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Exam 5: Accounting for Merchandising Operations

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Question 41

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Match the following terms with the appropriate definition.

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An accounting method that continually updates accounting records for merchandise transactions.

Debit memorandum

A cash discount granted to customers for paying within the discount period.

Perpetual inventory system

The amount of time allowed before full payment is due.

Gross profit

An accounting method that updates the accounting records for merchandise transactions only at the end of a period.

Credit terms

The description of the amounts and timing of payments from a buyer to a seller.

Selling expenses

The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.

Periodic inventory system

The time period in which a cash discount is available and a reduced payment can be made by the buyer.

Discount period

A notification that the sender has credited the recipient's account kept by the sender.

Credit memorandum

Net sales less cost of goods sold.

Credit period

A notification that the sender has debited the recipient's account kept by the sender.

Sales discount

Premises

An accounting method that continually updates accounting records for merchandise transactions.

A cash discount granted to customers for paying within the discount period.

The amount of time allowed before full payment is due.

An accounting method that updates the accounting records for merchandise transactions only at the end of a period.

The description of the amounts and timing of payments from a buyer to a seller.

The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.

The time period in which a cash discount is available and a reduced payment can be made by the buyer.

A notification that the sender has credited the recipient's account kept by the sender.

Net sales less cost of goods sold.

A notification that the sender has debited the recipient's account kept by the sender.

Responses

Debit memorandum

Perpetual inventory system

Gross profit

Credit terms

Selling expenses

Periodic inventory system

Discount period

Credit memorandum

Credit period

Sales discount

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Correct Answer

Premises

Responses

An accounting method that continually updates accounting records for merchandise transactions.

A cash discount granted to customers for paying within the discount period.

The amount of time allowed before full payment is due.

An accounting method that updates the accounting records for merchandise transactions only at the end of a period.

The description of the amounts and timing of payments from a buyer to a seller.

The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.

The time period in which a cash discount is available and a reduced payment can be made by the buyer.

A notification that the sender has credited the recipient's account kept by the sender.

Net sales less cost of goods sold.

A notification that the sender has debited the recipient's account kept by the sender.

Premises

An accounting method that continually updates accounting records for merchandise transactions.

A cash discount granted to customers for paying within the discount period.

The amount of time allowed before full payment is due.

An accounting method that updates the accounting records for merchandise transactions only at the end of a period.

The description of the amounts and timing of payments from a buyer to a seller.

The expenses of promoting sales, by displaying and advertising merchandise, making sales, and delivering goods to customers.

The time period in which a cash discount is available and a reduced payment can be made by the buyer.

A notification that the sender has credited the recipient's account kept by the sender.

Net sales less cost of goods sold.

A notification that the sender has debited the recipient's account kept by the sender.

Responses

Question 42

Short Answer

Review LaterAdd Note

Review Later

A ___________ is an intermediary that buys products from manufacturers and sells to retailers.

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verified

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Question 43

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_____________ are non-operating activities that include interest,dividend,and rent revenues,and gains from asset disposals.

How do closing entries for a merchandising company that uses the perpetual inventory system differ from the closing entries for a service company?

A company's current assets are $23,420,its quick assets were $13,890 and its current liabilities were $12,220.Its acid-test ratio equals:

From the adjusted trial balance for Worker Products Company given below,prepare a multiple-step income statement in good form.

A perpetual inventory system is able to directly measure and monitor inventory shrinkage and there is no need for a physical count of inventory.

Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.

A wholesaler is an intermediary that buys products from manufacturers or other wholesalers and sells them to consumers.

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

The acid-test ratio reflects the ___________ of a company.

A company's quick assets are $147,000 and its current liabilities are $143,000.This company's acid-test ratio is 1.03.

Under the perpetual inventory system,the cost of merchandise purchased is recorded in the Merchandise Inventory account.

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April: Prepare the journal entries that Steve's Skateboards must make to record these transactions.

A multiple-step income statement format shows detailed computations of net sales and other costs and expenses,and reports subtotals for various classes of items.

Each sales transaction for a seller that uses a perpetual inventory system involves recognizing both revenue and cost of merchandise sold.

_______________ refer to merchandise that customers return to the seller after a sale.

Using the following year-end information for Brim,LLC,calculate the current ratio and acid-test ratio:

On October 1,Courtland Company sold merchandise in the amount of $5,800 to Carter Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,000.Courtland uses the periodic inventory system.The journal entry or entries that Courtland will make on October 1 is:

A company uses the perpetual inventory system and recorded the following entry: Accounts Payable………………………… 2,500 Merchandise Inventory……………. 50 Cash………………………………... 2,450 This entry reflects a: