items (a-h)...

Question 11

Match each of the following items (a-h) with the appropriate definition below.
-Discount to government agencies or customers who purchase large quantities of merchandise.

Accepted Answer

Trade discounts are reductions in price given by the seller to buyers based on the quantity of the product purchased or to special types of customers, such as government agencies. This discount is often applied before any exchange takes place.

Question 12

Match each of the following terms (a-h) with the correct definition below.
-Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier.

Accepted Answer

FOB shipping point means that the ownership of the goods transfers to the buyer when the seller delivers the goods to the freight carrier.

Question 13

Discuss the following statement:
​
"Operating cycles for all merchandising businesses are the same, with similar profit margins."
​
Include an example(s) to illustrate your explanation.

Accepted Answer

The answer of Discuss the following statement:
​
"Operating cycles for all...

Question 14

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z.

Accepted Answer

The answer of Complete the following data taken from the...

Question 15

Match each of the following terms (a-h) with the correct definition below.
-Statement where net income is determined by deducting all expenses from all revenues.

Accepted Answer

HThe Single-step income statement (G) is a simplified financial statement where net income is determined by deducting all expenses from all revenues in one step, without breaking down the expenses into categories like cost of goods sold, operating expenses, etc. The Multiple-step income statement (H), on the other hand, provides a more detailed breakdown of revenues and expenses, including gross profit, operating income, and other income and expenses, leading to the net income.

Question 16

Match each of the following terms (a-h) with the correct definition below.
-Inventory system that updates the inventory account only at the end of the accounting period based on a physical count of inventory on hand.

Accepted Answer

The periodic inventory system updates the inventory account only at the end of the accounting period based on a physical count of inventory on hand, distinguishing it from a perpetual inventory system that updates inventory records continuously.

Question 17

Match each of the following terms (a-h) with the correct definition below.
-Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

Accepted Answer

The multiple-step income statement is the correct match because it breaks down revenue, cost of goods sold, and expenses into several steps or sections, including subtotals for sales, gross profit, and income from operations, before arriving at the net income.

Question 18

Match each of the following terms (a-h) with the correct definition below.
-Inventory system that updates the inventory account for every purchase and sale transaction.

Accepted Answer

The perpetual inventory system continuously updates the inventory account for every purchase and sale transaction, providing real-time inventory levels.

Question 19

Match each of the following items (a-h) with the appropriate definition below.
-Discount taken by the buyer for early payment of invoice.

Accepted Answer

Purchases discount is the term used to describe a discount taken by the buyer for early payment of an invoice, typically offered by the seller as an incentive for quicker payment.

Question 20

Match each of the following terms (a-h) with the correct definition below.
-Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Accepted Answer

B) FOB destination: The seller pays the transportation costs and assumes the risk of loss until the goods reach the buyer's destination.
C) FOB shipping point: The buyer pays the transportation costs and assumes the risk of loss after the goods leave the seller's shipping point.
D) Periodic inventory system: Physical inventory counts are taken periodically to determine the ending inventory and cost of goods sold.
E) Perpetual inventory system: Continuously updated inventory records are maintained to determine the ending inventory and cost of goods sold.
F) Inventory shrinkage: The loss of inventory that occurs due to theft, damage, or errors in recording.
G) Single-step income statement: A simple income statement that groups all revenues and expenses together to determine net income.
H) Multiple-step income statement: An income statement that separates operating revenues and expenses from non-operating items and calculates gross profit and operating income.

Answer: 
A) Credit terms 
B) FOB destination 
C) FOB shipping point 
D) Periodic inventory system 
E) Perpetual inventory system 
F) Inventory shrinkage 
G) Single-step income statement 
H) Multiple-step income statement

Each choice matches its corresponding definition.

Quiz 5: Accounting for Retail Businesses

During the current year, merchandise is sold for $137,500 cash and $425,600 on account. The cost of the goods sold is $322,325. What is the amount of the gross profit?

Match each of the following items (a-h) with the appropriate definition below. -Early payment discount offered to customers by the seller.

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

Match each of the following items (a-h) with the appropriate definition below. -Informs the seller of the reasons for the return of merchandise or the request for a price allowance.

Match each of the following items (a-h) with the appropriate definition below. -Account used to record inventory on hand under a perpetual inventory system.

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Match each of the following terms (a-h) with the correct definition below. -Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Match each of the following items (a-h) with the appropriate definition below. -Expense account for recording shipping costs paid by the seller.

Match each of the following items (a-h) with the appropriate definition below. -Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system.

Match each of the following items (a-h) with the appropriate definition below. -The cost associated with delivery of merchandise to the customer.

Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

Match each of the following terms (a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier.

Discuss the following statement: "Operating cycles for all merchandising businesses are the same, with similar profit margins." Include an example(s) to illustrate your explanation.

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z.

Match each of the following terms (a-h) with the correct definition below. -Statement where net income is determined by deducting all expenses from all revenues.

Match each of the following terms (a-h) with the correct definition below. -Inventory system that updates the inventory account only at the end of the accounting period based on a physical count of inventory on hand.

Match each of the following terms (a-h) with the correct definition below. -Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

Match each of the following terms (a-h) with the correct definition below. -Inventory system that updates the inventory account for every purchase and sale transaction.

Match each of the following items (a-h) with the appropriate definition below. -Discount taken by the buyer for early payment of invoice.

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Quiz 5: Accounting for Retail Businesses

During the current year, merchandise is sold for $137,500 cash and $425,600 on account. The cost of the goods sold is $322,325. What is the amount of the gross profit?

Match each of the following items (a-h) with the appropriate definition below. -Early payment discount offered to customers by the seller.

Complete the following data taken from the condensed income statements for merchandising Companies A, B, and C.

Match each of the following items (a-h) with the appropriate definition below. -Informs the seller of the reasons for the return of merchandise or the request for a price allowance.

Match each of the following items (a-h) with the appropriate definition below. -Account used to record inventory on hand under a perpetual inventory system.

Describe the major differences in preparing the financial statements for a service business and a merchandising business.

Match each of the following terms (a-h) with the correct definition below. -Losses of inventory due to theft, damage, spoilage, etc. that cause the actual inventory on hand to be less than that on record.

Match each of the following items (a-h) with the appropriate definition below. -Expense account for recording shipping costs paid by the seller.

Match each of the following items (a-h) with the appropriate definition below. -Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system.

Match each of the following items (a-h) with the appropriate definition below. -The cost associated with delivery of merchandise to the customer.

Match each of the following items (a-h) with the appropriate definition below. -Discount to government agencies or customers who purchase large quantities of merchandise.

Match each of the following terms (a-h) with the correct definition below. -Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier.

Discuss the following statement: ​ "Operating cycles for all merchandising businesses are the same, with similar profit margins." ​ Include an example(s) to illustrate your explanation.

Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z.

Match each of the following terms (a-h) with the correct definition below. -Statement where net income is determined by deducting all expenses from all revenues.

Match each of the following terms (a-h) with the correct definition below. -Inventory system that updates the inventory account only at the end of the accounting period based on a physical count of inventory on hand.

Match each of the following terms (a-h) with the correct definition below. -Statement that includes subtotals for sales, gross profit, and income from operations in determining net income.

Match each of the following terms (a-h) with the correct definition below. -Inventory system that updates the inventory account for every purchase and sale transaction.

Match each of the following items (a-h) with the appropriate definition below. -Discount taken by the buyer for early payment of invoice.

Match each of the following terms (a-h) with the correct definition below. -Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered.

Discuss the following statement: "Operating cycles for all merchandising businesses are the same, with similar profit margins." Include an example(s) to illustrate your explanation.