# Shared Flashcard Set

## Details

Chapter 05.1 Test
Accounting 01
31
Accounting
Undergraduate 1
11/30/2015

## Cards Return to Set Details

Term
 If the merchandise costs \$3,500, insurance in transit costs \$250, tariff costs \$75, processing the purchase order by the purchasing department costs \$50, and the company receiving dock personnel cost \$25, what is the total cost charged to the merchandise? A. \$3,850 B. \$3,500 C. \$3,825 D. \$3,875
Definition
 C. \$3,825 merchandise costs \$3,500 + insurance in transit costs \$250 + processing costs \$50 = \$3,825
Term
 A company, using the periodic inventory system, has merchandise inventory costing \$175 on hand at the beginning of the period. During the period, merchandise costing \$635 is purchased. At year-end, merchandise inventory costing \$160 is on hand. The cost of merchandise sold for the year is A. \$620 B. \$650 C. \$970 D. \$300
Definition
 B. \$650 \$175 + \$635 - \$160 = \$650
Term
 Discounts taken by a buyer because of early payment are recorded on the seller’s accounting records as A. Sales discount B. Purchases discount C. Early payment discount D. Trade discount
Definition
 A. Sales discount
Term
 Merchandise inventory is classified on the balance sheet as a A. Long-Term Asset B. Current Liability C. Current Asset D. Long-Term Liability
Definition
 C. Current Asset
Term
 The amount of the total cash paid to the seller for merchandise purchased for consumption would normally include   A. the list price plus the sales tax B. only the sales tax C. only the list price D. the list price less the sales tax
Definition
 A. the list price plus the sales tax
Term
 Which of the following accounts usually has a debit balance? A. Freight-In B. Purchase Discounts C. Sales Tax Payable D. Allowance for Doubtful Accounts
Definition
 A. Freight-In
Term
 Who pays the freight cost when the terms are FOB destination? A. either the buyer or the seller B. the customer C. the buyer D. the seller
Definition
 D. the seller
Term
 The arrangements between buyer and seller as to when payments for merchandise are to be made are called A. credit terms B. gross cash C. cash on demand D. net cash
Definition
 A. credit terms
Term
 When the perpetual inventory system is used, the inventory sold is debited to A. merchandise inventory B. sales C. cost of merchandise sold D. supplies expense
Definition
 C. cost of merchandise sold
Term
 Because many companies use computerized accounting systems, periodic inventory is widely used. True   False
Definition
 False
Term
 A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts. True   False
Definition
 False
Term
 Closing entries for a merchandising business are not similar to those for a service business. True   False
Definition
 False
Term
 When a merchandising business is compared to a service business, the financial statement that is not affected by that change is the Statement of Owner's Equity. True   False
Definition
 True
Term
 A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30 days after the invoice date to take advantage of the cash discount. True   False
Definition
 False
Term
 On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues. True   False
Definition
 True
Term
 Other income and expenses are items that are not related to the primary operating activity. True   False
Definition
 True
Term
 Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. If payment is made within 10 days of the purchase, the entry to record the payment will include a credit to Cash and a credit to Purchase Discounts. True   False
Definition
 False
Term
 As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet. True   False
Definition
 False
Term
 If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/30. True   False
Definition
 False
Term
 Multiple-step income statements show A. neither gross profit nor income from operations B. income from operations but not gross profit C. both gross profit and income from operations D. gross profit but not income from operations
Definition
 C. both gross profit and income from operations
Term
 Inventory shortage is recorded when A. merchandise is returned to a seller. B. there is a difference between a physical count of inventory and inventory records. C. merchandise is returned by a buyer. D. merchandise purchased from a seller is incomplete or short.
Definition
 B. there is a difference between a physical count of inventory and inventory records.
Term
 When merchandise is returned under the perpetual inventory system, the buyer would credit A. Merchandise Inventory B. Purchases Returns and Allowances C. Accounts Payable D. Accounts Receivable
Definition
 A. Merchandise Inventory
Term
 Calculate the gross profit for Jonas Company based on the data given below: Sales                                                 \$764,000 Selling Expenses                               52,500 Cost of Merchandise Sold                 538,000 Sales Discounts                                 7,100 Sales Returns and Allowances          3,650 A. \$162,750 B. \$753,250 C. \$215,250 D. \$700,750
Definition
 C. \$215,250 Sales  \$764,000 - Cost of Merchandise Sold  538,000 - Sales Discounts  7,100 - Sales Returns and Allowances  3,650 = \$215,250
Term
 When purchases of merchandise are made with cash, the transaction may be recorded with the following entry A. debit Merchandise Inventory; credit Cash B. debit Cash; credit Merchandise Inventory C. debit Merchandise Inventory; credit Cash Discounts D. debit Merchandise Inventory; credit Purchases
Definition
 A. debit Merchandise Inventory; credit Cash
Term
 Periodic Inventory (Definition)
Definition
 The inventory system in which the inventory records do not show the amount available for sale or sold during the period.
Term
 Perpetual Inventory System
Definition
 The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.
Term
 Gross Profit (Equation)
Definition
 Net Sales - COMS
Term
 Cost of Merchandise Sold is an Expense.   True    False
Definition
 True
Term
 Cost of Merchandise Sold (Equation)
Definition
Term
 Merchandise Available for Sale (Equation)
Definition
Term
 [image]
Definition
 D. \$36,580 Merchandise Inventory Sep.1  5,700  + Purchases 32,000 - Purchases returns and allowances 1,200 - Purchases discounts 960 + Freight In 1,040 - Merchandise Inventory Sep.30  6,370 = 30,210 Cost of Goods Sold   Sales 63,000 -  Sales returns and allowances 910 = 62,090 Net Sales   Net Sales - Cost of Goods Sold = Gross Profit 62,090 - 30,210 = 31,880?????
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