Question 1

Goods totaling $56,000 purchased August 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on August 10 would be subject to which of the following discounts if paid for on August 12?

Accepted Answer

A)   $1,080
B)   $1,120
C)   $1,160
D)   $40

Question 2

Use this information to answer the following question.  In addition,beginning merchandise inventory was $44,000 and ending merchandise inventory was $28,000.
If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Accepted Answer

A)   understated by $44,000.
B)   overstated by $16,000.
C)   understated by $28,000.
D)   understated by $16,000.

Question 3

Current assets divided by current liabilities is known as the

Accepted Answer

A)   profit margin.
B)   current ratio.
C)   working capital.
D)   capital structure.

Question 4

It is likely that a company would want to bond its employees who handle cash or inventory.

Accepted Answer

A) True 
 B)False

Question 5

Assume that on March 13,Cimarron Company made a purchase totaling $13,000.Record this transaction in journal form assuming the perpetual inventory system was in use (omit explanations).

Accepted Answer

The answer of Assume that on March 13,Cimarron Company made...

Question 6

Which of the following goods would not be included in merchandise inventory for a purchasing company?

Accepted Answer

A)   Goods in transit shipped FOB shipping point
B)   Goods on hand in the showroom
C)   Goods in transit shipped FOB destination
D)   Goods ordered and received from the supplier

Question 7

A retail operation would still have to take a physical inventory even if it uses a perpetual inventory system.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a measure of liquidity?

Accepted Answer

A)   Return on equity
B)   Return on assets
C)   Working capital
D)   Profit margin

Question 9

When the periodic inventory system is used,a physical inventory does not need to be taken at the end of the fiscal year.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a primary concern of internal control?

Accepted Answer

A)   Efficiency of company operations
B)   Fairness of financial statements
C)   Accuracy of accounting records
D)   Safeguarding assets

Question 11

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Accepted Answer

A)   Merchandise Inventory
B)   Purchases Returns and Allowances
C)   Accounts Receivable
D)   Cash

Question 12

Match each definition with the correct term below.
-Sales returns and allowances account

Accepted Answer

A)  An inventory system in which the inventory not yet sold or on hand is counted periodically.
B)  Management's regular assessment of the quality of internal control.
C)  An account that accumulates the total cost of merchandise purchased for resale during an accounting period.
D)  The policies and procedures that management puts into place to see that its directives are carried out.
E)  The seller bears the transportation costs to the place where merchandise is delivered and title passes at the time it is delivered.F) An inventory system in which continuous records are kept of the quantity and cost of individual items as they are bought and sold.G) The total cost of merchandise that could be sold in an accounting period.H) The buyer bears the shipping costs of merchandise and title passes at the time it is shipped.I) An account that gives management a readily available measure of unsatisfactory products and dissatisfied customers.J) Controls that limit access to assets.

Question 13

Scuilli Corporation purchased $5,000 worth of merchandise,terms n/30,from the Zupcic Corporation on June 4.The cost of the merchandise to Zupcic was $3,600.On June 10,Scuilli returned $700 worth of goods to Zupcic for full credit.The goods had a cost of $450 to Zupcic.On June 12,the account was paid in full.Prepare journal entries without explanations to record these transactions in (a)Scuilli's records and (b)Zupcic's records.Assume use of the perpetual inventory system by both companies.
a.Scuilli's records:
  
b.Zupcic's records:

Accepted Answer

a.Scuilli'...

Question 14

Taking a physical inventory refers to making a count of all merchandise on hand at a particular time.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are examples of internal control activities except

Accepted Answer

A)   rotation of key personnel.
B)   company picnics for all employees.
C)   authorization of certain transactions
D)   well-designed documents

Question 16

An effective system of internal control requires that individuals never take vacations.

Accepted Answer

A) True 
 B)False

Question 17

A large discount chain,like Wal-Mart or Target,most likely would use the perpetual inventory system to maintain control of its inventory.

Accepted Answer

A) True 
 B)False

Question 18

Before a check authorization is issued,the following documents must be in agreement,except for the

Accepted Answer

A)   invoice.
B)   remittance advice.
C)   purchase order.
D)   receiving report.

Question 19

Match each definition with the correct term below.
-Purchases account

Accepted Answer

A)  An inventory system in which the inventory not yet sold or on hand is counted periodically.
B)  Management's regular assessment of the quality of internal control.
C)  An account that accumulates the total cost of merchandise purchased for resale during an accounting period.
D)  The policies and procedures that management puts into place to see that its directives are carried out.
E)  The seller bears the transportation costs to the place where merchandise is delivered and title passes at the time it is delivered.F) An inventory system in which continuous records are kept of the quantity and cost of individual items as they are bought and sold.G) The total cost of merchandise that could be sold in an accounting period.H) The buyer bears the shipping costs of merchandise and title passes at the time it is shipped.I) An account that gives management a readily available measure of unsatisfactory products and dissatisfied customers.J) Controls that limit access to assets.

Question 20

Merchandise inventory becomes part of cost of goods sold when a company

Accepted Answer

A)   receives payment from the customer.
B)   pays for the inventory.
C)   purchases the inventory.
D)   sells the inventory.

Exam 6: The Operating Cycle and Merchandising Operations

Match each definition with the correct term below. -Sales returns and allowances account

Correct Answer
verified

Which of the following goods would not be included in merchandise inventory for a purchasing company?

Correct Answer
verified

Merchandise inventory becomes part of cost of goods sold when a company

Correct Answer
verified

Taking a physical inventory refers to making a count of all merchandise on hand at a particular time.

Correct Answer
verified

Current assets divided by current liabilities is known as the

Correct Answer
verified

It is likely that a company would want to bond its employees who handle cash or inventory.

Correct Answer
verified

All of the following are examples of internal control activities except

Correct Answer
verified

Use this information to answer the following question. In addition,beginning merchandise inventory was $44,000 and ending merchandise inventory was $28,000. If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Correct Answer
verified

Before a check authorization is issued,the following documents must be in agreement,except for the

Correct Answer
verified

Which of the following is a measure of liquidity?

Correct Answer
verified

When the periodic inventory system is used,a physical inventory does not need to be taken at the end of the fiscal year.

Correct Answer
verified

Goods totaling $56,000 purchased August 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on August 10 would be subject to which of the following discounts if paid for on August 12?

Correct Answer
verified

Which of the following is not a primary concern of internal control?

Correct Answer
verified

Assume that on March 13,Cimarron Company made a purchase totaling $13,000.Record this transaction in journal form assuming the perpetual inventory system was in use (omit explanations).

Correct Answer
verified

An effective system of internal control requires that individuals never take vacations.

Correct Answer
verified

Correct Answer
verified
a.Scuilli'...
View Answer

A large discount chain,like Wal-Mart or Target,most likely would use the perpetual inventory system to maintain control of its inventory.

Correct Answer
verified

Match each definition with the correct term below. -Purchases account

Correct Answer
verified

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Correct Answer
verified

A retail operation would still have to take a physical inventory even if it uses a perpetual inventory system.

Correct Answer
verified

Exam 6: The Operating Cycle and Merchandising Operations

Match each definition with the correct term below. -Sales returns and allowances account

Correct AnswerverifiedShow Answer

Which of the following goods would not be included in merchandise inventory for a purchasing company?

Correct AnswerverifiedShow Answer

Merchandise inventory becomes part of cost of goods sold when a company

Correct AnswerverifiedShow Answer

Taking a physical inventory refers to making a count of all merchandise on hand at a particular time.

Correct AnswerverifiedShow Answer

Current assets divided by current liabilities is known as the

Correct AnswerverifiedShow Answer

It is likely that a company would want to bond its employees who handle cash or inventory.

Correct AnswerverifiedShow Answer

All of the following are examples of internal control activities except

Correct AnswerverifiedShow Answer

Use this information to answer the following question. In addition,beginning merchandise inventory was $44,000 and ending merchandise inventory was $28,000. If beginning and ending merchandise inventories were ignored in computing net income,then net income would be

Correct AnswerverifiedShow Answer

Before a check authorization is issued,the following documents must be in agreement,except for the

Correct AnswerverifiedShow Answer

Which of the following is a measure of liquidity?

Correct AnswerverifiedShow Answer

When the periodic inventory system is used,a physical inventory does not need to be taken at the end of the fiscal year.

Correct AnswerverifiedShow Answer

Goods totaling $56,000 purchased August 2 on terms of 2/10,n/30 and on which returns of $2,000 were made on August 10 would be subject to which of the following discounts if paid for on August 12?

Correct AnswerverifiedShow Answer

Which of the following is not a primary concern of internal control?

Correct AnswerverifiedShow Answer

Assume that on March 13,Cimarron Company made a purchase totaling $13,000.Record this transaction in journal form assuming the perpetual inventory system was in use (omit explanations).

Correct AnswerverifiedShow Answer

An effective system of internal control requires that individuals never take vacations.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Scuilli'...View AnswerShow Answer

A large discount chain,like Wal-Mart or Target,most likely would use the perpetual inventory system to maintain control of its inventory.

Correct AnswerverifiedShow Answer

Match each definition with the correct term below. -Purchases account

Correct AnswerverifiedShow Answer

Under the perpetual inventory system,the entry to record a purchase return would include a credit to which account?

Correct AnswerverifiedShow Answer

A retail operation would still have to take a physical inventory even if it uses a perpetual inventory system.

Correct AnswerverifiedShow Answer

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a.Scuilli'...
View Answer

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Correct Answer
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Correct Answer
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