Question 1

Match the following definitions with the appropriate terms.
-The point of transfer from seller to buyer that takes place when the goods arrive at the buyer's place of business.

Accepted Answer

FOB destination means that the ownership of goods transfers from the seller to the buyer when the goods arrive at the buyer's location, which matches the definition provided.

Question 2

Match the following definitions with the appropriate terms.
-The point of transfer from seller to buyer that takes place when goods depart the seller's place of business.

Accepted Answer

FOB shipping point means that the ownership of goods transfers from the seller to the buyer when the goods leave the seller's premises, making E the correct match for the given definition.

Question 3

Describe the difference between the periodic and perpetual inventory accounting systems.

Accepted Answer

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Question 4

Describe the recording process (including costs)for the types of transactions associated with sales of merchandise inventory using a perpetual inventory system.

Accepted Answer

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Question 5

Match the following definitions with the appropriate terms.
-An income statement format that shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

Accepted Answer

A multiple-step income statement provides a detailed breakdown of revenue, costs, and expenses, including subtotals for different categories, which aligns with the definition provided.

Question 6

Match the following definitions with the appropriate terms.
-A given percent deducted from a list price often granted to customers purchasing large quantities of merchandise.

Accepted Answer

Trade discount refers to a reduction in the listed price of goods or services offered by sellers to buyers, often based on the volume of goods purchased or to maintain long-term business relationships.

Question 7

Match the following definitions with the appropriate terms.
-Inventory losses that can occur as a result of theft or deterioration and require an adjusting entry to account for those losses.

Accepted Answer

Inventory shrinkage refers to the loss of inventory that can occur for various reasons including theft or deterioration, and it requires an adjusting entry in the accounting records to accurately reflect the loss.

Question 8

What does the acronym FOB stand for? Describe the differences between FOB shipping point (or FOB factory)and FOB destination.

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Question 9

What is gross margin ratio? How is it used as an indicator of profitability?

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Question 10

Match the following definitions with the appropriate terms.
-Products a company owns and intends to sell.

Accepted Answer

Merchandise inventory refers to the products that a company owns and intends to sell, making it the correct match for the given definition.

Question 11

Match the following definitions with the appropriate terms.
-The expenses of promoting sales by displaying and advertising merchandise,making sales,and delivering goods to customers.

Accepted Answer

Selling expenses are costs incurred directly from the selling of products or services, including advertising, display costs, sales staff salaries, and delivery expenses to customers.

Question 12

Describe the key attributes of inventory for a merchandising company.

Accepted Answer

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Question 13

What is inventory shrinkage? How do managers account for shrinkage?

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Question 14

Explain the way in which costs flow through the merchandise inventory account to a merchandiser's income statement.

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Question 15

Identify and explain the key components of a merchandiser's net income.

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Question 16

Match the following definitions with the appropriate terms.
-The expenses that support a company's overall operations and include costs related to accounting,human resource management and financial management.

Accepted Answer

General and administrative expenses are costs related to the overall operations of a company, including accounting, human resource management, and financial management. These expenses are not directly tied to the production or selling of goods but are necessary for the broader operational aspects of a company.

Question 17

What are the steps of the operating cycle for a merchandiser with credit sales?

Accepted Answer

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Question 18

Describe the difference between wholesalers and retailers.

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Question 19

What is the acid-test ratio? How does it measure a company's liquidity?

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Question 20

Describe the recording process (including costs)for the types of transactions involved in purchasing merchandise inventory when a perpetual inventory system is used.

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Quiz 4: Accounting for Merchandising Operations

Match the following definitions with the appropriate terms. -The point of transfer from seller to buyer that takes place when the goods arrive at the buyer's place of business.

Match the following definitions with the appropriate terms. -The point of transfer from seller to buyer that takes place when goods depart the seller's place of business.

Describe the difference between the periodic and perpetual inventory accounting systems.

Describe the recording process (including costs)for the types of transactions associated with sales of merchandise inventory using a perpetual inventory system.

Match the following definitions with the appropriate terms. -An income statement format that shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

Match the following definitions with the appropriate terms. -A given percent deducted from a list price often granted to customers purchasing large quantities of merchandise.

Match the following definitions with the appropriate terms. -Inventory losses that can occur as a result of theft or deterioration and require an adjusting entry to account for those losses.